The price of the most popular health plans sold through Maryland’s insurance exchange will jump, on average, by about one quarter next year, fueling questions about whether coverage under the Affordable Care Act will remain affordable in the state and elsewhere.
The 26 percent average increase in monthly premiums are for CareFirst plans, which cover three-fourths of the state residents who have bought insurance under the federal health-care law. The price jump, scheduled for January, is among rate changes that the state’s insurance regulators have approved for plans sold to individual families and small businesses.
The increases were announced Friday by state Insurance Commissioner Alfred W. Redmer Jr.
Maryland is the latest state to disclose premiums for 2016 in time for the third annual open enrollment period for buying plans on the exchanges created by the ACA.
Open enrollment begins Nov. 1.
Before the exchanges opened two years ago, the Obama administration, health policy experts and consumer advocates worried whether enough insurance companies would agree to sell health plans through the marketplaces and what prices they would charge. The initial results were promising, but questions lingered as to whether some insurers set their rates artificially low at first to attract customers.
The rates for 2016 are of keen interest to supporters and detractors of the law. For the past two rounds, insurers were partly guessing about how much to charge, since they had not yet had an entire year to gauge how much medical care their new customers in the exchanges would actually use. Around the country, the rates that insurers proposed for next year are the first grounded in concrete knowledge of their costs.
Although the ACA is a federal law, each state has a separate set of insurers in its marketplace and sets its own rates. Some states have more leverage than others to raise or lower the premium prices proposed by insurers. Among the several states that already have announced their final rates for next year, the price patterns vary.
Florida’s insurance regulators announced last week an average 9.5 percent increase in insurance premiums for its exchange’s plans. California’s marketplace has said the average increase there will be 4 percent. In other states, such as Illinois and Texas, insurers are hoping for much greater increases, but it is not yet clear what their final rates will be.
Across the Washington area, the District has not finished setting its rates. Virginia has final rates, but it does not compute averages or publicize rates in a form that makes it easy to discern the range of prices.
In Maryland, nearly 125,000 people had received coverage through the Maryland Health Connection as of midsummer, according to that exchange’s most recent figures. Nearly 96,000 of them have one of a variety of plans sold by CareFirst. Maryland’s exchange, like ones around the country, is intended for people who cannot get health coverage through a job.
Under the rates announced Friday, prices by the various insurers will rise, on average, more sharply for individual policies than for small-business ones. But not all insurers are raising their rates in the individual market as much as CareFirst, and a few small carriers are reducing them. For a typical 40-year-old in Maryland’s Washington suburbs buying a CareFirst “silver” health plan, the most common level of coverage, the monthly premium next year will be $329 — a $75 increase.
During the past two years, CareFirst has asked for big rate increases, but the insurance commission has pared them. In an interview, Redmer said that CareFirst deserves to be able to charge more for 2016 because it has lost $100 million this year on individual insurance policies. That loss, he said, is partly because 7,800 small businesses around the state have decided to stop offering insurance to their workers, sending them into the exchange, where premiums were less expensive.
Michael P. Sullivan, a spokesman for CareFirst, said that, once the company had a full year of experience with the exchange, it turned out that “people who are in that pool in Maryland are, in fact, older and sicker than we expected them to be.” He said that he hoped that the rate increase would “go a long way” toward making the prices adequate and, as a result, more stable in the future.
Benjamin Wakana, a spokesman for the federal Department of Health and Human Services, said that, in Maryland as elsewhere, the health-care law now makes it easier for consumers to compare the prices and benefits of plans in the exchanges — and to switch plans. He also pointed out that more than eight in 10 people insured through the exchanges get federal subsidies to help pay for their coverage.
“Discussing rates without discussing financial assistance does not reflect reality,” he said.
But Maria Gomez, president of Mary’s Center, a health clinic with branches in Maryland and the District, said, “If the subsidy doesn’t move somewhere along the same rate, then forget it.”
Mary’s Center helps patients enroll in exchange plans, and Gomez said that “it took quite a bit to convince” some patients that insurance was worth paying for.
“If the increase is that high for people that just barely were able to scrape together enough dollars to get the insurance,” she said, “this 26 percent will put them over the edge.”