As Maine’s providers of Affordable Care Act-compliant health insurance prepare to file their rate requests for 2019, analysts say they are expecting ACA individual insurance rates in Maine to increase by double digits as they have done in previous years.
Both of Maine’s existing providers of Affordable Care Act individual health insurance say they plan to offer coverage again in 2019. Health insurance providers have until June 4 to submit their 2019 rate requests to the Maine Bureau of Insurance.
Only Lewiston-based Community Health Options and Massachusetts-based Harvard Pilgrim Health Care continue to offer ACA-compliant individual health insurance in Maine. Community Health, Anthem, Harvard Pilgrim, Aetna, United Health Care and others also offer a variety of ACA-compliant small group insurance plans in the state.
Nearly 76,700 Mainers had individual ACA coverage in the first quarter of this year, down 10 percent from 85,300 a year earlier, according to the bureau. Another 60,000 Mainers had ACA-compliant small group coverage through their employers, down about 8 percent from 65,500 the previous year.
Mainers who purchase individual insurance through the ACA marketplace have seen their premiums soar by as much as 110 percent since 2014. While those cost increases have been largely offset by increased federal subsidies for the majority of policyholders, an estimated 10,000 Maine policyholders who earn more than 400 percent of the federal poverty limit are not eligible for subsidies and must bear the entire brunt of the increases.
The surging costs already have priced some Mainers out of the market, and that trend is expected to continue in 2019.
A report issued Wednesday by the Congressional Budget Office estimates that Congress’ recent repeal of the ACA individual mandate penalty as part of the Republican-led tax reform will cause individual policy premiums to increase in 2019 by an average of about 10 percent nationwide.
Another report issued May 18 by the progressive think tank Center for American Progress estimates that in Maine, the Trump administration’s plan to allow short-term, limited-coverage health insurance policies to be used as a replacement for ACA insurance in 2019 will cause individual premiums to increase by another 6 percent for the average 40-year-old.
Those two factors combined would cause the average 40-year-old’s 2019 premium in Maine to increase from $7,550 to an estimated $8,750 – a jump of $1,200, or 16 percent, the report says.
The center’s report notes that nearby Massachusetts has its own state version of the ACA, passed under former Republican Gov. Mitt Romney’s administration, which includes its own rules and mandates and is largely immune to ongoing Republican efforts to “sabotage” the market. The center predicts that the average ACA individual premium for a 40-year-old in Massachusetts will be $4,057 in 2019, less than half the expected cost in Maine.
Mainers earning up to about $27,000 can qualify for zero-premium bronze plans through the ACA, while typical premiums for people who earn $40,000 to $45,000 are roughly $200 to $300 per month, depending on the policyholder’s age and place of residence. Insurers can charge up to three times more based on age, and can charge more based on address.
People who earn more than 400 percent of the federal poverty limit – about $81,000 for a family of three, $65,000 for a two-person family or $48,000 for a single person – are not eligible for subsidies in the ACA marketplace and must pay the full cost of their premiums.
Mitchell Stein, an independent health policy consultant based in Cumberland, said other factors also will determine the degree to which Maine’s ACA individual premiums increase in 2019, such as the finances of its two major ACA insurance providers.
“The wild card is always the 2018 experience for the insurers who are in the market,” Stein said. “Depending on how good or bad their risk was, that impacts their rates for the coming year.”
Harvard Pilgrim’s finances are not publicly available, but because of past financial difficulties, Community Health is required to file monthly financial reports with the state Bureau of Insurance.
GOOD QUARTER IN CONTEXT
The most recent report, issued May 7, says that as of March 27, the nonprofit insurance cooperative was experiencing lower-than-expected costs and revenues, and that it reported a net income of $1.1 million in March.
Community Health’s total reported cash surplus was $46 million, a $12.2 million increase from its reported surplus of $33.8 million in December 2017.
However, the bureau’s report notes that those results need to be viewed in the proper context.
“Health insurers generally have better experience earlier in the calendar year before members satisfy deductibles and other cost-sharing thresholds,” it says. “Results in the first several months of the year, therefore, are not necessarily predictive of results in subsequent months.”
The report also says Community Health’s transition to a new claim administration platform in January reduced its cash outflow in January, February and March, since claim payments to health care providers were significantly delayed and a backlog was created.
“A substantial portion of the increase in assets during 2018 is due to this development,” it says.
Community Health Options President and CEO Kevin Lewis said the bureau’s report is indicative of where the company is financially.
“We’ve had a good first quarter and continue to maintain our focus on an excellent service model and providing great value to our members,” he said.
Lewis said Community Health is in the process of preparing its rate request to submit to the bureau in June, and that he could not specify what type of rate increase, if any, the insurer would seek. Lewis also said he could not estimate whether Community Health would gain or lose customers in 2019.
“It is too early to provide indications on these submissions, and it’s premature to provide any forecasts on expected membership,” he said.
Both Community Health and Harvard Pilgrim gained customers in 2018 as a result of Anthem pulling out of the ACA individual insurance market. Currently, Community Health has about 55,500 ACA individual and group policyholders in Maine, and Harvard Pilgrim has about 28,800.
Harvard Pilgrim Vice President for Maine Ed Kane said the insurer’s ACA claims so far this year are about the same as in 2017, and that the company is anticipating lower premium increases in 2019 compared with the current year’s increases. For 2018, Community Health raised its premiums by a range of 17.5 to 25.5 percent, depending on the plan, and Harvard Pilgrim raised its rates by 21.1 to 27.1 percent, according to the Bureau of Insurance.
Kane said the biggest threat to the stability of Maine’s ACA market in 2019 actually pertains to small group health plans. He has repeatedly expressed concerns about the introduction of “self-insured” plans that he says are structured to skirt ACA requirements and undercut the market.
“One development which threatens the stability of the small group market that the ACA is intended to protect and enhance is the advent of so-called self-insured products in the small group market, the success of which is ultimately at the expense of ACA participants,” Kane said.
Insurers’ rate requests must be defended before the state’s seven-member Bureau of Insurance panel, led by Maine Insurance Superintendent Eric Cioppa, in a series of rate hearings. The panel can make changes to the requested rates based on public feedback and its own analysis of the market. The hearings are expected to commence in July.