The last-minute surge of enrollment in the health care exchanges brought in younger customers to Indianapolis-based WellPoint, which could lessen the insurance giant’s premium increases next year, company officials said Wednesday.
WellPoint officials reportedly said at a March investor meeting that it would seek double-digit increases when submitting to regulators its proposed 2015 rates over the next two months.
Asked several times about 2015 rates on a call with investors Wednesday, CEO Joseph R. Swedish and chief financial officer Wayne DeVeydt didn’t give a specific estimate.
“It’s not an easy one to answer because it’s going to vary by market, by product,” Swedish said.
Officials said the average age of WellPoint’s exchange customers fell every day over the past four weeks of enrollment as more younger customers signed up. Because younger customers tend to be healthier, that could mean average health care expenses for enrollees will be less than expected.
“We think because we hit the sweet spot, there’ll be less volatility in price for our members than there would be for others,” DeVeydt said.
WellPoint, which already had the most customers on the individual market, is hoping to grab the biggest share of the millions of Americans who will buy insurance through the exchanges created by the 2010 Affordable Care Act.
The company is selling plans in 14 states, including Indiana, where it already covers the majority of those who buy insurance on their own, instead of getting it through an employer or government program.
Bloomberg reported last month that WellPoint official Ken Goulet told investors last month that rate increases will vary by carrier, “but all of them will probably be in double-digit plus.”
WellPoint spokeswoman Kristin Binns said last month’s comments referenced industry rate trends and Wednesday’s comments were based on WellPoint’s recent enrollment data.
The company reported gaining 400,000 customers from the exchanges through mid February. Officials say the number should top 600,000 once it has final figures from the open enrollment period, which ended mid April. About 90 percent of those who have signed up for WellPoint’s coverage through an exchange are actually enrolling by paying their premiums.
The nonpartisan Congressional Budget Office recently projected that annual premiums for benchmark “silver” level plans will rise slightly next year from an average of $3,800 to about $3,900. After that, premiums are expected to increase about 6 percent a year from 2016 to 2024, primarily to keep up with rising health care costs.
Insurers may also raise rates, CBO projected, because of pressure to expand their provider networks and pay providers more.
The exchange plans generally have lower payment rates, smaller networks and tighter rules on patients’ use of health care than typical coverage provided by employers. Those restrictions enabled insurers like WellPoint to offer lower premiums than they would have otherwise, but that’s likely to change as more people enroll, CBO predicted.
Because insurers had limited information on the health of new customers when pricing premiums for this year, the Affordable Care Act included corrective measures to prevent an insurer from trying to attract only healthier customers, and to protect an insurer from big losses if sicker customers showed up.
For example, the law redistributes funds from plans with a disproportionate share of healthier customers to those with sicker customers.
Those measures are intended to keep premiums from spiraling out of control while the exchanges are getting established.
WellPoint officials said Wednesday the company doesn’t expect to need any of the help provided by the law, and should have profit margins of 3 percent to 5 percent on its exchange products.
The corrective measures have been criticized as taxpayer bailouts for the health insurance industry. But the program is funded through insurance company fees, not by taxpayer dollars.
Date: May 8, 2014
Source: JConline