Health insurers request increases of up to 24% for Arkansas coverage

Four of the state’s five health insurance providers are requesting double digit rate increases for 2017 insurance policies, but the state’s insurance commissioner said those rates are not justified at first look.

The requested average increases for policies purchased on the Affordable Care Act’s individual exchange were: QualChoice Life and Health – 23.69%; QCA Health Plan – 23.78%; Arkansas Blue Cross & Blue Shield’s multi-state plan – 14.7%; and Arkansas Blue Cross & Blue Shield’s local plan – 14.7%.

The average includes all the different types of metallic (gold, silver and bronze) plans offered by the insurers, including those offered through Arkansas Works, the program that uses federal Medicaid dollars to purchase private health insurance for Arkansans with incomes up to 138% of the federal poverty level. The Affordable Care Act requires insurance companies to publicly disclose and justify increases of more than 10%. The fifth Arkansas health insurance company, Celtic Insurance, otherwise known as Ambetter, has requested an increase of less than 10%. Another carrier providing insurance in 2016, UnitedHealthcare, is exiting the market in 2017.

The Arkansas Insurance Department must grant rate approvals by Aug. 23. The rates would be effective Jan. 1.

“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,” Insurance Commissioner Allen Kerr said in a statement released by his office. “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.”

AID spokesman Ryan James said this is the first time insurance companies have requested an increase of more than 10% in Arkansas since the program began in 2014. Rate requests had to be submitted by May 11. Department employees and hired professionals will look at every company’s filings, taking into account the insurers’ surpluses and actuarial soundness. Theoretically, the increases could be approved after what James called “a strict scrutiny.”

“What we want to be clear is, this is a request,” he said.

The U.S. Department of Health and Human Services’ press secretary, Jonathan Gold, released a statement saying that 87% of Health Insurance Marketplace consumers receive tax credits that will increase if the cost of silver plans, the second lowest-cost plan, increase.

BLUE CROSS RESPONSE
Max Greenwood, spokesperson for Arkansas Blue Cross Blue Shield, said the rate increase request is actuarily justified, and the insurer will provide more information to the Insurance Department when it is requested. Greenwood said the rate increase reflects all metallic policies – 75,000 insured Arkansans on the insurance exchange for individuals with incomes up to 400% of the federal poverty level, those off the exchange who previously were likely in the state’s high-risk pool, and those on Arkansas Works.

Greenwood said rates for Arkansas Works would be affected. Amy Webb, spokesperson for the Department of Human Services, said it’s too early to tell.

Greenwood said the rate increase request is based on patients’ increasing utilization of services coupled with increasing medical costs, particularly the rising cost of prescription drugs, including speciality drugs, and the rising number of catastrophic claims of more than $50,000. She said Blue Cross looks at past experience and projected needs and said, “Our trends are showing that the costs are continuing to rise, so that’s a factor.”

Greenwood said some of the elements used to mitigate the Affordable Care Act’s costs, such as the act’s transitional reinsurance fee which offset higher cost enrollees, are going away. Also, the Arkansas Legislature removed a premium tax credit for all premiums, effective Jan. 1, 2017, in this year’s health care special session.

She said when the state cleaned up its list of private option enrollees last year, Blue Cross lost 25,000 members, many of which were low utilizers who had been included in the insurers’ 2015 filing.

“When those folks were removed, the stability of that pool became deteriorated,” she said.

‘CAUGHT BY SURPRISE’
Ray Hanley, president and CEO of the Arkansas Foundation for Medical Care, said the rate hike requests, while high, are lower than in other states that have had rate increases greater than 30%.

“Still, as I read the comments from Commissioner Kerr, it appears he is not satisfied with the justification submitted with the rate hikes,” Hanley said. “I think he is doing his due diligence and will be asking for more details on the claims experience of the health plans over the past year.”

Hanley said insurers have been “caught by surprise at the pent up demand and utilization of services by a largely heretofore uninsured population, but clearly they have work ahead of them to justify whatever increase may be approved. Arkansas, for a rural state, is fortunate to have as many competing plans, but double digit increases are, and should be, a tough sell.”

Hanley said rate increases across the country are a reminder that “the ‘Affordable’ in the Affordable Care Act is elusive and presently is the Achilles heel in the law.”