State regulators say the cost will rise in the coming year for many Marylanders who buy their own health insurance, largely a result of the ongoing coronavirus pandemic.
The rates approved Friday are only for those who buy plans through the state’s health exchange or directly from a carrier under the program created by the Affordable Care Act. Most buying this coverage, known as Obamacare, do not get insurance through their employers.
The premium hikes for the nearly three dozen plans offered by three insurance companies on the exchange average about 2.1%. But about two-thirds of people buy the CareFirst BlueCross BlueShield HMO plans, and the average premium for those will rise 6.2%
“Health insurance is always critically important, but it’s even more important to have coverage in the midst of a pandemic,” said Kathleen A. Birrane, Maryland insurance commissioner.
“My actuaries are pretty tough,” said Birrane, noting the staff largely reduced the carriers’ requests for rate increases. “But we did have to factor in the unpredictability of COVID. There is a lot of pent up care happening, and the severity of illnesses is greater.”
The plans begin in January and people will be able to re-enroll or pick a new plan soon. Nearly 222,000 Marylanders have plans now, with tens of thousands added during an extended special enrollment period for those who lost insurance during the pandemic.
Birrane noted that 79% of people get some subsidy that was widely enhanced by federal legislation related to the pandemic. So she advised people to shop around for a plan that may cost less. Subsidies are only available for plans purchased through the state online marketplace, not on plans bought directly from a carrier.
After CareFirst HMO plans’ average increase of 6.2%, which puts a mid-level silver plan’s premium at about $323 a month, the next highest increase was for Kaiser Permanente’s HMO plans.
Kaiser offers the second most popular plans, with about a quarter of the market. Those plans will rise an average of 5%, putting a silver plan’s premium at about $261 a month.
Less than 6% of consumers on the exchange market buy CareFirst PPO plans, the cost of which will drop by 12.6%. The premiums for such a silver plan will average $453 a month.
UnitedHealthcare, which recently returned to the exchange in Maryland, offers HMO plans that cover the smallest share of people, less than 2%. The premiums for its silver plans are slated to rise 1.2% to an average of $335 a month.
The premiums had skyrocketed in years past, leading many consumers and carriers to flee the market. But the Maryland General Assembly passed a reinsurance program to help carriers offset the expenses from their costliest beneficiaries, replacing a federal program scrapped by Republicans in the U.S. Congress. That contributed to premium decreases in the previous three years exceeding 30%.
But the pandemic is taking a toll, with delayed care leading to an increase in claims. The insurance companies also carried some extra pandemic costs. Testing and vaccinating people has largely been funded with federal dollars, but for a time many voluntarily took on any costs not covered as well as the cost-sharing for treatments.
In a statement, CareFirst officials praised the state reinsurance program for helping control costs and stabilizing the insurance market. The carrier reported that between 2018 and 2021, it lowered rates an average of 27.3% for the PPO plans and 37.6% for the HMO plans.
“It was expected that these significant reductions would eventually level off and that future rate adjustments would reflect rising healthcare costs and changing market conditions,” the statement said, specifically attributing premium increases to “underlying healthcare costs expected for 2022.”
A statement from Kaiser said the premium increases “reflect the anticipated costs of providing high-quality health care and coverage for all our members over the long term.”
The carrier said costs rise every year due to expenses from such things as running hospitals and medical offices, paying wages and benefits of providers and upgrading technology.
“While there was reduced utilization as a result of the pandemic and stay-at-home orders in 2020 and Kaiser Permanente experienced a large increase in the use of telehealth services, we also incurred additional costs as a delivery system for surge preparation, COVID-19 testing, treatment and vaccination, and a return of medical services delayed from 2020,” officials said.
Kaiser ended its policy of waiving out-of-pocket costs for COVID-19 treatment at the end of July, and consumers are now responsible for their share of those bills.
UnitedHealthcare officials said in a statement: “We are pleased to have the opportunity to continue to serve people with affordable, consumer-centric health plan options through the Maryland Health Connection in 2022.”
They added that COVID-19 diagnostic tests and vaccinations will continue to be fully covered, but treatment is covered under individual’s benefits plans.
For small businesses buying state regulated plans, rates are slated to go up an average 5%, the Maryland Insurance Administration reported. About 255,000 Marylanders now get their coverage through one of the 220 plans offered.
Larger companies that self-insure, which cover most working people in the state, are not regulated by the state.