Maine’s top insurance regulator plans to approve double-digit rate increases for all three of the state’s providers of health insurance under the Affordable Care Act.
The increases for 2018 would be approved if the rate requests were revised to amounts slightly lower than the health insurers requested, said Eric Cioppa, superintendent of the Maine Bureau of Insurance, in written orders posted Thursday to the bureau’s website. Cioppa said he would approve revised increases of 27.1 percent for Harvard Pilgrim Health Care, 17.5 percent for Maine Community Health Options and 18.8 percent for Anthem Blue Cross and Blue Shield.
In its June filings, Harvard Pilgrim requested an initial 39.7 percent rate increase that it later lowered to 29.2 percent, Community Health requested a 19.6 percent rate increase and Anthem sought an increase of 21.2 percent.
All of the insurance providers were seeking significant rate hikes for their individual plans, in part because of the political uncertainty surrounding the ACA.
The health care act initiated under former President Barack Obama was the target of multiple repeal and replace efforts this summer by Republicans in Congress, all of which failed. Providers were especially concerned about enforcement of the individual mandate, the rule that everyone needs to have health coverage, and the threat to subsidies for cost-sharing reduction as added risk factors for their operations.
A total of about 91,000 Mainers purchase health coverage from the three insurers on the ACA’s individual marketplace.
Community Health President and CEO Kevin Lewis said the co-op will revise its 2018 rate request according to Cioppa’s instructions.
“His decision and order is a very thoughtful response in a complex environment with a lot of moving parts,” Lewis said.
He noted that Cioppa agreed with most of Community Health’s assumptions about what its costs and revenue requirements would be in 2018, and that he only disagreed with assumptions it made about the impact of the current political turmoil on the size and average health of next year’s pool of ACA-insured Mainers.
FORCED BY RISING COSTS
Anthem spokesman Colin Manning responded to a request for comment via email, saying only, “We look forward to continuing the regulatory process.”
Harvard Pilgrim did not respond Thursday to a request for comment.
In his decision, Cioppa said he found all three of the rate requests “excessive,” but felt compelled to approve revised increases because of escalating health care costs and other market trends.
“One of my highest priorities as superintendent of insurance is to do everything in my power to look for solutions that will ease the burdens on consumers,” Cioppa wrote in his rulings. “This includes continuing the bureau’s dedication to strict enforcement of the statutory prohibition of excessive health insurance rates. Nevertheless, premiums must be adequate to pay claims and expenses, so I cannot approve premiums that fail to keep pace with the rising cost of health care. … Therefore, although I am rejecting the rates that (all three providers) filed, I must nevertheless reluctantly approve another double-digit increase next year for Maine consumers.”
Last year, the bureau approved rate increases for 2017 of 25.5 percent for Community Health, 21.1 percent for Harvard Pilgrim and 18 percent for Anthem. Most policyholders’ out-of-pocket costs associated with those increases were offset by government subsidies.
Steve Butterfield, policy director of Consumers for Affordable Health Care, was a vocal skeptic of the requested rate increases during July hearings before Cioppa and a panel of insurance experts. On Thursday, Butterfield said that Cioppa had a difficult task to evaluate the insurance carriers’ rate requests at a time when health care costs are rising and the ACA is facing “chaos, uncertainty and instability.”
“One of the things that really jumps out at us is just what an unusual time it is to try to be figuring out what the insurance landscape is going to look like next year,” Butterfield said. “I think that frustration is reflected in (Cioppa’s) decisions. … I was glad to see that he reined in all three providers.”
PROFITS AND RISKS
Following rate hearings for Community Health, Anthem and Harvard Pilgrim, the Maine Attorney General’s Office submitted written arguments to Cioppa on each carrier’s request. The office’s role in the hearings was to represent the interests of consumers.
Assistant Attorneys General Christina Moylan and Scott Boak said they had no objections to the rate increase being sought by Community Health, and that the nonprofit co-op had demonstrated a financial need for the increase it requested. They recommended approval of Community Health’s request for a “profit and risk margin” of 4 percent to help build up its cash reserves.
However, they said Anthem had failed to meet its burden of demonstrating that the rate increase it requested was not “excessive or unfairly discriminatory.” In particular, they objected to the for-profit insurance provider’s request for a profit and risk margin of 4.5 percent based on “enhanced risks due to the uncertainty of the ACA.” Moylan and Boak recommended that Cioppa approve a margin of no more than 3 percent for Anthem.
They said Harvard Pilgrim did not provide enough information for them to assess whether the nonprofit insurance provider’s requested rate increase was excessive. Still, they applauded Harvard Pilgrim for reducing its requested rate increase based on additional data from the first quarter of 2017. Moylan and Boak urged Cioppa to closely review the insurance carrier’s arguments to “ensure that they do not result in excessive rates.”
IF GOVERNMENT CUTS PAYMENTS
Each provider also was asked to submit an “alternative” rate request, to be implemented only if the federal government were to eliminate the reimbursement for cost-sharing reduction. In his rulings, Cioppa approved a 36.7 percent alternative rate increase for Harvard Pilgrim. The insurer had requested an alternative rate increase of 39 percent.
Cioppa approved a 19.9 percent alternative rate increase for Anthem. The alternative rate increase sought by Anthem was 30.7 percent.
He did not approve a specific alternative rate increase for Community Health, but rejected its request for a range of increases from 10 percent to 45 percent depending on the deductible level and type of contract.
According to Cioppa’s rulings, Community Health has about 41,400 individual plan policyholders in Maine, Harvard Pilgrim has about 20,800 and Anthem has about 28,700.
Average individual plan premiums in Maine have shot up more than 50 percent since the ACA was implemented in 2010, and they have more than doubled nationally.
J. Craig Anderson can be contacted at 791-6390 or at: