After years of double-digit rate hikes, Hawaii Medical Service Association is proposing a modest 2.7 percent increase for members with Obamacare plans in 2019, though Kaiser Permanente Hawaii is seeking to boost premiums an average 28.6 percent.
The reason for the huge difference in next year’s health insurance rates under the federal Affordable Care Act is unclear. The preliminary rate changes were made public Wednesday by the U.S. Department of Health and Human Services. The proposals are under review with final rates set to come out later this month.
“The difference in the requested increases reflects the continual challenge of the ACA marketplace. We hope on one hand, there is stabilization of rates by one insurer, while we are reviewing to see why high rate increase requests continue from the other,” said state Insurance Commissioner Gordon Ito, who regulates health plan rates. “Impacts to the rates may be due to risk adjustment estimations, denigration of the morbidity of its risk pool and higher out-of-network costs.”
| ACA RATE HIKES
HMSA
2019 2.7% *
2018 19.8%
2017 35.0%
2016 27.3%
Kaiser
2019 28.6% *
2018 24.1%
2017 25.9%
2016 34.4%
Source: Hawaii Medical Service Association
* (proposed)
|
Adjustments to the rate filings are likely, he added.
“The Insurance Division will ensure rates meet the statutory requirement that rates cannot be excessive, inadequate and unfairly discriminatory,” Ito said.
In its filing, Kaiser Foundation Health Plan Inc. said it is seeking to raise premiums 18.8 percent to 40.8 percent due to changes in benefits from 2017 and 2018 for certain plans and “refinements in the application of the model used to develop pricing factors.”
As of December 2017, Kaiser covered 13,558 people who will be affected by the new rates, which begin on Jan. 1.
“The experience of this block of business has not been favorable, with claims costs exceeding premiums in 2017 by over 35 percent,” Kaiser said in the filing, adding that it collected $52.4 million in premiums, but paid $72.7 million in medical claims in 2017.
“Given the magnitude of these losses, the filed 2018 rate increase is not expected to be sufficient to cover medical and other costs and risk adjustment transfer payments associated with Kaiser’s ACA individual insurance block,” said Kaiser, the state’s largest healthmaintenance organization — both an insurer and medical provider. “The change in medical costs and utilization of services between the 2016 and 2017 claims experience was more significant than projected in the 2017 filing. This is one of the driving forces of the overall rate increase for 2019.”
HMSA said its rate changes reflect “an improvement in the morbidity of the ACA risk pool” and projected utilization, among other factors.
A number of insurers across the nation are requesting smaller ACA increases for 2019 as health insurance markets stabilize, following massive rate hikes in recent years. The state approved an average 19.8 percent rate hike for HMSA and a 24.1 percent increase for Kaiser’s Obamacare health plans this year. In 2017, HMSA raised premiums 35 percent, while Kaiser’s rates jumped 25.9 percent following 27.3 percent and 34.4 percent increases in 2016, respectively.
