Three Ohio companies — including the state’s largest health insurer — have proposed double-digit rate increases for the health plans they plan to sell next year in Ohio’s government-run health insurance marketplace, mainly to cover higher-than-expected medical costs for sicker than anticipated policyholders.
But 11 of the 14 companies selling health plans in Ohio’s marketplace today fall under the 10 percent threshold and some may seek reductions for 2016.
“We are excited about the third year of open enrollment after a successful 2014,” said Scott Streator, senior vice president at CareSource — a downtown Dayton-based health insurer with more than 60,000 marketplace members in Ohio. “While it’s early to provide final rate adjustments, we have filed to keep our premium increase, on average, below 3 percent in Ohio for two years in a row.”
The federally run health insurance exchange was established by the Affordable Care Act, otherwise known as Obamacare, and has marketplaces in 36 states, including Ohio.
CareSource and Dayton-based hospital operator, Premier Health, which also sells health plans in the marketplace, have both submitted rate proposals that are currently under review by the Ohio Department of Insurance and have not been made public.
Insurers seeking rate increases of 10 percent or morr were required by law to post their proposed rate increases with an explanation for the rate hikes by Monday. In Ohio, the group included Aetna, HealthSpan and Med Mutual.
Cleveland-based Med Mutual, for example, is seeking a 14.5 percent average rate increase for individual and family plans next year after losing more than $20 million in the marketplace in the first full year of coverage in 2014, according to a rate request sent to the Ohio Department of Insurance.
The largest health insurer in the state with more than 1.6 million customers — including more than 40,000 marketplace members — collected $151 million in marketplace premiums in its first full year of coverage in 2014 but paid more than $177 million in claims, according to the filing.
“These rate proposals are specific to each company, and they reflect how each company did in attracting healthier, less costly customers,” said John Bowblis, a health economist at Miami University.
Despite the sizable premium increases eyed by some insurers, final rates — which will be published no later than Nov. 1 — are likely to be lower than the ones requested.
“The rate review process kicks off an important set of steps designed to provide consumers and others the opportunity to weigh in on proposed rate increases of 10 percent or more,” said Andy Slavitt, acting administrator for the federal marketplaces, accessible online at HealthCare.gov. “These specific rates will be subject to vigorous rate review and revision and the final rates consumers will see this fall will reflect the breadth of choice and competition in the marketplace.”
Trey Daly, Ohio director of the pro-Obamacare group, Enroll America, said research shows most marketplace consumers are price sensitive, noting that that nearly 30 percent of HealthCare.gov consumers who re-enrolled in coverage this year chose different plans after shopping around, according to the U.S. Department of Health and Human Services.
The fear of losing business as a result of pricing coverage too high will keep premium rates in check, according to Daly.
“Part of the whole idea of the marketplace is creating competition, and that competition will lead insurers to moderate their premium increases so they remain competitive,” he said.
Even if higher rates are eventually approved for some marketplace policyholders who want to keep their plans, federal tax credit subsidies designed to offset the cost of coverage will blunt the impact on those consumers.
The subsidies, which are available only through the marketplace to most people who don’t have job-based insurance, are based on income — up to $46,680 a year for an individual, and $95,400 for a family of four.
And subsidies will be adjusted to accommodate rate increases so that Obamacare policyholders pay the same percentage of their income on premiums from one year to the next, Daly said.
“We don’t know ultimately how the proposed rate increases will affect the tax credits,” he said. “But if premiums increase, the financial assistance that’s available to people will also increase so that you should never be paying more than 2 percent of your income toward premiums.”
About 85 percent of the 234,341 Ohioans who enrolled in private plans through the Ohio marketplace this year were eligible for premium subsidies, according to government figures.