Arkansas' largest health insurance company will increase its premiums for plans offered to individual consumers by an average of more than 7 percent next year under rates approved by the Arkansas Insurance Department on Tuesday.
The plans affected by the rate increase include those offered by Arkansas Blue Cross and Blue Shield and the national Blue Cross and Blue Shield Association through the state's federally run insurance exchange as well as plans offered by the Arkansas insurer outside the exchange.
Two other companies also offer plans on the exchange. One of them, St. Louis-based Centene Corp., will increase its rates by 0.8 percent, and the other, Little Rock-based QualChoice Health Insurance, will reduce its rates by 8.2 percent, according to the Insurance Department.
Minnetonka, Minn.-based Unitedhealth Group plans to begin offering plans on the exchange next year.
As of June 30, more than almost 203,000 Arkansans were enrolled in Blue Cross plans that will be affected by the rate increase, according to the company.
That included 140,709 people whose premiums were paid by the state Medicaid program under the so-called private option, and 50,163 others who enrolled through the exchange.
The remaining 11,966 consumers enrolled directly with Arkansas Blue Cross and Blue Shield in unsubsidized coverage.
Most people who sign up through the exchange receive assistance, either through the private option or through federal tax credits that offset the cost of premiums.
In an Insurance Department filing dated Tuesday, Centene reported that 39,945 Arkansans were in plans affected by its slight rate increase.
QualChoice in May reported having 27,779 customers who would be affected by its rate decrease.
Private option enrollees make up a large portion of the customers in each of the companies' plans. Almost 210,000 Arkansans were enrolled in the program as of April 30.
Factoring in the premiums and enrollment in each of the companies' plans, the average increase was about 4.4 percent, Insurance Department spokesman Ryan James said.
This year, the rates decreased an average of 2.2 percent compared with 2014, which was the first year coverage on the exchange was available.
In a news release, Insurance Commissioner Allen Kerr said he is "proud to report that rate increases for health insurance have been held below 10 percent, unlike many other states which are looking at double-digit percentage price hikes."
Cynthia Cox, associate director of health reform and private insurance research at the Menlo Park, Calif.-based Kaiser Family Foundation, said the approved rates appear to be in line with rates that have been approved in other states.
Some companies that initially set their premiums too high have come down, while others that set their prices low have plans for increases.
Proposed rates in the double-digits in other states have made headlines because of a requirement in the 2010 Patient Protection and Affordable Care Act for requested increases of 10 percent or more to be made public. Information about more moderate increases often isn't known until later, when the rates are approved, she said.
"There's been a lot of what I would call doom and gloom stories about rates going up 30 to 40 percent," Cox said. "There certainly are some insurers that are doing that across the country, but it doesn't necessarily represent what people's options are going to be."
Joe Thompson, director of the Arkansas Center for Health Improvement, credited the private option for helping to keep the rate increase low.
Compared with others enrolled in coverage in the individual insurance market, those in the private option tend to be younger and healthier, he said.
"I think we have one of the healthiest insurance pools in the United States," he said.
Under the private option, the Medicaid program pays the premiums for silver, or mid-level, plans on the exchange, and also provides additional subsidies that reduce or eliminate the enrollees' out-of-pocket expense for medical care.
The assistance is available to adults with incomes of up to 138 percent of the poverty level: $16,105 for an individual, for instance, or $32,913 for a family of four.
The tax credit subsidies are available to many people who don't qualify for Medicaid and who 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.
The federal government is expected to pay the full cost of the private option through the end of next year as long as the cost of the program over three years is below a cap that will be calculated using such monthly cost targets.
While the per-enrollee cost last year was above the target of $477.63 per month, the premiums paid by program this year were essentially flat compared with last year, state officials have said.
That has kept the monthly cost of the program this year below the cap, which rose to $500.08. The cap rises to $523.58 next year.
To hold down costs next year, Human Services Department officials have said they will limit private option enrollment to each companies' cheapest silver plan. That plan will qualify for enrollment only if it is within 10 percent of the second-lowest-priced silver plan in the region.
"I think we're going to be fine on the cap," Thompson said.
Even if the cost of the private option stays below the cap, Arkansas will begin paying part of the cost of the program starting in 2017. Gov. Asa Hutchinson has proposed crafting another program that will take the private option's place starting that year.
In an Insurance Department filing, Arkansas Blue Cross and Blue Shield cited the increasing cost of caring for an aging population and increased enrollment by people with chronic health conditions as reasons for needing to increase rates.
It also cited special language attached to the Insurance Department's appropriation bill during this year's legislative session that bars the company from using a tax credit to reduce the amount of premium taxes it pays to the state on private option plans.
The credit allows insurance companies to claim a credit on the premium tax for the salaries of its employees in the state.
The tax is equal to 2.5 percent of the health insurance premiums. Removing the credit amounted to a 2 percent increase in the cost of the plans, according to the Blue Cross filing.
Blue Cross' rates increased an average of 2 percent this year compared with last year.
James, the Insurance Department spokesman, said Centene and QualChoice each reduced their proposed rates for next year as a result of the Human Services Department's effort to check the incomes of private option enrollees who have been signed up for at least a year.
That effort, which began in mid-May after a delay of seven months, has resulted in more than 58,000 enrollees who as of last week had lost their coverage or received notices that their coverage was set to end.
Centene had initially requested an increase of 6 percent, and QualChoice had sought a decrease of 4.4 percent.
The companies' representatives didn't return calls seeking comment Tuesday.
Metro on 08/26/2015