Health-premium dip set

2% drop for state exchange needs U.S. OK

Premiums for plans on Arkansas' health insurance exchange would drop an average of more than 2 percent next year under preliminary rates approved by the state Insurance Department, state officials announced Tuesday.

The Insurance Department approved increases lower than requested by three companies that offer plans on the exchange and approved a bigger decrease than requested by another, yielding an overall average decrease of 2.2 percent, compared with an average increase of 3.1 percent under the initial proposals submitted by the insurance companies, according to the Insurance Department's figures.

The rates won't be considered final until they are approved by the U.S. Department of Health and Human Services' Centers for Medicare and Medicaid Services, which is expected to happen by early November.

The new rates start Jan. 1.

Gov. Mike Beebe's spokesman, Matt DeCample, called the preliminary rates "great news for the state."

He credited the so-called private option, which uses Medicaid dollars to buy coverage for low-income adults on the insurance exchange, with adding more young, healthy people to insurance companies' plans, thus lowering the insurers' risk.

Arkansas Surgeon General Joe Thompson agreed. About 65 percent of private option enrollees are younger than age 44, compared with 38 percent of those in non-Medicaid plans, he said.

Thompson said the preliminary rates show that insurance companies "overshot what they thought the risk was" in setting their initial rates for this year.

"No one had ever done the private option before, so the insurance companies had to do an estimate," Thompson said.

Sen. David Sanders, R-Little Rock and a sponsor of the law creating the private option in 2013, said the lower rates will help keep the state's spending on the program below limits set under the terms of the federal waiver that authorized the program.

The waiver caps overall spending during a three-year demonstration period based on a target of $477.63 per month per enrollee in 2014, $500.08 in 2015 and $523.58 in 2016.

Through July, monthly spending per enrollee for the private option averaged $491.20.

"What we're proving in real time is that, done correctly, the inclusion of a population that has historically been segregated out of private insurance markets, their inclusion can have a significant positive impact at driving prices down," Sanders said.

As long as cost of the private option through 2016 is below the cap, calculated using the monthly targets, the federal government will pay the full cost of the program. If the cost exceeds the cap, the state would owe the difference to the federal government. The terms of the waiver allow the cost to be adjusted if the state has information that the limits "may underestimate the actual costs of medical assistance for the new adult group."

Rate details

Under the rates announced Tuesday, the cost for plans issued by Arkansas Blue Cross and Blue Shield and the national Blue Cross and Blue Shield Association would rise an average 2 percent, according to the Insurance Department, while premiums for St. Louis-based Centene Corp.'s plans would drop an average 12 percent.

The Blue Cross Blue Shield companies had requested an average increase of 8.5 percent for their plans, which covered more than 112,500 people as of early June.

Centene Corp. had requested a 9.4 percent decrease; its plans covered more than 49,500 people as of early June.

The premiums for QualChoice Health Insurance plans, which covered more than 2,100 people, would increase 5 percent, 1.5 percentage points less than the company had requested.

The summary of proposed rates for 2015 was released four days after the Arkansas Times' Arkansas Blog published information on the rates that was accidentally posted on the Insurance Department website.

The information that had been listed on the site differed from the figures released Tuesday.

For instance, the website had listed Arkansas Blue Cross and the national Blue Cross association as not requesting an increase.

Insurance Department officials had declined to comment on the proposed rates until Tuesday.

Seth Blomeley, a spokesman for the Insurance Department's Health Connector Division, said the errors on the website resulted from a "systems issue."

Insurance Department spokesman Alice Jones said the department is investigating how the information got on the site.

Private option

Coverage under the private option is available to Arkansans who became eligible for Medicaid on Jan. 1 under the expansion of the program approved by the Legislature last year.

The expansion extended eligibility to adults with incomes below 138 percent of the poverty level: $16,105 for an individual, for instance, or $32,913 for a family of four.

Tax credit subsidies for coverage on the exchange are available to many consumers who don't qualify for Medicaid but have incomes of less than 400 percent of the poverty level: for example, $45,960 for an individual or $94,200 for a family of four.

As of July 31, about 200,000 Arkansans were enrolled in plans on the exchange, including 163,480 in Medicaid-funded plans.

Those in non-Medicaid plans will benefit from the private option because Medicaid and non-Medicaid enrollees alike are included in the same risk pool, meaning their medical expenses are used in calculating future premiums, Thompson said.

Private-option enrollees tend to be healthier in part because the program excludes those with exceptional health needs -- about 10 percent of those eligible for coverage under the expanded Medicaid program. Enrollees with exceptional health needs are covered by traditional Medicaid.

To further reduce costs, the Insurance Department required plans available to private-option enrollees next year to cover only benefits required by the state and the federal health care overhaul law.

Those benefits do not include adult vision and dental coverage, which had been included in some Centene Corp. plans this year.

John Ryan, chief executive of Centene Corp.'s Arkansas Health and Wellness Solutions, said officials with his company don't plan to comment on the rates until they are approved by the Centers for Medicare and Medicaid Services.

Companies were required to file their proposed rates for 2015 with the Insurance Department by June 15.

Max Greenwood, a spokesman for Arkansas Blue Cross and Blue Shield, said her company's initial proposal was "supported by the actuarial information we had at the time."

"I think during the course of discussions, we definitely had more information and there are business decisions that are made during the course of those," Greenwood said.

Michael Stock, chief executive of QualChoice Health Insurance, said he didn't want to comment on his company's proposed rates until they receive final approval.

In general he said the company's rates are based on medical claims submitted by current enrollees and expected changes in health care costs and demographics.

Consultants hired by the Insurance Department review the company's calculations and assumptions. The department tries to keep rates as low as possible while also ensuring insurance companies don't lose money, Stock said.

"They are trying to be as fair to consumers and as fair to the insurer as possible," he said.

A Section on 08/27/2014

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