Affordable Care Act plans pose challenges for insurers

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With the results sure to affect politics as well as pocketbooks, health insurers are preparing to raise rates next year for plans issued under the Affordable Care Act.

But how much depends on their ability to predict how newly enrolled customers -- for whom little is known regarding health status and medical needs -- will affect 2015 costs.

"We're working with about a third of the information that we usually have," said Brian Lobley, senior vice president of marketing and consumer business at Pennsylvania's Independence Blue Cross. "We've really been combing the data to get a first look."

At stake are price increases that buyers on the federal exchange, HealthCare.gov, and other online marketplaces will encounter when they get renewal notices this year. Forecasting success or failure could also affect whether insurers stay on the exchanges, a key pillar of the health overhaul.

The 2014 enrollment period closed at the end of March for most consumers. But carriers selling medical plans on HealthCare.gov must file initial 2015 rate requests with federal regulators in late May or June -- even though they have little idea about the health and potential costs of their newly enrolled members. Deadlines also loom for state-run exchange filings.

WellPoint, the biggest player in the online exchanges, is talking about double-digit rate hikes for 2015. Such increases would give ammunition to Republican critics before the November elections.

Analysts' expectations vary, but nobody is predicting decreases.

"We'll see rate increases in the marketplaces, but I think it's anyone's guess" about what the precise changes will be, said Sabrina Corlette, project director at the Georgetown University Center on Health Insurance Reforms. "It's like nailing Jell-O to a wall."

The health law required insurers to accept all applicants this year for the first time without asking about existing illness. That reduces what they know about customers and raises the likelihood that they'll sign sicker, more expensive members who were previously denied coverage.

At CoOportunity Health, a nonprofit carrier in Iowa and Nebraska, many enrollees scheduled medical treatments -- including surgeries -- as soon as possible after their coverage began Jan. 1, said chief operating officer Cliff Gold. Among the procedures were several expensive transplant operations, including heart and lung procedures that can cost more than $1 million each.

But insurers tend to receive pharmaceutical claims long before hospital bills. They are poring over these early prescription records for clues about new members' medical status.

Pharmacy-benefit manager Express Scripts published data April 9 showing that marketplace enrollees in January and February were substantially more likely than average to have HIV infections, chronic pain, depression and other high-cost ailments.

But that doesn't necessarily mean average costs will soar.

For one thing, insurers figured they would cover more sick patients this year and priced plans accordingly. Early pharmacy data at Independence Blue Cross, Mr. Lobley said, are "on par for what we expected."

Even if carriers signed more chronically ill customers this year than planned, the health law includes "reinsurance" and other safety valves designed to keep high-cost members from pushing up rates.

As part of the health care overhaul, the government left the door wide open for millions of Americans to be excused from the Affordable Care Act's requirement that most people must carry health insurance or pay a fine. But so far relatively few have asked for such a pardon.

About 77,000 families and individuals have requested exemptions from the health care law's so-called individual mandate, according to internal government documents obtained by The Washington Post. As of April 20, officials had approved tens of thousands of exemption requests and rejected none.

The rest are on hold or in the process of being vetted. Even so, the numbers are relatively small compared with the 8 million who have enrolled in private coverage on the state and federal marketplaces -- a sign that people taking action as a result of the health-care law are by and large choosing to comply with the mandate, long the most unpopular aspect of the program.

Republicans have been sharply critical not only of the mandate but also of the many ways a person can skirt it. Various categories of people, including those belonging to certain religious groups, Native Americans and illegal immigrants, may request an exemption. There are also 14 "hardship" categories, some of them rather broad.

Republicans have reserved particular criticism for a vaguely worded, catchall category added in December -- an exemption available to anyone who "experienced another hardship in obtaining health insurance."

But the documents show that there has not been a wave of people seeking this exemption.

The Washington Post contributed. Kaiser Health News is an editorially independent program of the Kaiser Family Foundation.



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