Insurers: 2015 Exchange Rates Could Spike
State insurance officials are preparing to release figures next week on how much health plans will cost under the Affordable Care Act for 2015, and rate increases seem inevitable as insurers say their new consumers are older and sicker than anticipated.
Top executives at Blue Cross and Blue Shield of Florida and Cigna said rate increases are likely, but declined specifics. Humana proposed an average 14.1 percent increase for its HMOs, saying the increase was driven by factors including increased prescription drug costs and doctor and hospital reimbursements. However, Molina has proposed an 11.6 percent average rate decrease.
Critics of the health overhaul warned of huge rate increases, a signal they say shows the law isn't working. But rates have risen as much as 20 or 30 percent in recent years and early filing from insurers in other states suggest the 2015 increases won't be as dramatic.
Meanwhile, insurers say that even though the nearly 1 million Florida enrollees include many who are older with chronic conditions, the marketplace is still ripe for profits.
Brian Evanko, president of Cigna's U.S. individual market, said the company anticipates financial losses from the exchange in 2014, but "we expect over time that as things tend to shake out this could be a very attractive market for us."
Federal health officials say 91 percent of Florida's 983,775 enrollees received a tax subsidy, 55 percent were female and 45 percent were male. The government and insurance companies have not released data on how many were previously uninsured and no details on their health conditions.
"A lot of the people are in need of more chronic care as opposed to people who might need a knee surgery and held out to get it," said Evanko.
At Florida Blue, the state's largest insurer, the average consumer age was slightly over 45 in the exchange, while their average consumer age is under 40 outside the exchange. Only about 23 percent made up the crucial healthy young adult demographic, which is essential to balancing out the cost of caring for older, sicker consumers, said Jon Urbanek, a senior vice president for the BCBS's Florida Blue.
"From a risk pool, it's slightly worse than what we would have first anticipated," said Urbanek.
About 1 in 3 Floridians who signed up — or 339,000 people — chose a Florida Blue plan, Urbanek said.
With so many unknowns under President Obama's new health law, insurers struggled with how to price plans, how many options to offer and how to structure their hospital and doctor networks. Insurers also faced new challenges because the law mandated they could no longer turn away consumers with pre-existing medical conditions, limited what they could charge older policy holders and required them to offer more benefits.
"Clearly the price of the product that was offered through the federal exchange was a key distinguishing factor," said Coventry Florida president Christopher Ciano.
Coventry offered one of the most competitive premium rates, which health experts said made them a popular choice among consumers. Federal officials and insurers have not released data showing enrollment among plans.
Some health navigators said consumers seemed overwhelmed by the volume of choices from Florida Blue — which had multiple options at each medal level — and stuck to plans with fewer choices.
Florida Blue officials plan to pare down their offerings when enrollment starts in November.
Cigna plans to expand into other states and regions at a controlled rate, not as rapidly as some of its competitors. UnitedHealth Group, the nation's largest health insurer, earlier this month announced it will participate in as many as 24 of the law's individual health insurance exchanges in 2015, up from only four this year.
"We entered the market in a very focused way. We didn't want to be in 50 states in year one because we knew it was going to be a bit bumpy," said Evanko.
Insurance companies said they're also hammering out contingency plans for the next enrollment period taking a cue from last year's bumpy enrollment.
Amid problems with the glitch-plagued healthcare.gov and back-end problems connecting the system to insurers, consumers complained they spent hours on the phone.
Insurers were strapped juggling the new exchange with Medicare open enrollment and the large employer enrollment in January.
"We put through probably four times what we would normally put through that system in a year, so that's a lot of volume," said Urbanek.