Health insurers seek higher premiums

Published 8:58 am Friday, June 5, 2015

By Mark Zdechlik FM

Eight health insurance companies in Minnesota are proposing double-digit increases in average premiums and some want to raise rates by more than 50 percent, according to the federal Centers for Medicare & Medicaid Services.

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Blue Cross and Blue Shield of Minnesota, for example, wants to raise rates an average of 54 percent on nine plans.

The eye-popping proposals to dramatically increase health insurance premiums, most of which are for individuals and family plans, are drawing fire from Republicans and Democrats.

Gov. Mark Dayton called the proposed rate increases “outrageous” given that the cost of health care is currently increasing at just 3 percent.

Other insurers also may be planning to raise premiums. The federal Affordable Care Act requires early disclosure of rate requests of 10 percent or more. Those that seek to increase rates below that threshold may not have disclosed their plans.

The proposed higher premiums are far from becoming reality, as state regulators must be convinced the increases are necessary. The 2016 individual market rates will be finalized Oct. 1.

Officials at Blue Cross and Blue Shield say the company needs dramatically higher premiums to account for rapidly rising medical costs for individual and family plans. The company lost $135 million on its portfolio of individual products in 2014 and is on track to lose significantly more on those plans this year, they said.

Jim McManus, Blue Cross and Blue Shield of Minnesota’s director of public relations, said the decision to seek the premium increases is necessary but also challenging, given what it could mean to customers.

“Blue Cross is committed to making sure our members understand what options will be available to them once 2016 prices are finalized later this year,” McManus said. “We continue working with leaders in both government and health care on the impact of escalating medical costs.”

Blue Cross’ HMO, Blue Plus, is seeking an average rate increase of 54 percent. Combined, the two plans have been the biggest health insurers in Minnesota.

According to its government filing, Blue Cross and Blue Shield paid out $1.23 for every dollar paid in premiums. That was common. Of the six insurance companies that reported 2014 operating results as part of their rate request, all but one paid out more in individual claims in 2014 than they collected in premiums. Some said their health plan members were sicker and needed more care than expected.

State Rep. Greg Davids, R-Preston, called the news of the proposed rate increases “another disheartening sign that Obamacare and MNsure are not working for Minnesotans.”

Commerce Commissioner Mike Rothman promised a thorough review of the rate increase proposals to determine whether they are justified.

“What I want people to know is that these are the proposed rates by the insurance companies and we will at the Department of Commerce be looking at them very rigorously over the next few months,” said Rothman, who will oversee the review. “They’re not the final rates.”

Rothman is encouraging people to share their concerns about the proposed rate increases with his office.

Minnesotans are not alone in seeing jaw-dropping rate hike plans. According to information from the governor’s office, a plan in Idaho has proposed doubling its rates while plans in several other states are seeking increases of more than 50 percent.

Regulators should thoroughly scrutinize the requests, said Cheryl Fish-Parcham, private insurance program director of Families USA, a non-profit that promotes access to health care. But she notes that not all of the plans aim to dramatically raise prices.

“Even within the same state, as was the case last year, some insurers are increasing rates dramatically [while] others are not,” Fish-Parcham said. “So it will still be a challenge for consumers to shop around and find the best rate — and meanwhile they really should be weighing in with regulators.”

Determining how to price the individual market has proven challenging, said Jim Schowalter, president and CEO of the Minnesota Council of Health Plans, which represents the health insurance companies. He notes that the individual plans account for just 6 percent of the entire health insurance marketplace in Minnesota.

“Certainly what we’re seeing is volatility in the market both in Minnesota and in other states,” Schowalter said. “And that volatility is really concentrated in a sliver of the overall insurance market.”