Insurers file for lower rates as the individual market stabilizes

Carriers in Maryland’s individual health market have requested average rate decreases for the second straight year, signaling that after several years of steep rate increases a reinsurance program has stabilized the market.

Last year, carriers initially requested large increases. However, after the state negotiated a reinsurance program with the federal government, rates decreased by an average of more than 13 percent for 2019 plans.

On average, people with health insurance on the individual market will see a decrease in their premium costs. However, not all plans saw a decrease.

“I think (the reinsurance program has) a significant impact,” said Al Redmer, commissioner of the Maryland Insurance Administration. “I think that we are in certainly a much better place than we were in before the reinsurance and I hope we are going in a better direction.”

CareFirst BlueCross BlueShield and Kaiser Permanente are the two carriers with plans on the individual market, which covers about 202,000 people.

CareFirst filed for average rate decreases of 8.9% for its HMO plan. Rates vary by age, plan level and whether a plan member is a smoker. A 40-year-old nonsmoker in the Baltimore area would pay about $364 a month for an off-exchange silver-level plan.

CareFirst also filed for an average rate increase of 9.1% for its PPO plan. That plan would cost $693 for a 40-year-old nonsmoker who purchased an off-exchange silver plan.

Kaiser filed for an average rate increase of 3.9 percent for its HMO plan. A 40-year-old nonsmoker would pay around $366 for an off-exchange silver plan.

Last year, the state legislature and Gov. Larry Hogan created a state-based reinsurance program after years of double-digit rate increases led to fears that the market was entering a death spiral.

Brian Pieninck, CareFirst’s president and CEO, praised the reinsurance program.

“The proposed rates CareFirst filed in Maryland – particularly for the individual market – reflect positive developments and are early evidence that the steps taken to stabilize the Affordable Care Act (ACA) market are having the intended effect,” he said in a statement.

The reinsurance program, which required a federal waiver, allows carriers to be reimbursed for some high-cost claims, bringing down the cost of insuring the sickest people and making insurance more affordable for everyone.

The program was funded by a state assessment on carriers. The program is also funded by federal pass-through money, funds the federal government saves by paying lower subsidies because of lower premiums.

Insurers are still assessing how the reinsurance program will affect premiums, as it kicked in only in time for 2019.

The new rate filings could also help persuade other carriers to jump into the market.

“We are hopeful, and there are a couple of carriers that we have been communicating with for a while,” Redmer said, adding that he hoped “the quantifiable evidence of certainty” in the market encourages them to join.

The rate filings are the first step in a months-long process. The insurance administration will review the rates filed by insurers and then work to see where the rates must be increased or decreased.

Carriers also filed rate requests for the small group market, which covers about 268,000 people. Across the nine plans on the market, carriers requested an average rate increase of 4.3 percent.

A public hearing is scheduled for July 16. The final rate determinations typically come in August or September.