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Gloom, hope shape early 2016 health rate filings

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Some state insurance regulators have already started posting significant numbers of 2016 major medical insurance rate filings.

Not Vermont. That state’s Green Mountain Care Board was one of the rate-posting speed demons for 2014 and 2015. The agency has a rate review blog entry URL that promises “rates_coming_April.” But the agency now says in the text on that page that it anticipates getting the rate filings on May 15 and posting the filings within five days of receiving them.

The Connecticut Insurance Department has published a collection of individual and small-group 2016 rate filings, both for exchange and off-exchange business. Proposed average changes range from an average decrease of 7.15 percent for Anthem on-exchange small-group plans to an increase of 33 percent for off-exchange individual plans sold by a unit of UnitedHealth Group Inc. (NYSE:UNH).

The Oregon Insurance Division has posted a collected of 2016 rate filings with average proposed changes ranging from a decrease of 1.95 percent for Kaiser Foundation Health Plan of the Northwest individual plans, to be sold on and off the exchange, to a 52 percent increase proposed by a company that apparently is leaving the market.

See also: GOP leaders consider preserving PPACA subsidies until after the 2016 election

Some carriers have made a point of saying they have little interest in the off-exchange market, and would like to be rid of the “transitional” coverage written before the major Patient Protection and Affordable Care Act (PPACA) product rules took effect, in January 2014, as quickly as possible.

We focused on searching for clues about 2016 in individual, on-exchange filings.

See also: PPACA premium tax credits: CCIIO sets 2016 procedures

For some of the interesting bits we found, read on. 

Icy window

1. For at least some carriers, claims were much higher than expected.

Drafters of PPACA created a new group of nonprofit, member-owned plans, the Consumer Operated and Oriented Plan (CO-OP) carriers, in an effort to boost competition. They also created risk-management programs that were designed to encourage the CO-OPs and other insurers to focus on taking high-risk enrollees, then do a good job of holding down those enrollees’ claims.

In the real world, one of the PPACA risk-management programs, a risk corridors underwriting margin protection program, appears to be missing in action, and claims have been much higher than the CO-OPs expected.

In many cases, those CO-OPs and others annoyed bigger carriers by winning market share on the exchange system with rock-bottom prices. 

In Oregon, a state with two CO-OPs, one, Oregon’s Health CO-OP, had expected claims to amount to 75 percent of premium revenue. In reality, they were equal to 178 percent of premium revenue.

Health Republic Insurance Company, another CO-OP, expected claim costs to amount to 103 percent of premium revenue. There, claim costs equaled about 216 percent of premium revenue.

See also: Will King vs. Burwell kill the 2016 individual health market? 

Blue sky

2. The carriers hope experience will look better in 2016.

In Connecticut, actuaries for HealthCT, a CO-OP, said claims were higher than they expected, but that morbidity was low partly because of issues involving low initial enrollment levels, rules that let some healthy people keep their old coverage, and the tendency for uninsured people who suddenly get covered to make heavy use of their coverage early on.

The company does not believe its 2014 experience is credible, and it is assuming the 2016 experience will be much better, the actuaries say.

Actuaries for some other carriers have also included similar statements about what they believe to be the lack of credibility of 2014 experience data.

See also: What is PPACA World like? Anthem and Humana open up 

Suits with blank stares

3. CO-OP managers may have sobered up.

Actuaries for Health Republic of Oregon have been particularly blunt about the problems they’ve faced with trying to break into the health insurance market.

In response to a question about whether carriers have succeeded at getting providers to give some of the gains from the reported PPACA-related drop in uncompensated care back to insurers and plan enrollees, the CO-OP said, “Attempts were made by [the company's] network administrator to re-negotiate rates due to the increase in uncompensated care. Providers in hospitals have simply refused to negotiate their rates at this point in time.”

In a section on whether the company would be able to increase its surplus, Health Republic said that it “intends to pare back its plan offerings in order to limit its exposure to what appears to be a highly competitive individual market.”

Oregon’s Health CO-OP noted that federal regulators have set the deductible for the 2016 PPACA reinsurance program at $90,000, rather than at $70,000, as they’d hoped, and that the higher deductible level could cut down on reinsurance program recoveries. 

See also: Low-cost CO-OPs win share