Some at more than 50 percent
Health insurance companies providing plans in South Carolina through the Health Insurance Marketplace are requesting double-digit rate increases for 2016 – from about 14 percent to more than 50 percent in some cases.
The Affordable Care Act (ACA) requires companies seeking 10 percent or higher increases to submit their rates for review by the state or federal government.
This is the first year that the federal government has required health insurance companies to make the requested rates public before review, said S.C. Department of Insurance director Ray Farmer. “That gets everyone a little more anxious than they should be,” he said.
At this point, the department’s analysts and actuaries are reviewing the requests along with an outside actuary, said Farmer.
According to the federal Department of Health and Human Services, the rate increases are starting points and could change as the result of Marketplace competition and review process. Deadline for completing the Marketplace provider rate requests is Aug. 25, said Farmer.
His agency must also review rates for companies offering non-Marketplace coverage, said Farmer, and all of the approved rates will be released after the Oct. 9 deadline to avoid unfair advantages.
Health insurance companies say rates are increasing due to a variety of factors, increased utilization of health care, rising health care costs, the failure of Medicaid and Medicare to reimburse the full cost of care, forcing hospitals to shift the difference onto private insurers, and utilization of new, more expensive technology.
In addition, two federal programs that were helping to defray the cost to insurers are expiring or changing in 2016: reinsurance and risk corridor. The reinsurance program worked to stabilize premiums in the individual market and outside of the Marketplace.
Under the program all health insurance issuers and third-party administrators had to pay a fee to support payments to individual market issuers that cover high-cost individuals. The program will reimburse insurers 50 percent of the cost for claims between $90,000 and $250,000, a change from 50 percent of claims between $45,000 and $250,000 in 2015.
The risk corridor program ends in 2016 and shares gains and losses between plans and the federal government to mitigate pricing uncertainty.
Double-digit rate increase request are also the result of the insurers’ additional experience with the ACA, said Farmer. This is the third year of submitting rate requests, he said. In the first year, companies had no experience with the newly passed legislation and the second year only offered about three months before rates had to be set, he said.
If the Department of Insurance does not approve a rate increase request, insurers must adjust to one that the department approves, said Farmer.
Rate increases are currently under review, and the public can comment on the rate increase requests at consumers@doi.sc.gov or call 1-800-768-3467. To view rates, visit ratereview.healthcare.gov.
Enrollment in the Marketplace reopens on Nov. 15. “We stress that consumers shop around and compare rates and metal levels,” said Farmer.
