2018 Maryland Insurance Administration Rate Review and Analysis

The Maryland Insurance Administration released the 2018 proposed premium rates for Maryland's insurance carriers on May 5th, and they produced some sticker shock, to say the least.

Maryland's largest carrier, CareFirst, requested an average 50.4% increase on its HMO plans in Maryland and a 58.8% increase on average on its PPO plans.

Other carriers also requested large increases, although smaller than CareFirst's. Cigna Health and Life Insurance Co. requested an average 37.36% increase, while Kaiser Foundation Health Plan of the Mid-Atlantic States asked for an average 18.08% increase.

Evergreen Health, which was absent from the individual marketplace last year because it was waiting for approval to convert to a for-profit insurer, is seeking an average 27.8% increase in its rates.

Consumer Health First President, Leni Preston, was quoted in an article in the Baltimore Sun:

"The company [CareFirst] set prices too low in the beginning and they should have realized there was going to be a rush of sick people trying to get care," said Leni Preston, president of the Maryland advocacy group Consumer Health First.

"These just seem uncomfortably high and out of sync with what one sees with the rest of the market," Preston said. "I'm almost speechless, really."

Carriers received large increases last year, saying it was a one-time market adjustment to reflect the fact that fewer healthier people were enrolling in the plans than anticipated. This year, uncertainty around the individual mandate and other policy issues were the “primary driver” of the increased rates requests according to an article in Vox.

“We were hoping for more stability this year,” says Chet Burrell, chief executive of Carefirst, a Blue Cross Blue Shield Plan in the D.C. metro area. “But these factors have lead to instability, and the beginning of a death spiral.”

So far, no carrier has indicated that they are considering leaving the market, but they are wary of continued losses.

On Wednesday, June 21st, the Maryland Insurance Administration held public hearings on the rate increases announced in May. Consumer Health First submitted written testimony to Commissioner Redmer, signed by 3 dozen state and local agencies and organizations opposed to the rate hikes requested by CareFirst.

“It looks as if CareFirst is not living up to its obligations as a nonprofit health service plan to provide affordable, accessible insurance in the individual market,” said Leni Preston, president of Consumer Health First. “These rates would make insurance unaffordable for thousands of Marylanders, particularly those who do not qualify for a federal subsidy under the Affordable Care Act.”

Consumer Health First’s analysis of the rates found a number of concerns with CareFirst’s justification for its proposed hikes to premiums. For instance, CareFirst’s assumptions about increases in medical costs far exceeded those of other insurance carriers. CareFirst also asserted its morbidity rate will increase in 2018, but there is no evidence to suggest consumer behavior will change. 

“The Commissioner has the statutory authority to consider affordability and accessibility when reviewing CareFirst’s rate filings,” said Beth Sammis, former acting commissioner of the MIA and a consultant for Consumer Health First. “These rate filings result in unaffordable health insurance for many in the individual market and thus must be rejected.”

Consumer Health First looks forward to continue to work with Commissioner Redmer as he continues to improve the rate review process, and we welcome the opportunity to work with all stakeholders to create a healthy and robust insurance market that works for Maryland’s consumers. 

Read the letter here, our press release here, and press coverage here:

2017 Maryland Insurance Administration Rate Review and Analysis

Consumer Health First President, Leni Preston, presented testimony at a joint briefing of the House Health and Government and Senate Finance Committees regarding the 2017 health insurance rate increases.

The graphic above clearly illustrates why the review of insurance carriers' proposed rates by the Maryland Insurance Administration (MIA) matters to the consumers of our state and particularly to those who purchase their own insurance in the individual market. 

Despite this, the MIA released their 2017 rate increases which averaged more than 20% for the individual market, ranging from a low of 10% for Kaiser, to a high of 31.4% for the CareFirst plans. As demonstrated by the graphic above, that translates into an increase of about $1,000 a year or more for Maryland consumers in these plans.

Last year we saw significant increases in the rates for these 2016 plans approved by Maryland's Insurance Commissioner, Al Redmer, Jr. For example, CareFirst of Maryland requested a 30% increase. Consumer advocates, led by Consumer Health First, provided the MIA with analyses that we believed undercut CareFirst's rationale for such an increase. However, we saw only modest success, with a final approved rate of 26% for CareFirst of Maryland in 2016. 

This year’s rate review process made one thing abundantly clear: it is time to take a hard look at ways to improve Maryland’s health insurance market to ensure that all consumers can continue to afford high quality, comprehensive health care. There are a number of steps we believe should be examined as we work to both achieve the promise of the Affordable Care Act and create a robust and competitive insurance market in Maryland. These include:

  • Merge the individual and small group markets as the District of Columbia has successfully done. CareFirst BlueChoice, the largest provider of individual health insurance in Maryland covering 69 percent of the market, requested an average rate increase of about 14 percent in the District of Columbia but about 28 percent in Maryland. This illustrates that increasing the number of people in the market helps to spread risk and thereby lower costs.
  • Take advantage of Maryland’s all-payer claims database at the Maryland Health Care Commission to identify the health conditions and treatments driving costs in the individual market. This would enable policymakers to identify appropriate benefit changes, such as value- based insurance, to help contain costs or identify health care programs carriers should have in place to meet the health care needs of these consumers. This analysis should also be used during the rate review process, giving Commissioner Redmer and his staff independent information to verify carriers’ medical trends.
  • Investigate ways to increase competition. This year, Maryland consumers could choose a health insurance policy from CareFirst, Cigna, Evergreen, Kaiser or UnitedHealthcare. In 2017, UnitedHealthcare will exit the individual market, and there may be other changes as well. Competition is good for consumers, giving them choices and holding down costs. Mandating that MCOs and all those in the small group market provide coverage in the individual market should be considered, as should inclusion of a public option to bring additional competition. Additionally, reestablishing Maryland’s reinsurance program to help pay for extraordinary claims would make it more palatable for companies to enter the individual health insurance market.

For now, we all need to work together to encourage consumers to shop around during the 2016- 17 open enrollment period. Faced with much higher costs, consumers need to carefully consider the value proposition each carrier offers to find the best option at the lowest cost. We all have a role to play, including the Maryland Insurance Administration, the Maryland Health Benefit Exchange and consumer advocates, as well as insurance agents and brokers. In addition, in- person assistance for consumers is available in each county – go to www.marylandhbe.com and click on Connectors & ASCEs for contact information.

To read more about the rate review process, our testimony on behalf of consumers, and the analysis we provided, continue reading.

On May 1, the carriers submitted their proposed rates and supporting materials. That was followed by a public comment period (read the comments). Then, on July 6, a public hearing was held for the public to comment on the rate proposals and for the MIA and carriers to answer questions (see the July 6th hearing summary below). 

On July 26, CareFirst submitted a new 2017 individual market rate filing, asking to more than double their original filing rate request - from 12.0% to 27.8% for Blue Choice and from 15.3% to 36.6% for CFMI/GHMSI. CareFirst cited significant increases in existing member morbidity and projected new member morbidity.

Consumer Health First first presented its case for rejection of this new rate request in a Baltimore Sun OpEd, by Consumer Health First President, Leni Preston 

As a result of this late filing, the Maryland Insurance Administration held a new public comment period, followed by a second rate review hearing on August 15th to address the revised increases requested by CareFirst. 

CareFirst CEOChet Burrell, offered a detailed explanation of the revised rate request, citing nearly $300 million in losses during their first three years in the exchange and an "older, sicker" population than anticipated. He also stated that there was no subsidization of DC residents by Maryland consumers, and that the lower rates in DC were largely due to the fact that, unlike in Maryland, DC's risk pool includes both the small groups and individual market.

In response, several consumers provided their individual perspectives on the negative impact CareFirst's requested rates would have on their own families and others like them. Other consumers provided written comments on-line, as did the Health Education and Advocacy Unit of the Attorney General's Office, noting "Consumers who stay in these individual plans ... will never get their money back if excessive increases are allowed based on inaccurate or erroneous data and assumptions." 

Consumer Health First strongly urged Commissioner Redmer to not only reject CareFirst's new request, but to cut its initial request. Jeananne Sciabarra, Executive Director, was joined by Jay Angoff of Mehri & Skalet, who prepared our initial analysisThey reiterated the negative impact that the proposed premiums would have on consumers' pocketbooks and then laid out a substantive case for rejecting the CareFirst request. In addition to the affordability issue, they noted: 

  • Rate increases of this magnitude will push the healthiest consumers from the market altogether, or to other carriers, leaving CareFirst with only the sickest members, thus requiring large increases next year, and so on. In addition, these rates will discourage the young and healthy from entering the market, disrupting one of the core principles of the Affordable Care Act. 
  • These rate increases contradict the CMS report from last Thursday showing that, nationwide between 2014 and 2015, there has been little change in the cost per enrollee in the ACA individual market. 

As Mr. Angoff noted "There is just such a disconnect of such a magnitude between the CMS data and the CareFirst data, it just doesn't make sense."

For a complete summary of Ms. Sciabarra's testimony, click here.

The MIA will continue its analysis of the proposed rates and we expect a decision to be announced in early September. Consumer Health First will continue to track this process and keep our members informed. Remember, contact us and let us know how these proposed rates will affect you and your ability to afford insurance in the marketplace.

Summary of July 6th Hearing:

The MIA's Chief Actuary, Sarah Li, provided a synopsis of the rate review process. Beth Sammis, former Deputy Insurance Commissioner, testified as part of the Consumer Health First advocates' panel. She cited some items to enhance the review process in the future. This would include greater analysis of the claims data available to the MIA through the All-Payer Claims Database maintained by the Maryland Health Care Commission. Find Ms Sammis' full testimony here.

Consumer Health First President, Leni Preston, also provided testimony, in which she emphasized the :

  • Trust and confidence that Marylanders place in the Commissioner to ensure that the approved rates are justified, fair and reasonable and that they reflect the best interests of the consumers. 
  • Importance of affordability, particularly in light of last year's increases. She cited a 2015 Kaiser Family Foundation survey that found that 42% of respondents reported that it is "somewhat or very difficult" to afford health services due to cost." 
  • Consumer Health First analysis prepared by Jay Angoff of the rate filings for CareFirst, Evergreen Health Cooperative, and Kaiser Permanente. 

Jay Angoff, of Mehri & Skalet and formerly the Missouri Insurance Commissioner and Director of the Center for Consumer Information and Insurance Oversight at HHS, was commissioned to provide an analysis of the proposed rates of the carriers cited above. The primary focus of his testimony related to CareFirst. Among his key points were:   

  • CareFirst: The trends in health care costs, which are a partial justification for CareFirst's proposed 12-16% rate increases, are considerably higher than either Kaiser or Evergreen. Mr. Angoff also pointed out that they are almost double those at the national level as found by the Milliman Medical Index. He goes on to state that "CareFirst's trend assumption in its 2017 individual market rate filings is starkly inconsistent with recent data CareFirst has disclosed about its own true costs." Linked to the trend factor is the question of why, as the largest insurance carrier in the private market, CareFirst has been less effective in containing costs - clearly an issue that impacts consumers. Related to this is the fact that CareFirst highlights cost savings in its Patient Centered Medical Home but appears to ignore them in its rate filing. 
  • Kaiser Permanente: Its rate increase appears to be justified given "a net loss of $31.9 million, or 42% of what it took in in premiums." However, Mr. Angoff recommended taking a close look at the morbidity rates used by Kaiser as well as the administrative expenses. The latter, he suggested, should be going down rather than the rise cited in the filing.
  • Evergreen Health Cooperative: Mr. Angoff stated at the outset that "... a fundamental problem for all the ACA-authorized COOPS that have not already failed is that they were not designed to succeed." His analysis primarily focused on the issues surrounding the risk adjustment payment that Evergreen is required to pay to CareFirst (learn more). He cited the actuarial analysis by Milliman that was submitted by Evergreen and recommended that the Commissioner continue his efforts to address this issue. He noted that "a payment from Evergreen to CareFirst that would drive Evergreen into insolvency would make very little difference to CareFirst."
  • Rate Distribution by Metal Level: This is an area that has received little attention but which can have significant implications for consumers. Mr. Angoff provided a useful chart illustrating the variations across carriers and suggested that the Commissioner "consider both the relationship between the current rates of the different carriers, and the rates charged by individual carriers at different metal levels, in determining what rates he will approve for 2017."