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Iowa: Health claims may also be higher off-exchange

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An Iowa official says health insurance claims seem to be worse than originally expected this year in both the individual public exchange market and the off-exchange market.

Iowa Insurance Commissioner Nick Gerhart talks about the current-year claim trends in passing in comments on three new rate review decisions.

Iowa has a Patient Protection and Affordable Care Act (PPACA) exchange run by the U.S. Department of Health and Human Services (HHS).

The division has approved efforts by Wellmark Blue Cross and Blue Shield to increase 2015 individual rates an average of 14.5 percent and to increase the individual rates at an affiliate, Wellmark Health Plan of Iowa, an average of 11.9 percent. Both companies sell all of their individual coverage off-exchange.

The division also gave Coventry, a unit of Aetna, permission to increase rates for individual coverage sold both through the exchange and off the exchange by an average of 8.7 percent.

CoOportunity Health — one of the new member-owned, nonprofit CO-OP health plans created by PPACA — received permission to raise rates for individual coverage sold on and off the exchange by an average of 19 percent. Originally, the company had proposed raising rates an average of 14.3 percent.

The actuarial analyses posted on the division website include only 2013 health claim experience data, but officials and actuaries refer to confidential supplements that provided 2014 enrollee morbidity data and some experience data.

PPACA now requires sellers of all new individual major medical coverage to make it available during open enrollment periods and special enrollment periods on a guaranteed-issue basis. The only information insurers can use when pricing major medical coverage is the applicant’s age and, in some states, tobacco use.

The underwriting rules apply to off-exchange coverage as well as to the qualified health plan (QHP) coverage sold through the public exchanges.

For the Wellmark, “the claims experience proved to be higher for these plans than was projected in 2013,” Gerhart says in an explanation of his review decision. 

Actuaries with Magnum Actuarial Group say Wellmark originally assumed a 35.8 percent in 2014 morbidity, or health risk level, as a result of PPACA changes. In part because of decisions to let many enrollees keep pre-PPACA plans longer than expected, “the 2014 risk pool has turned out to be considerably less healthy and more expensive than Wellmark’s best estimate was a year ago,” the actuaries say.

Actual morbidity may have increased 54.7 percent, the actuaries say.

In the decision on the CoOportunity rate application, Gerhart says year-to-date experience filed in September justified adding 4.7 percentage points to the company’s initial request for a 14.3 percent 2015 increase.

“The carrier demonstrated that the claims experience is considerably higher than was projected in the initial rates filed in 2013,” Gerhart says.

Similarly, Gerhart says of Coventry’s 2014 experience that it has been “substantially higher than was projected in 2013.”

See also: Many PPACA exchange plan enrollees use HIV drugs


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