Health insurers covering nearly 211,000 Louisiana residents under “Obamacare” plan to increase rates an average of 16.4 percent to 30.75 percent in 2017.
The premium hikes are necessary to offset enormous losses the plans have racked up. Insurers’ filings with the state Insurance Department cite enrollees’ increased use of services, higher costs of benefits and prescription drugs, and lower payments from a federal program designed to protect insurers from unexpectedly high claims and losses.
Blue Cross and Blue Shield of Louisiana plans to raise rates an average of 20.5 percent to 28.3 percent for five individual plans covering more than 134,000 people, spokesman John Maginnis said.
“About 89 percent of our on-exchange members receive federal subsidies,” Maginnis said. “If their income doesn’t change, their portion of the premium won’t change either.”
The other plans, their proposed increases, and the number of people they cover are:
Aetna Health Inc., 16.4 percent, 3,660 people.
Humana Health Benefit Plan of Louisiana Inc., 29.5 percent, 30,901 people.
Vantage Health Plan Inc., 30.8 percent; 42,001 people.
Freedom Life Insurance Co. of America and Enterprise Life Insurance Co. of America requested rate increases of 17.4 percent, although neither covers any members in Louisiana.
In April, UnitedHealth announced it would no longer offer Affordable Care Act coverage, in Louisiana and most other states. UnitedHealth said those plans racked up losses of more than $1.1 billion nationally over two years. UnitedHealth’s individual plans covered about 29,000 people in Louisiana, who will have to choose another insurer for 2017.
“We have a lot of people who have not had insurance in the past, and they’ve had some pent-up conditions that needed some initial treatments,” Vantage spokesman Billy Justice said. “So the loss ratio is unusually high.”
But Vantage hopes that in 2017 the company will approach the ceiling of where premiums need to be, partly because by then consumers will have taken care of issues that may have gone years without treatment, he said. Still, that doesn’t mean insurers are out of the woods yet.
The federal government-provided reinsurance — the insurance for insurance companies against excessive claims — goes away in 2017. Companies will have to take on that expense, he said. Brand drugs and treatments for hepatitis C, cancers and prosthetics are all expensive and growing more so.
“I will say this. While this has been a very rough start for all of the insurance companies, we have seen thousands of Louisianans able to obtain health insurance who could not afford it in the past,” Justice said. “And these are people who have had jobs and are working.”
The most recent report from the federal Centers for Disease Control and Prevention show Louisiana’s uninsured rate fell to 9.7 percent in 2015, a historic low.
Maginnis said Louisiana Blue Cross has lost more than $200 million over the past three years on its Affordable Care Act plans, with close to $60 million of that in 2016.
Blue Cross laid much of the blame for those losses on the Affordable Care Act’s design.
Among other things, the law doesn’t do enough to get healthy people to enroll, which means plans cover higher percentages of people who need more care. Individuals can also enroll outside of the open enrollment period under “special circumstances,” but they don’t have to prove they meet those requirements: marriage, job loss, divorce, new birth, etc.
In addition, Blue Cross says roughly $100 million of its total losses resulted from a lack of federal funding from a program that was supposed to limit losses and also limit gains on the Affordable Care Act’s plans.
In 2014 alone, the federal government didn’t pay insurers $2.5 billion promised under the program to balance out those suffering losses against those making money. The payments that were made didn’t get to insurers until mid-2015, well after the insurance companies had to turn in their rates.
In March, Highmark, a publicly traded Blue Cross plan based in Pittsburgh, sued, saying the federal government owes it $223 million in safety-valve payments.
Maginnis said the Louisiana Blue hasn’t decided whether it will pursue legal action to recover its funds.
Louisiana law doesn’t allow the state Insurance Department to regulate health insurance rates, but the department reviews rate increases over 10 percent. In the past, it has pressured insurers to reduce excessive rate hikes.
About 89 percent of the nearly 211,000 Louisiana residents who received coverage in 2016 through federal marketplace plans received subsidies, according to the U.S. Department of Health and Human Services. The average premium for Louisiana residents who received tax credits was $86 per month in 2016, down from $97 in 2015.
HHS officials say this proves consumers didn’t see double-digit percentage rate hikes. However, some critics say the plans’ deductibles are so high that consumers are basically uninsured. The only way these people will meet their deductible is if they suffer a catastrophic illness or accident. In May, the American College of Emergency Physicians released a report saying affordable policies cover very little and emergency room patients don’t understand that until they get the bill.
Follow Ted Griggs on Twitter, @tedgriggsbr.