CareFirst asks for 50 percent Md. rate increase in 2018

Carefirst CEO Chet Burrell (File)

CareFirst BlueCross BlueShield announced that it requested 50 percent rate increases for the individual market in Maryland for 2018 just hours after the U.S. House of Representatives passed a bill that Republicans said would reform the Affordable Care Act and make health insurance more affordable for consumers.

The 50 percent increase applies to CareFirst HMOs. CareFirst requested a 59 percent rate increase for its PPO insurance pool.

CareFirst’s rates had been inadequate and the rate increase will help cover a pool of people that is getting sicker, said Chet Burrell, the insurer’s CEO.

“We start from a position here of being under water,” he said. “What we’re seeing is greater sickness levels. Gradually the pool of people is becoming sicker.”

If people were getting sicker at the normal rates and enough healthy people were in the pools, rates would only rise by around 15 percent, he said. But those problems have been compounded by the lack of enforcement of the individual mandate of the Affordable Care Act and could be further threatened if the federal government stops paying cost sharing reduction subsidies.

Already in Maryland, only about one-third of consumer receive subsidies, leaving those without subsidies ready to feel the “full brunt” of the rate increases.

If the government were to stop making those payments, CareFirst would have to increase its rate request by another 10 to 15 percent Burrell said.

“The current approach on that at the federal level has been to say they are not going to enforce the individual mandate,” he said. “We think the effect of that has been encouraging healthy people not to enroll.”

The company’s pool could be in the beginning of a death spiral, he said.

“We’re worried that the early stages on that may have already begun,” Burrell said.

A typical healthy person costs the insurer $50 on average while a sick person with a common cluster of problems, like heart disease and diabetes, could cost $5,000 a month. Burrell said the company has too many of the sicker people to continue to offer lower rates.

“It leaves you with an overall mix that is sicker and that becomes a death spiral,” he said. “In the end, you can’t raise the rates enough to cover the burning houses that are the only ones left that you insure.”

The Maryland Insurance Administration also released rate increase requests for Maryland’s other individual market insurers.

Cigna requested an average increase of 37 percent, Evergreen request 28 percent and Kaiser requested 18 percent.

CareFirst gets the lion’s share of the individual market, with around two out of every three consumers, Burrell said.

The Maryland Insurance Administration will hold hearings for the rate increases next month with final decisions expected in late summer.

Health Care Bill

Rep. Andy Harris, the only Republican member of Maryland’s Congressional delegation voted for the Republican bill Thursday after opposing the original incarnation of the bill because he feared it would raise premiums.

“The original version did little to lower premiums. In fact, premiums might have gone up,” he said. “I believe if the state constructs its high-risk pool correctly, it will actually lower premiums for high rates.”

Harris said he was swayed by an amendment that would add $15 billion to high-risk pools, reimbursing insurers for the most costly individuals.

If the bill passes the Senate and is signed by President Donald Trump, Harris called on Gov. Larry Hogan to call a special session of the legislature to reinstate the high-risk pools previously used in Maryland.

“If the legislature acts promptly, I believe we can have an impact on the premiums that were just published,” he said. 

Maryland Insurance Commissioner Al Redmer said his agency would not ask the insurers for contingency rates now that the Republican proposal has passed the House.

“The rates are in and if anything changes, we will give the insurers a chance to modify their rates,” he said.

If the Senate acts quickly, a special session of the Maryland legislature could let them introduce lower rates, Harris said.

“If the legislature acts promptly, I believe we can have an impact on the premiums that were just published,” he said.

While his agency is watching the developments in Washington, changes to the Affordable Care Act are necessary for the law to survive, Redmer said.

“The status quo is not a solution,” he said. “The Affordable Care Act needs to be fixed. … There needs to be changes made or the Affordable Care Act, in my opinion, will not survive.”

But Burrell disagreed that the Republican proposal would help decrease premiums and said it could be disastrous.

“I think the bill that just passed the House, if that bill were literally passed in the Senate and became law, would be catastrophic,” he said. The cutbacks in Medicaid would cause massive disenrollments. Many many people would lose coverage.”

He also said the high-risk pool proposals that swayed Harris’ vote would be insufficient to stabilize the market.

“The provisions that relate to separate high-risk pools, those proposals have not worked in the past,” he said. “The coverage for those is woefully inadequate.”

Changes likely in the Senate

Opponents of the American Health Care Act are now looking to the Senate to defeat the measure, or at least substantially change it.

It’s far from clear what the measure will cost. The bill was originally “scored” in March by the Congressional Budget Office, but after it was pulled from the House floor and later amended to appease conservative lawmakers, its financial implications were not assessed by the budget office.

Interest groups like the American Medical Association and the Maryland Hospital Association originally opposed the bill in March and said that without a new score they could not revise their position.

These groups have not started to prepare for life under the American Health Care Act yet. They believe there’s a significant chance the bill undergoes significant changes in the Senate, if it doesn’t die, said Jim Reiter, a spokesman for the Maryland Hospital Association.

Burrell also expected the Senate to change the proposal.

“We don’t think the chances are good that the Senate will approve what has been sent to them,” he said.

The House passed the Republican proposal under the rules of budget reconciliation, which would require only 51 votes in the Senate to pass, rather than the filibuster-proof 60. Republicans in the Senate currently control 52 seats.

However, if a revised Congressional Budget Office score, expected next week, shows the bill adds to the deficit, it could violate the reconciliation rules.

Already, Republican senators from states that have expanded Medicaid have expressed concerns about the current bill, particularly a phase-out of that Medicaid expansion.