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Highmark's Obamacare rates could jump up to 24 percent in 2018

Wes Venteicher
| Friday, July 21, 2017, 3:36 p.m.
The Highmark sign atop Fifth Avenue Place in downtown Pittsburgh.
Keith Hodan | Tribune-Review
The Highmark sign atop Fifth Avenue Place in downtown Pittsburgh.

Highmark Inc. is seeking some of the largest premium increases in the state in 2018 for individual health plans the insurer sells on the Affordable Care Act's marketplace, averaging up to nearly 24 percent, according to Insurance Department rate filings published Friday.

The Pittsburgh-based insurer requested average increases of 9.3 percent to 23.9 percent across the state, according to the filings . UPMC Health Plan requested increases of 3.1 percent to 13.14 percent, the filings show.

Spokesman Aaron Billger said Highmark's requested rate hikes are needed to cover the cost of treating people with the plans, who tend to be older and have more chronic conditions than people with employer insurance.

UPMC Health Plan chief actuary John Wisniewski said the increases account for medical inflation and other factors, including the return of a health plan tax of about 3 percent that the ACA suspended for the first years of the marketplace, which launched in 2014.

The five insurers that sell ACA plans in Pennsylvania are requesting average increases of 8.8 percent for individual plans, according to an Insurance Department news release. Insurers requested average increases of 6.7 percent for small group plans, according to the release.

The department may approve, deny or adjust the rate changes insurers requested. Most people who buy the plans qualify for tax credits that lower their premiums. The income-based subsidies are structured so people would pay smaller increases than those the department approves.

Next year's requested increases are smaller than the hikes of previous years. Premiums jumped an average 33 percent from 2016 to 2017, an increase Insurance Commissioner Teresa Miller called a one-time correction to stabilize the markets. The Insurance Department didn't average the increases from 2015 to 2016, but several were more than 20 percent.

“Pennsylvania's individual market is stabilizing, and the current rate requests we see, which are in line with the annual trend in medical costs, are proof of this,” Miller said in a news release. “But that stability is not absolute. For months, I have asked Congress and the Trump Administration to help stabilize the individual market rather than trying to undermine the entire law, which will only hurt the real Pennsylvanians who benefit from the law.”

If the federal government eliminates insurer payments that reduce costs for some of the lowest-income policyholders, the statewide average could increase to about 20 percent, according to the release. If the government eliminates those payments and doesn't enforce the requirement that everyone have insurance, the average increase would jump to 36 percent, the release states.

Highmark lost about $148 million on the plans in calendar year 2016, the filings show, bringing the insurer's total losses in the ACA marketplace to more than $900 million since the markets launched. Highmark set some of the lowest rates in the country when the markets launched and then found the people who bought the plans were sicker than the insurer expected. Billger said the company aims to break even on the plans in 2018 with the proposed increases.

“Statewide, we have seen a significant turnaround in financial performance for the ACA line of business,” he wrote in an email. “But right now, we are only in July and it's difficult to estimate what claims may look like for the remainder of the year.”

UPMC Health Plan lost about $55 million for the year, according to the filings.

Wisniewski said he expects the plan to break even in 2018 and to be sustainable over the long term.

UPMC expects annual medical costs to go up about 7 percent in 2018, according to the filings, while Highmark anticipates the costs will go up about 10 percent.

Wisniewski said the health plan has approached the ACA population the way the insurer has approached its Medicaid members, working to coordinate care with doctors and treat chronic conditions before the conditions require costly emergency room treatments or hospital admissions.

“Whereas some of the medical costs going forward are population, some of it is what you are doing to prevent those costs,” he said.

Highmark officials have said they are working toward the same goals.

The Senate is expected to vote on a bill next week that would repeal much of the federal health law, often called Obamacare. The measure so far lacks enough Republican votes to pass, but some Republican senators have been meeting to try to find a way to move it forward.

Changes could prompt insurers to leave the market. The companies have until September to decide whether they will sell the 2018 plans, according to the release.

Premiums are finalized in the fall. The open enrollment period during which people may buy the plans at healthcare.gov runs from Nov. 1 to Dec. 15.

Most people get insurance through their employers. Their premiums are not affected by the ACA's individual marketplace.

Billger said the ACA premiums in Pennsylvania are still among the lowest in the nation.

Wes Venteicher is a Tribune-Review staff writer. Reach him at 412-380-5676, wventeicher@tribweb.com or via Twitter @wesventeicher.

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