The honeymoon is over for state and local health insurers participating in Ohio’s health insurance marketplace, where the expiration of government-mandated cost controls is expected to drive significant increases in premium prices next year.
The so-called reinsurance and risk-corridor programs created under the Affordable Care Act to protect insurers against individuals with high medical costs will expire at the end of this year — leaving insurers to cover a shortfall of nearly $8 billion a year under the reinsurance program alone. The program redistributes funds collected from all marketplace insurers to insurers with members with extremely high medical claims.
Without the program, many health insurers, including downtown Dayton-based CareSource, will be forced to raise premiums next year to cover high-cost claims on their own. And that doesn’t include other factors impacting rates, such as overall health care price inflation, which is projected to rise anywhere from 3-7 percent next year.
“We are seeing some upward pressure on rates, as is everyone in the marketplace,’’ said Steve Ringel, president of the Ohio market for CareSource, which sells marketplace plans in Ohio, Indiana, Kentucky and West Virginia. “Our (request for premium increases for 2017 coverage) are in the low double-digit range…although it varies by state. I think industry-wide, you’re going to see double-digit (premium) increases, not only in Ohio, but across the country.”
Hefty rate increases could play a factor in enrollment for next year, especially for the small fraction of marketplace customers who do not receive federal tax-credit subsidies to offset premium costs.
“We would expect a little bit slower growth this year with the pricing impact,” said Ringel, who noted the attention-grabbing presidential election taking place in November could also hold back marketplace enrollment for 2017, which begins Nov. 1.
Still, Ringel said, CareSource is satisfied with its position in the marketplace, where it had about 124,000 customers in all four states at the end of open enrollment for 2016, including about 76,000 in Ohio.
In addition, the company, which is primarily a nonprofit Medicaid managed care provider, is well positioned to compete for new marketplace customers, even though rates are certain to go up more in 2017 than they did in 2016.
“Our goal is still to be the lowest-cost or second-lowest cost provider in the marketplace,” Ringel said, noting that CareSource will also offer two new plans with little or no increase in subsidized premiums. “Our cost structure is lower than our for-profit competitors, which allows us to do that. We’re providing an affordable and easy-to-understand product to these consumers, especially the consumers who receive subsidies.”
Critics of the Affordable Care Act point to rate increases as evidence the health law’s insurance marketplace isn’t sustainable financially and that premiums will rise even higher for consumers.
But the more than 80 percent of marketplace consumers who receive premium tax credits in Ohio and across the country will be protected from premium increases so long as they stay enrolled in one of the lower-cost plans in their area, said Trey Daly, Ohio director for Enroll America — a national organization working to get the uninsured signed up for coverage.
“Generally speaking, as premiums go up the tax credits also go up,” Daly said. “Hopefully, that will reduced or eliminate any increase in premiums for people who qualify for the tax credits.”
Of the more than 266,000 Ohioans who signed up for marketplace plans by the end of open enrollment for 2016, about 88 percent, or nearly 235,000 consumers, were eligible to receive premium tax credits, according to figures from the U.S. Department of Health and Human Services.
In addition to subsidies, consumers have other options to take the sting out of potential premium increases, Daly said.
“The other option is that people can shop around during the next open enrollment period, and try to find plans with lower premiums,” he said. “Over the last two years, we’ve seen more and more people opt to shop around rather than let plans automatically renew. And the folks who did that generally saved money.”
The Ohio Department of Insurance is still reviewing initial rate requests for health plans inside and outside of state marketplace in 2017 and hasn’t posted them on the agency’s website yet.
But it’s likely Ohio consumers will see a wide range of requests for rate changes and new product approvals across insurers and geographic areas, and, as in previous years, in some cases approved rates will likely end up being lower than proposed rates.