Those who buy health plans through New York State's insurance marketplace will face extremes next time they shop – steep double-digit increases next year in some cases and modest price changes in others.
One major insurer – BlueCross BlueShield of Western New York – seeks an average 48.8 percent increase in 2018 for individual health plans sold on the state's health insurance exchange, as well as those purchased directly from insurers. But another, Univera Healthcare, looks for an average increase of only 4.4 percent for its individual plans.
Insurance companies here and elsewhere say rising medical and drug costs are pushing up premiums. But insurers also attribute the larger increases to government fees, taxes and policies.
The rate requests filed with the state Department of Financial Services apply to private health plans that individuals buy and also plans for small groups of 100 or fewer people. The plans cover about 15,000 people in the eight-county Western New York region with individual policies, and 128,000 people insured in small groups. The requests do not apply to health plans for larger groups, self-insured groups, Medicare Advantage, Medicaid, or the state's Essential Plan.
Four insurers that sell health plans to individuals and small businesses on the exchange in this region requested the following average rate increases:
- Buffalo-based HealthNow New York, which operates locally as BlueCross BlueShield of Western New York: 48.8 percent for individual plans; 7.9 percent for small groups. On the high end, average monthly premiums for bronze plans would increase 58 percent from $352 to $555. The average silver plan would go up 51 percent from $422 to $639.
- Amherst-based Independent Health: 25.9 percent for individual plans, and 13.3 percent for small groups.
- Univera Healthcare in Amherst, a part of the Rochester-based Lifetime Healthcare Companies, which also operates Excellus BlueCross BlueShield: 4.4 percent for individual, and minus 9.5 percent small group.
- Fidelis Care New York, which has a large operations center in Getzville: 8.1 percent for individuals. The company does not offer small-group coverage to businesses.
If history is any indication, the state will likely cut some of the insurers' proposed premiums. But industry representatives say companies that have experienced repeated large reductions by the state are facing a significant gap between the costs of the plans and revenue from the premiums.
"We have a history of the state reducing rate requests, sometimes significantly. That has become its own trend in addition to the traditional underlying cost trends," said Leslie Moran, senior vice president of the New York State Health Plan Association.
The association contends the continued reductions in the rate requests threatens the financial stability of the state's insurance market.
"There is no reason to believe it won't happen again. If you're a health plan, you probably think that you better ask for more, figuring that it will probably be cut," she said.
BlueCross BlueShield, for instance, said it lost $15 million over the last three years in its individual and small-group plans.
"It's unreasonable to expect us to offer products that lose money," said Jared M. Gross, senior vice president of enterprise initiatives and analytics.
Driving the increases
About 83 percent of people nationwide – 59 percent in New York – who buy plans through online insurance exchanges operated by a state or the federal government receive premium tax credits to help pay for insurance. But the subsidies apply to only a small portion of the customers affected by these increases, according to the insurers.
The companies attributed much of the proposed increases in New York to rising medical and prescription drug costs, especially for newer, costlier specialty prescriptions to treat complex diseases, as well as state-mandated coverage for certain health services.
They cited an assortment of fees and taxes they pay to the state and federal governments, particularly the return of the Affordable Care Act's health insurer tax in 2018.
But perhaps the biggest target of insurer criticism is a provision in the Affordable Care Act, also known as Obamacare, aimed at leveling the playing field in states by having health plans with healthier and less costly members transfer funds to those with older and sicker members based on a formula. Some New York state insurers complain that a Department of Financial Services emergency regulation for 2017 and proposed regulation for 2018 significantly limits the benefit of the federal risk-adjustment policy. They contend the state regulation artificially caps the payments, putting unfair pressure on certain insurers to raise rates.
"It's like a clawback of the money, and it's driving more than half of our increases," said Julie Snyder, vice president for corporate relations at BlueCross BlueShield of Western New York.
Gross attributed half of the proposed increases at the Blues to the state's change in the risk adjustment process.
"It's messing with the competitive balance in the market," he said.
Officials at Univera and Independent Health also took aim at the risk-adjustment change.
"We are a plan with sicker members and have been a receiver of funds, but the changes have led to a 40 percent reduction in funds for this region," said Nora McGuire, senior vice president and chief marketing officer.
She said the change accounted for 12 percent of the proposed average increase at Independent Health.
Picking the right coverage
The News is seeking a comment from the Department of Financial Services, which is expected to approve rates by July 31. The agency typically posts proposed rates on its website, but had yet to do so as of Tuesday.
Except for Fidelis Care, individual plans sold on the exchange or directly to consumers represent a small portion of the total business of Western New York's largest health insurers.
"Each year, Fidelis Care proposes premiums for the individual marketplace that are designed to be as affordable and competitive as possible. Currently, Fidelis Care is the lowest-priced health plan in the Western Region," Allie Abbate, public relations manager, said in a statement.
"The individual marketplace has always been an extension of the Fidelis Care mission to reach those who need quality, affordable health coverage" she said. "During open enrollment this fall, we will continue to encourage local residents to compare their options and to choose the coverage that’s right for them."