The news for Marylanders who purchase their own insurance through the state exchange has gone from bad to worse. In an unprecedented move, CareFirst, Maryland's largest insurance provider, just submitted a new rate filing for its plans in the individual market for calendar year 2017, more than doubling the rate increases it proposed in May to a whopping 28 percent for its HMO and 37 percent for its PPO business.
We believe that CareFirst's new request raises a number of questions about the legality, fairness and validity of the filing. Perhaps most important, however, is the serious impact this will have on the wallets of Maryland consumers. These increases would bump up monthly premiums for CareFirst's BlueChoice Silver Plan and PPO Silver Plan to $382 and $478, respectively. For each plan, that adds up to over a $1,000 increase from the previous year. For the hundreds of thousands of Maryland consumers who purchase their own health insurance coverage and are already struggling to afford their plans, those increases will be devastating.
The U.S. Bureau of Labor Statistics estimates that on average, Americans spend about 4 percent of their annual income on health insurance. However, consumers in Maryland who purchase their own insurance pay more than the average. Last year, those with incomes just above the level to qualify for a subsidy who purchased a low-cost CareFirst BlueChoice Silver Plan spent between 6 and 10 percent of their annual income on health insurance. With the new proposed rates from CareFirst, a family of four making $102,000 — slightly above the income to qualify for a subsidy — would pay between 10 percent and nearly 17 percent of their annual income for the lowest cost bronze or silver plans offered by CareFirst.
A 2015 Kaiser Family Foundation poll found that about 42 percent of Americans say it is "somewhat or very difficult" to afford health care — more so than monthly utilities, rent or mortgage, food and transportation. If consumers are already struggling to afford health insurance, raising their premiums will only add to their financial burden.
The Maryland Insurance Administration and Commissioner Al Redmer should pay particular attention to CareFirst's assumptions on trends in the cost of care, on which it based the requested rate increase. Consumer Health First commissioned an analysis of CareFirst's initial rate request, and we found little justification for the increases it originally requested — 12 percent for its HMO plan and 16 percent for the PPO business. CareFirst's trends were significantly higher than other carriers. As the state's largest carrier, it should be more effective at controlling costs than smaller companies, not less.
Additionally, CareFirst has based its updated increase requests on claims filed in the first five months of 2016. These claims, representatives say, show that new enrollees are not healthier, and therefore not cheaper to insure. However, it took until June of this year to completely analyze CareFirst data from 2015. Therefore, we question the reliability and validity of raw data for 2016.
Meanwhile in D.C., the insurance commissioner has frozen CareFirst's rates in the District. Given the magnitude of this new request, we have to ask: Are Maryland consumers being asked to counterbalance, at least in part, what CareFirst believes to be inadequate rates in D.C.?
Any rate increase puts consumers in a bind — especially those who are already struggling to afford health insurance. This last-minute increase only makes the situation worse. A new public comment period on the CareFirst rates will be open until Sunday, with a new hearing scheduled for Monday. Comments can be made at the MIA Rate Review website. We urge consumers to make their voices heard and share their concerns with the MIA.
The most vulnerable Maryland consumers, those without an employer to negotiate health insurance prices or programs to control costs, depend upon regulators like the MIA to hold carriers accountable. They trust regulators to have their best interests at heart. We urge the MIA and Commissioner Redmer to remember this — and ensure that thousands of Marylanders are not unduly burdened by rising health insurance premiums that are unjustified.
Leni Preston is president of Consumer Health First (formerly Maryland Women's Coalition for Health Care Reform). Her email is firstname.lastname@example.org.