Hit hard by health reform, some private payers looking to dramatically raise rates

A battle over big bucks is looming as major private health insurers in some states seek to aggressively hike premiums for plans they sold through Affordable Care Act exchanges. The companies angling for the biggest increases cite ballooning costs incurred by new enrollees. Consumer groups are preparing to push state insurance regulators to force the carriers to scale back their requests.

The multi-state development was brought to light May 21 in the politics section of the Wall Street Journal.

The newspaper reported the following startling requests:

  • New Mexico’s market leader, Health Care Service Corp., is asking to elevate its premium rates by an average 51.6% for 2016.
  • BlueCross BlueShield of Tennessee, that state’s biggest carrier, has put in for an average increase of 36.3%.
  • In Maryland, market leader CareFirst BlueCross BlueShield (in the news recently for getting hacked) wants to lift rates by 30.4%.
  • Moda Health, the largest insurer on the Oregon health exchange, seeks an average boost of around 25%.

These companies—along with numerous others seeking more modest but still substantial increases—are evidently reeling over spikes in claims they’ve seen since the exchanges went live. CareFirst, for example, said its monthly claims per member have come very close to doubling, from $197 pre-exchange to $391, according to the WSJ.

In most cases the Affordable Care Act, aka “Obamacare,” requires insurers to submit proposals for increased rates to both state regulators and the federal government.

The WSJ article noted that insurance regulators in many states can compel carriers to scale back requests they can’t justify, while the Obama administration can grill insurers seeking increases of 10% or more (although it cannot demand reductions). Meanwhile consumer groups are insisting on careful scrutiny of premium requests at both the state and federal level. 

The debate will likely rage over the summer as rates must become final by the fall.

“This year, health plans have a full year of claims data to understand the health needs of the [health insurance] exchange population, and these enrollees are generally older and often managing multiple chronic conditions,” Clare Krusing, a spokeswoman for the industry group America’s Health Insurance Plans, told the newspaper