The state entity that approves insurance rates is going to hire an independent actuarial firm to review the large increases requested by CareFirst BlueCross BlueShield for plans that people buy under the Affordable Care Act.
Maryland's largest health insurer asked the Maryland Insurance Administration this week for permission to raise rates by an average of 52 percent on individual health plans purchased through a state insurance exchange. Rates on at least one of the insurer's plans could jump as much 67.9 percent.
"We want to make sure we get it right based on the gravity of those numbers," Maryland Insurance Commissioner Al Redmer Jr. said Friday.
Typically the insurance administration uses in-house actuaries to review rate requests. The review process also includes a public hearing.
Insurance companies don't usually get the rates they want. The administration often reduces the rates requested by insurance companies, but it has ordered an even larger increase.
"We have a talented actuary team, but I just want to make sure based on the size of this request that we make the right decision," Redmer said. "I do not want to make a mistake."
CareFirst declined to comment about plans for an outside review.
The other three insurance companies that sell plans on the exchange also asked to increase rates significantly, but CareFirst had the highest request by far.
CareFirst is 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.
As of now, only the request by CareFirst is getting an independent review, Redmer said.
He said the review doesn't mean he thinks the request by CareFirst is too high. He said he wants to make sure the rates are fair for both the insurer and consumers.
"Clearly the numbers we are starting from are certainly concerning," he said.
Double-digit rate increases are troublesome for the market and could deter people from buying plans, Redmer said.
CareFirst CEO Chet Burrell said Thursday that the company needed to raise rates because it was more costly to insure people than they anticipated. The insurer didn't charge high enough rates during the early years of the Affordable Care Act and there aren't enough healthy people buying plans, he said. Insurers need healthy people in plans to balance out the costs of caring for sicker customers.
The insurance administration not yet chosen an outside actuary, Redmer said, and the selection needs to be done through the procurement process.
The commission plans to make a final decision on the requests by late summer.