A national upswing of health insurance rates is coming to Pennsylvania, and that could mean bigger-than-expected cost increases next year for at least a couple hundred thousand Pennsylvanians who bought insurance in the marketplace created by the 2010 federal health care law.
Last week's deadline to file paperwork with the state Department of Insurance showed that some insurers selling plans on the marketplace want rate increases of almost 10 percent — or well above that — in one or more of their plans.
At one end of the spectrum is an individual health plan offered by a subsidiary of Milwaukee-based Assurant Health that is seeking an average 61 percent rate increase. About 3,300 people are covered by it now, according to the company's filing.
At the other end is a group of plans for both individuals and small groups offered primarily by Harrisburg-based Capital Blue Cross. Rates in those plans would remain basically unchanged, according to company filings.
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The Department of Insurance emphasized that it must approve any rate increase and that nothing is final.
"A key thing we want to stress is these are proposed rates only, so they may not be what the rates are come the fall," said department spokesman Ron Ruman. "We have the authority to review them and we are going to do that very carefully and our top priority is consumer impact. That's important for folks to know."
Antoinette Kraus, executive director of the Pennsylvania Healthcare Access Network, which works to help people get insured, said proposed rate increases last year also came down before they were finalized for 2015. One thing to consider, she said, is that if the rates go up, so will the size of the tax credits.
According to federal figures, about 473,000 Pennsylvanians enrolled in insurance plans for 2015 sold through the marketplace. Of those, about four in five people — 382,000 — qualified for a tax credit to help cover the cost of monthly premiums, according to the figures.
Analysts say that it is difficult to make across-the-board generalizations about the proposed rate increases.
Some insurers may have underestimated actual claims — Assurant says its prior year rates did not fully account for the claims it experienced — or are seeking a significant increase on a relatively low rate. Some plans may be attracting an unusually high proportion of people who are heavier users of health care.
In any case, the marketplace is a new experience for insurers, and they will be basing their 2016 premiums on a full year's worth of data, the first time that's happened on the 17-month-old exchanges.
"There's a lot they have to learn: What the markets are and the profile of the people who are enrolling," said Robert Town, a professor of health care management at the University of Pennsylvania. "They really went into it pretty blind, so it's not surprising that they have to make adjustments."
In some cases, insurers know that state regulators will pare down their requested rate increases, and insurers account for that in their original request, Town said.
Rates for 2016 should be final by early October. Enrollment for 2016 begins Nov. 1, giving people weeks to shop for a plan.
Some of the bigger increases are being requested by Pittsburgh-based Highmark, including a 25 percent increase for an individual plan that covers about 118,000 enrollees in western Pennsylvania.
Highmark spokesman Aaron Billger attributed the increases to heavy use of services, including expensive prescription drugs, by people who had not had insurance before they enrolled.
Nearly 50 percent of its marketplace enrollees were new to Highmark, and the insurer knew little about their insurance history, Billger said. That includes enrollees who rack up huge insurance bills, and then stop paying their premiums, Billger said.
"That's an example of sort of what's driving costs for everyone," he said.