CareFirst BlueCross BlueShield proposed monthly premiums averaging more than 50 percent higher for 2018 than for 2017, in filings to the Maryland Insurance Department for the online health insurance marketplace under the Affordable Care Act.
The three other companies offering coverage in Maryland’s online/individual market, CIGNA, Kaiser Mid-Atlantic, and Evergreen Health, applied for substantial but smaller 2018 rates that average 37.4 percent, 18.1 percent, and 27.8 percent, respectively.
CareFirst has the largest market share by far over the company’s Maryland, D.C., and Northern Virginia market area, said the company’s CEO, Chet Burrell. It covers two out of every three people in that area with coverage purchased through the ACA online exchanges.
The public may comment online about the proposed rate increases through June 20. The Maryland Insurance Department will hold a public hearing on the proposals on June 21 at its offices in Baltimore. Insurance Commissioner Al Redmer, Jr., said the agency would make a decision by late summer. The ACA requires the agency to approve rates that are adequate to meet the costs of the coverage.
Burrell said CareFirst is committed to the exchanges. However, he declined to comment when asked by the Sentinel whether it would remain in them if the department rejected the proposed increases outright, or approved only half of them. Last year, the department reduced CareFirst’s proposed increases for the ACA market by 14 percent, but still approved substantial rate hikes of 23.7 percent and 31.4 percent for products of health maintenance organizations (HMOs) and preferred provider organizations (PPOs), respectively.
Those increases narrowed but did not eliminate CareFirst’s losses on ACA products, Burrell said. Over the company’s Maryland, D.C., and Northern Virginia market area, CareFirst lost approximately $500 million in 2014-16 on ACA products, and expects to lose another $100 million in 2017. He called those losses “unsustainable.”
The company declined to give a breakdown of these losses between Maryland, D.C., and Virginia. The rate hikes it’s seeking for 2018 ACA products are smaller for Northern Virginia and D.C., averaging 35 percent and 29 percent, respectively, than for Maryland.
Burrell claimed that the rates approved in Maryland in prior years have been inadequate to cover the costs of ACA exchange plans by 5 percent to as much as 45 percent. “One component of 2018 rate filings is to make up for these shortfalls,” he said.
Conceivably, the company could seek to add to its proposed rate hikes by another 10 to 15 percent, Burrell said. This depends in part on actions by Congress. In the recent budget action funding the federal government for the rest of Fiscal Year 2017, Congress funded cost-sharing subsidies to help low-income individuals with out-of-pocket expenses. Burrell said the CareFirst rate proposals assume this assistance will continue, although there is no commitment so far from Congress or the Trump administration.
Two other backstops the ACA provided to offset insurer losses, called risk corridors and reinsurance protection, have continued not to be funded by Congress, Burrell noted.
As required by the ACA, CareFirst rates are the same for men and women. Also, CareFirst does not seek geographic differentials within Maryland, that is, among the Washington and Baltimore metro areas, and Eastern, Southern and Western Maryland.
The rate proposal document is still complex, however, because the company charges different rates by age in five-year groups, by smoker status, and for its Bronze, Silver and Gold plans. Bronze plans come with lower monthly premiums but also lower coverage than Gold plans; Silver plans are in between. Many aspects of such plans are specified in the ACA and supporting regulations.
The following are proposed monthly rates for a 40-year-old, non-smoking, Maryland resident buying the lowest-cost Silver plan, without employer, tax credit or other subsidies: CareFirst PPO, $714.95; CareFirst HMO, $518.59; CIGNA PPO, $565.55; Evergreen Health HMO (rejoining the ACA market in 2018 after dropping out for 2017), $403.16; and Kaiser Mid-Atlantic HMO, $359.25. Notably, United Healthcare, a major Maryland carrier, has already left the Maryland exchange.
These rates would apply whether people buy coverage through the Maryland government’s online insurance marketplace, called Maryland Health Connection, directly from insurers, or through brokers.
They do not apply to employer plans—which have much lower rates and 2018 increases. Across the four exchange companies and UnitedHealthcare, the average small employer group increase sought for 2018 is 8.3 percent. CareFirst proposed 2018 small-group premium hikes of about 5 percent, the lowest of the group. The proposed monthly small-group 2018 rates, before employer subsidies, for a 40-year-old non-smoker buying the cheapest Silver plan, would be: Kaiser, $242.04; Evergreen, $317.61; CareFirst HMO, $310.98; CareFirst PPO, $367.22; United, four plans ranging from $258.14 to $319.54; and Aetna HMO and PPO, $429.06 and $438.09, respectively.
Many large employers have still smaller rate hikes.
Burrell said the yawning gaps between ACA/individual market rates and employer group rates reflect the costs of covering “those most in need—particularly older, sicker and low-income individuals and their families.” He also criticized what he called a federal failure to enforce the ACA’s “individual mandate” that everyone obtain coverage. According to Burrell, the Congressional Budget Office and outside studies indicate that about 20 percent of “healthier, younger individuals” have not obtained coverage, which forces ACA insurance pools to charge higher rates, he asserted.