Insurers are proposing double-digit premium increases in Maryland's individual-health-plan market, a consequence of what the state’s health insurance commissioner called a “death spiral.”
CareFirst BlueCross BlueShield requested an 18.5 percent increase on the HMO plans used by the vast majority of its individual-plan members — and a whopping, 91.4 percent increase on its PPO plans. Kaiser Permanente requested a 37.4 percent increase on its HMO plans. The average rate increase requested, across insurers and plans, was 30 percent.
“We are at a place in the individual market where any increase at all creates stress in the marketplace,” said Alfred W. Redmer Jr., Maryland’s health insurance commissioner. “We have folks in Maryland that are struggling, that are trying to do the right thing — and they’re paying more for their health insurance than they are for their mortgage. While an 18 percent increase is better than last year, it’s still, in some cases, catastrophic if you’re the young family that has got to pay that 18 percent increase.”
The rate requests are an early sign of the trends in the individual marketplace, but they are only the first step toward determining 2019 premiums, which will be subject to review and won’t be finalized until later this year.
Redmer said soaring premiums are causing healthy people to drop out of the insurance pool, leaving only sick people behind. He noted that in March 2017, there were 243,000 people enrolled in individual plans, and a year later, there are only about 211,000. He said those who dropped coverage were likely healthy people, whose premiums no longer help underwrite the costs of people who are heavy users of the health-care system.
“My own opinion is, yes, I believe we’ve been in a death spiral for a year or two,” Redmer said. He added there is hope that the state’s efforts to stabilize the marketplace through a reinsurance fund would help provide relief to consumers.
“We are working with our federal partners to expedite approval for Maryland’s reinsurance waiver, and we continue to call for action at the federal level to fix our broken health insurance system,” Gov. Larry Hogan (R) said in a statement.
That hope was echoed by CareFirst chief executive Chet Burrell, who said that if anticipated changes come to pass, people in the HMO program might see a flat or even slightly lower premium in 2019. He projected that of the roughly 13,300 people in the PPO plan, he would expect to see a “very substantial portion” seek other coverage.
He said that by the end of the year, his company will have lost $476 million on the individual marketplaces since 2014.
“We have had major, major losses, and the reason for that is the rates — as high as they have been and as steeply as they have increased — have simply not kept up with how costly it is to take care of the population,” Burrell said. “We're not alone in this experience.”
Burrell said that he believes the Trump administration’s move to zero out the individual mandate penalty for not being insured in 2019 will exacerbate the premium increases, but he said it is too soon to know precisely what those effects will be.
In a statement, Kaiser Permanente said its rate request “reflect the expected costs of providing coverage for these members, including the impact of eliminating the individual mandate penalty.”