Blue Cross Blue Shield of Alabama has filed with Alabama's insurance regulators requesting an increase on the company's marketplace plan premiums by 28 percent. The insurer's plans currently cover 175,000 members in Alabama and is the first in the state to submit this year's rate request. The other two carriers Humana and United Healthcare have yet to file but are expected to do so soon.
The reported 28 percent increase undersells how much plan premiums might actually be increasing as it used the weighted average of existing policy holders. The actual experience among consumers with Blue Cross Blue Shield Plans will actually vary significantly, with the plan requesting increases between 4 and 71 percent in 2016. The higher tiered Gold and Platinum plans will likely be hit the hardest with the Blue Choice Platinum, the company's most comprehensive offering, being pegged with the 71 percent increase next year.
|Plan||2016 Increase||Projected Member Months|
|Blue Choice Platinum||71%||62,900|
|Blue Access Gold||54%||137,000|
|Blue HSA Gold||37%||11,800|
|Blue Value Gold||30%||4,200|
|Blue Secure Silver||24%||338,000|
|Blue Saver Silver||6%||47,800|
|Blue Value Silver||27%||1,286,400|
|Blue Saver Bronze||8%||206,000|
|Blue HSA Bronze||4%||40,000|
Despite the relatively high premiums in the Gold and Platinum tiers it is clear that the company severely underestimated the costs from its associated membership base. While the insurance company was able to maintain a Medical Loss Ratio (MLR), the percentage of premiums paid out in claims, of 89 percent in 2014, this year BCBS projects an MLR of over 100 percent this year. In effect Blue Cross Blue Shield will be paying out more in benefits for its customers than it will collect in premiums this year.
Expect Much Higher Premiums and Lower Benefits
The skew in rate requests towards the higher metal tiers is a signal that adverse selection is occuring during the plan selection process, with sicker and more costly patients flocking to the higher benefits policies. The relatively larger increases in Gold and Platinum plans will also present a problem for consumers during this upcoming renewal period. Federal subsidies are tied to the benchmark silver plan, with the amount of tax credits tied to the cost of this policy. In 2015, the Blue Value Silver was the benchmark for most of Alabama.
With the Gold and Platinum price hikes increasing at a much faster pace, it will be impossible for the federal tax credits to keep pace. Consumers currently enrolled in these plans should expect their out of pocket monthly costs to balloon even further. While 2016 benefits are still unreleased, these premium increases are likely to be coupled with decreases in benefits as deductibles, copays and other out of pocket contributions rise.