CareFirst requests rate increases of more than 50 percent

Maryland's largest health insurer asked state regulators Thursday for permission to raise rates by an average of 52 percent on health plans bought by individuals on the state insurance exchange under the Affordable Care Act.

The other three insurance companies that sell plans on the exchange joined CareFirst BlueCross BlueShield in asking to increase rates significantly, though not as much as CareFirst.

The requests came as the House of Representatives passed the American Health Care Act, partly in response to consumer frustration with soaring health care costs under former President Barack Obama's signature health care reform law.

CareFirst CEO Chet Burrell said the insurance company requests reflect higher-than-anticipated costs to pay for people's health care. The insurance company, he said, didn't charge enough during the early years of health care reform and continues to be burdened by large pools of sick people buying plans.

Not enough healthy people are entering the market to balance out the costs, and that problem may worsen, said Burrell, acknowledging that raising rates further could continue to discourage healthy people from buying plans.

"In the end you can raise the rates high enough so the burning houses are the only ones left for you to insure," he said.

Al Redmer Jr., commisioner of the Maryland Insurance Administration, which will decide on the requested rate increases, was not available for comment, his spokeswoman Tracy Imm said. But he said in a prepared statement that a final decision on the rates will be made in late summer.

"It's important to remember that these rates are what companies have requested, and not necessarily what will be approved," Redmer said in the statement. "There will be a thorough review of all the filings. As in years past, we may require changes."

In the past, the administration has both significantly reduced and increased the rates requested by insurance companies.

Although the other insurers also asked for rate increases, CareFirst requested the highest rates by far. It's seeking an average 50.4 percent increase on its HMO plans in Maryland and a 58.8 percent increase on average on its PPO plans.

Cigna Health and Life Insurance Co. requested an average 37.36 percent increase, while Kaiser Foundation Health Plan of the Mid-Atlantic States asked for an average 18.08 percent increase.

Evergreen Health, which the insurance administration barred from selling health insurance policies for individuals last year because it was waiting for approval to convert to a for-profit insurer, returned to the market, seeking an average 27.8 percent increase in its rates.

One health advocate said that CareFirst's rates in particular seemed exorbitant. The company set prices too low in the beginning and they should have realized that there was going to be a rush of sick people trying to get care, said Leni Preston, president of the Maryland advocacy group Consumer Health First.

"These just seem uncomfortably high and out of sync with what one sees with the rest of the market," Preston said. "I'm almost speechless, really."

Preston said the prices would be unaffordable for people buying individual plans who do not qualify for a federal subsidy to offset the cost.

Burrell said that only one-third of its customers in Maryland, Virginia and Washington, D.C., qualified for meaningful subsidies. "The rest would feel the full brunt of these rates," he said.

In a statement, Cigna suggest its continuing participation in the individual market could depend on whether it gets the rates it wants. "Our participation in individual markets is contingent on market conditions and regulatory approval," Cigna said. "Approvals and final plan decisions typically take place in the third quarter and we will continue to assess our participation based on the evolving rules, regulations and design of the marketplace throughout this process."

Carefirst is not yet ready to exit Maryland's exchanges as insurers have done in other states, but the financial losses are worrisome, Burrell said. "We are committed to the market and think it is fundamental to our mission," he said. "We think that people need the coverage and we would make every attempt to continue it."

Burell noted that the federal government said it will not enforce the penalty people face when they don't buy insurance, which is mandatory under the law. Doing so could help drive more people to plans, he said.

Burrell said he is also watching to see if the government will continue to pay billions in "cost-sharing" subsidies. If those subsidies ended, the company might have to ask for rate increases 10 percent to 15 percent higher than currently proposed.

Bradley Herring, a health economist at the Johns Hopkins Bloomberg School of Public Health, said he was surprised by the size of the requested premium increases because insurers received big bumps last year. The insurers got those increases when a program expired that had helped them offset the high cost of exchange participants, who turned out to be far less healthy and more expensive than anticipated.

He said that may have contributed to something of a downward spiral. More healthy people left the pool when their premiums jumped, leaving the sicker and costlier enrollees.

"These are the companies' requests only," Herring said. "And the insurance commissioner presumably will push back and the approved increases will likely to be much smaller than that."

For its part, Kaiser, which is seeking the smallest increase, smells opportunity.

"We expect consumers will find us to be one of the most competitive choices when they seek health coverage for 2018," Kaiser CEO Kim Horn said in a statement.

Kaiser is seeking increased rates due to complex administrative requirements, challenges related to risk adjustment, changes in programs and rules, new medical technologies, and higher costs for prescription drugs, she said.

Insurers also asked for increases in the small group market. Aetna Health Inc. asked for the highest increase — a 17.5 percent average increase for its HMO plan. CareFirst requested a 3.1 percent increase on its HMO for this market and a 2.9 percent increase on its PPO.

Baltimore Sun reporters Sarah Gantz and Meredith Cohn contributed to this article.

amcdaniels@baltsun.com

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