Tuesday, May 24, 2016

Insurance Department announces intent to reject big health insurance rate increases

Posted By on Tue, May 24, 2016 at 4:48 PM

Insurance Commissioner Allen Kerr announced late this afternoon that he expected to deny health insurance rate increase requests from several carriers for insurance polices provided on the exchange under the Affordable Care Act.

Because the insurance carriers sought increases higher than 10 percent, the increases required approval from the Insurance Department.

At this time, with the information we have on hand, including historical patterns, Governor Hutchinson and I do not believe there is substantive justification for these rate increases. For that reason, we expect to take action to deny the requested rate increases until there is sufficient justification to properly consider any rate increase.

The department had received these requests exceeding 10 percent:

QualChoice Life and Health 23.69%
QCA Health Plan, Inc. 23.78%
AR Blue Cross & Blue Shield (MSP) 14.70%
AR Blue Cross & Blue Shield (Local) 14.70%

One other insurance company participating in the Arkansas marketplace, Celtic Insurance (Ambetter), has submitted a rate increase request below the 10% automatic-reporting threshold. The Arkansas Insurance Department has until August 23 to grant approval of rates for qualified health plans for Plan Year 2017. The Open Enrollment Period for PY 2017 will run from November 1, 2016 through January 31, 2017.
The U.S. Health and Human Services Department later issued a statement saying Arkansas customers could still expect affordable insurance and downplaying requests for large rate increases. A statement from HHS:

“Consumers in Arkansas will continue to have affordable coverage options in 2017. Last year in Healthcare.gov states, the average cost of Marketplace coverage for people getting tax credits went from $102 to $106 per month, a $4 change, despite suggestions of ‘double-digit price hikes.’ People in Arkansas understand how the Marketplace works, and they know that they can shop around and find coverage that fits their needs and budget. In fact, last year more than 50 percent of them did exactly that by switching plans to save money. In addition, the vast majority of consumers in Arkansas qualify for tax credits that reduce the cost of coverage below the sticker price. Today’s announcement is just the beginning of the rates process, and consumers will have the final word when they vote with their feet during Open Enrollment.”
For more background from HHS, read on:

Proposed rates aren’t what consumers pay. While today’s filings show an average rate increase in Arkansas, a report from the U.S. Department of Health and Human Services demonstrates that proposed premium changes from preliminary rate filings do not capture what Marketplace consumers actually pay. In Healthcare.gov states the average Marketplace premium among people with tax credits increased just $4, from $102 to $106 per month, despite headlines suggesting double digit increases.

Most people receive tax credits and can buy a plan for less than $75 per month.

· 87% of Marketplace consumers in Arkansas receive tax credits, which are designed to protect consumers from premium increases and help make coverage affordable.
· Tax credits increase if the cost of the second lowest-cost silver, or benchmark, plan goes up. So if all premiums in a market go up by similar amounts, 87% of Marketplace consumers in that market will not necessarily pay more because their tax credits will go up to compensate. Average rate increases reported with the preliminary rate filings do not account for tax credits.
· For 2016 coverage, 62% of customers in Arkansas had the option of selecting a plan with a premium of $75 or less per month after tax credits.

Shopping: The ACA Marketplace helps consumers shop around for the best deal.
· Prior to the ACA, it was nearly impossible for consumers to compare plans and shop around easily – and many Americans went uninsured because they couldn’t afford insurance or had pre-existing conditions. Those who did have insurance in the individual market were often trapped in the plan they had, since people with even small health problems could be denied coverage or charged an exorbitant price if they tried to switch plans or issuers.
· Today, Marketplace consumers in Arkansas can purchase any available plan regardless of health conditions, and tools such as the doctor lookup and out-of-pocket cost calculator help them find the plan that meets their needs. Last year, 22% of returning Marketplace consumers in Arkansas switched plans. They saved an average of $240 annually.

Prior to the Affordable Care Act, plans were typically inferior and excluded services like maternity care, or even routine services like prescription drugs. Plans also often charged a higher premium, or denied coverage altogether, to consumers due to a pre-existing condition. Now, all consumers have the option to purchase quality, affordable coverage.

This is a big deal for as many as 1.2 million people in Arkansas with a pre-existing condition.

Since major provisions of the Affordable Care Act went into effect, Arkansas’ uninsured rate fell from 21.2 percent in 2013 to 14.0 percent in 2015 for non-elderly residents, according to new data released just last week.

Health insurance is clearly something people in Arkansas like, want, and need: 73,648 people signed up for 2016 coverage.

Both Marketplace and non-Marketplace consumers continue to benefit from the low health care cost growth of recent years.

Marketplace rates remain well below expectations when the law was passed. Marketplace rates for 2014 came in about 15% below Congressional Budget Office (CBO) projections in 2010. Better-than-expected Marketplace premiums are due in large part to lower-than-expected economy-wide health care cost growth and other efficiencies.

For the half of Americans who obtain health insurance through an employer, premiums for family coverage grew by an average of 5% per year from 2010 to 2015 – compared with about 8% per year from 2000 to 2010. Premiums grew at an even slower 4.2% rate in 2015. If premium growth since 2010 had matched the average growth rate over the prior ten years, the average family premium would have been almost $2,600 higher in 2015.

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