With over a full year's worth of claims data, insurance companies are following up on the 2015 plans with yet another round of rate increases for the state of Oregon. Every insurer with the exception of Kaiser Permanente has made a request for increased premiums for 2016. Particularly troubling for insurance policyholders is the magnitude of those increases with a number of insurers with a larger policy base requesting weighted average increases of greater than 25%.
|Company||Members||Avg Change||Min. Change||Max. Change|
|Atrio Health Plan||196||18.4%||14.8%||19.0%|
|Moda Health Plan||102,393||25.6%||12.67%||54.12%|
|Oregon Health Co-op||9,985||5.3%||1.0%||8.6%|
|Providence Health Plans||24,132||8.7%||3.5%||10.1%|
|Regence Blue Cross Blue Shield||24,609||12.3%||29.5%||-11.1%|
Moda health entered the 2014 enrollment period with some of the lowest prices available in the state. Unfortunately for consumers and Moda these prices were simply too good to be true. Continuing on a trend that began last year when it was approved to raise rates by 12.5%, Moda is again filing for an increase with the overall change pegged at 25.6%. As a result, the company expects enrollment among its plans to drop significantly, reducing its 100,000+ membership base to around 72,000 for 2016.
Looking further at the request shows even greater detail about the state of the health insurance market. Within the policy base of each carrier are significant variations to what consumers will actually experience. Moda consumers might see increases from anywhere between 12.67 percent to an incredible 54 percent assuming these rates are approved.
In the accompanying correspondence, the insurers also discuss the factors leading to these submissions. The main culprit for the increased rates can be attributed to widespread underestimation with regards to expected loss levels for marketplace enrollees. Consumer should recall that when insurers first submitted their plans for the 2014 open enrollment period, they were doing it with almost no data on the health and expense profiles of potential enrollees.
Insurers entering the marketplace priced plans with the expectation that claims related losses would account for around 80% of premiums. With little to go on many of the more expensive insurance companies suggested that their cheaper counterparts were overly aggressive with their marketplace pricing, and such level would not be actuarially sustainable. The claims experience from the entirety of 2014 appears to validate this belief. Instead of claims related loss levels of around 80%, the companies reported loss levels of 160 to 224 percent of premiums. Marketplace enrollees ended up much sicker and more costly than insurers had anticipated.
The final rate changes will in most likely be reduced from the levels of these initial filings. Rate requests in the state of Oregon must be approved by the department of insurance and have historically come in lower during the final adjustments. The requests however do show a troubling sign regarding the pricing levels for the exchange going forward. Insurance companies with high loss levels are still benefiting from reinsurance and risk corridor payments that mitigate premium and claims levels.
These programs have helped to artificially lower the costs borne by the insurance companies and have made moderated the impact of rate increases. These programs will end next year, after which the insurance companies will need to price plans to be sustainable with actual costs. This could prove tricky if the cost trends indicated in the filings continue going forward. Oregon health insurance consumers could see even greater hikes a year from now.