Health insurance premiums will be on the rise again in 2016 — and at a pace that the state’s health insurance commissioner acknowledges leaves room for improvement when it comes to affordability.
After receiving requests from insurers to increase premiums by double-digits in some instances, Commissioner Kathleen Hittner announced Wednesday that she has approved rate hikes ranging from 2 percent to 8 percent in a variety of categories — for individuals, small employers and large employers.
Still unresolved is how much Blue Cross and Blue Shield of Rhode Island may raise rates for its individual plans, which cover about 25,000 people. The nonprofit insurer initially requested an 18-percent increase, but no decision has yet been made because, by law, its rate hike requests are reviewed in a separate process that reserves a key role for the state’s attorney general.
“Throughout the rate review process I listened to hard-working Rhode Islanders and business owners struggling to keep up with the increasing cost of health insurance for their families and their employees,” Hittner said in a statement. “My office’s review of premium requests balances affordability to the consumer with a legal obligation to guard the solvency of insurers. This year’s approved rates are lower than the insurers requested. However, there continues to be room for improved affordability for consumers by reforming the payment and delivery system.”
One reason why the initial rate hike requests could be adjusted downward was because, after they were submitted, a proposed fee on health plan premiums to finance HealthSource RI, the state’s Obamacare exchange, was reduced by the General Assembly, according to Sarah Nguyen, principal policy associate for the commissioner. Still, the new premium assessment — despite being lowered to 2.86 percent for individuals and .59 percent for small businesses — contributed to next year’s increase.
Other factors reflect trends that have been driving up health care costs for years.
“The rising cost of medical care — the prices insurers pay to providers for particular services and the number of services members use — continues to be the main driver of health-insurance premium growth,” the commissioner’s office stated.
The approved rates for the individual and small business markets are based on a “essential health benefits” base rate, which represents the premium for a plan with no cost-sharing for a 21-year-old. Premiums differ based on subscriber’s age and what benefits subscribers choose. The commissioner also looks at another figure, the “weighted average overall rate change,” which includes modifications to plan benefits from year to year.
Apart from Blue Cross and Blue Shield, only two other insurers offer plans for individuals and their families. They include Neighborhood Health Plan of Rhode Island, which was approved for a base rate hike of 8 percent (it requested 10.8 percent) and a weighted increase of 5.8 percent. United Healthcare got permission to raise the base rate 4.1 percent (it requested 11.1 percent) and a weighted average of 2.7 percent.
In the smaller employer category, the commissioner approved the following:
— Blue Cross: 2.3-percent base rate (4.7 percent requested), no increase in its weighted average
— Neighborhood Health: 1.9-percent base rate (0.3 percent requested), 2.4 percent weighted average
— Tufts (HMO and PPO): 3.3-percent and 3.7-percent base rate (4.9 percent and 5.4 percent requested), and -4.1-percent and -4.5-percent weighted average.
— United (HMO and PPO): 7.2 percent base rate (13.5 percent requested), 7.2 percent weighted average.
The plans for large employers are based on averages, meaning that employers individual rates will depend upon demographics and utilization of medical services in their work force. The following are the average hikes allowed by Hittner:
— Blue Cross: 7.3 percent requested, 5.1 percent approved
— Tufts (HMO and PPO): 6.7 percent and 7.2 percent requested, 6.1 percent and 6.6 percent approved
— United: 7.1 percent requested, 4.4 percent approved.
In response to the approved rates, Elizabeth Roberts, who as secretary of Health and Human Services has been leading Governor Raimondo’s efforts to curb health care costs, issued a statement that cited recent efforts to address the cost of health care. She mentioned the revision of health commissioner’s affordability standards, which guide the rate-setting process, and the work of two panels convened by the governor.
“We will be coming together as a state to address the root causes of rising health care costs,” Roberts said. “By working together and building on initiatives such as [the commissioner’s] Affordability Standards, our Reinventing Medicaid process and the efforts of the Working Group for Healthcare Innovation, we can spark innovation across our health care system to improve costs while providing the quality care that Rhode Islanders deserve.”
Date: August 19, 2015