Health Insurers Seek Hefty Rate Boosts

Yep, all that talk about how Obamacare was going to save everyone money and we'd have better access to doctors and health care......................a bunch of lies. My premium cost went up last year, deductibles and co-pays WAY up and percent covered after deductible from 80-90% down to 60% and now this

Health Insurers Seek Hefty Rate Boosts

Proposals set the stage for debate over federal health law’s impact

Major insurers in some states are proposing hefty rate boosts for plans sold under the federal health law, setting the stage for an intense debate this summer over the law’s impact.

In New Mexico, market leader Health Care Service Corp. is asking for an average jump of 51.6% in premiums for 2016. The biggest insurer in Tennessee, BlueCross BlueShield of Tennessee, has requested an average 36.3% increase. In Maryland, market leader CareFirst BlueCross BlueShield wants to raise rates 30.4% across its products. Moda Health, the largest insurer on the Oregon health exchange, seeks an average boost of around 25%.

All of them cite high medical costs incurred by people newly enrolled under the Affordable Care Act.

Under that law, insurers file proposed rates to their local regulator and, in most cases, to the federal government. Some states have begun making the filings public, as they prepare to review the requests in coming weeks. The federal government is due to release its rate filings in early June.

Insurance regulators in many states can force carriers to scale back requests they can’t justify. The Obama administration can ask insurers seeking increases of 10% or more to explain themselves, but cannot force them to cut rates. Rates will become final by the fall.

“After state and consumer rate review, final rates often decrease significantly,” said Aaron Albright, a spokesman for the Centers for Medicare and Medicaid Services, the federal agency overseeing the health law.

Consumer groups are demanding federal and state officials put premiums requests under the microscope this year.

“We are really wanting to see very vigorous scrutiny,” said Cheryl Fish-Parcham, director of the private insurance program at Families USA, a group that advocates for the health law. Her group wants regulators and the public to debate insurers’ assumptions about rates and look for ways they could save money.

Insurers say their proposed rates reflect the revenue they need to pay claims, now that they have had time to analyze their experience with the law’s requirement that they offer the same rates to everyone—regardless of medical history.

Health-cost growth has slowed to historic lows in recent years, a fact consumer groups are expected to bring up during rate-review debates. Insurers say they face significant pent-up demand for health care from the newly enrolled, including for expensive drugs.

“This year, health plans have a full year of claims data to understand the health needs of the [health insurance] exchange population, and these enrollees are generally older and often managing multiple chronic conditions,” said Clare Krusing, a spokeswoman for America’s Health Insurance Plans, an industry group. “Premiums reflect the rising cost of providing care to individuals and families, and the explosion in prescription and specialty drug prices is a significant factor.”

David Axene, a fellow at the Society of Actuaries, said some insurers were trying to catch up with the impact of drugs such as Sovaldi, a pricey pill that is first in a new generation of hepatitis C therapies.

Mr. Axene, who helps many health plans set rates but didn’t work with the big plans in Maryland, New Mexico, Oregon or Tennessee, said insurers knew they would have to have “extreme evidence” to support their requests for the year ahead. “Somebody sincerely believed that they needed it,” he said.

In some of the dozen states where The Wall Street Journal reviewed filings that are public, the biggest insurers are seeking significant but less eye-popping increases. Anthem Inc., in Virginia, wants an average increase of 13.2%. Blue Care Network, part of Blue Cross Blue Shield of Michigan, applied for a 10% average increase.

In Washington state and Vermont, the market leaders have sought relatively modest average increases, akin to those proposed last year, of 9.6% and 8.4%, respectively. In Indiana and Connecticut, the leading plans want 3.8% and 2% boosts. So far, Maine is the only state where the market leader proposed keeping rates generally flat.

The 2010 health law made sweeping changes to the way medical insurance is sold to consumers who don’t get coverage through jobs or a government program such as Medicare. The federal government subsidizes premiums for some consumers, based on income, and the validity of those subsidies in most of the country is the subject of a lawsuit the Supreme Court is expected to decide in late June.

The filings from insurers are based on the assumption that those subsidies remain in place.

Insurance premiums have become a top issue for consumers and politicians as they evaluate how well the law is working. Obama administration officials weathered a storm as some younger, healthier consumers saw their premiums jump when the law rolled out, but were also able to point to modest premiums overall as insurers focused on other ways to keep costs down, such as narrow provider networks.

For 2015 insurance plans, when insurers had only a little information about the health of their new customers, big insurers tended to make increases of less than 10%, while smaller insurers tried offering lower rates to build market share.

BlueCross BlueShield of Tennessee, CareFirst in Maryland and Moda in Oregon all said high medical claims from plans they sold over insurance exchanges spurred their rate-increase requests.

The Tennessee insurer said it lost $141 million from exchange-sold plans, stemming largely from a small number of sick enrollees. “Our filing is planned to allow us to operate on at least a break-even basis for these plans, meaning that the rate would cover only medical services and expenses—with no profit margin for 2016,” said spokeswoman Mary Danielson. The plan’s lowest monthly premium for a midrange, or “silver,” plan for a 40-year-old nonsmoker in Nashville would rise to $287 in 2016 from $220.

Tennessee Insurance Commissioner Julie Mix McPeak said she would be “surprised if we settled on 36.3%” as requested for the Blue plans’ average rate increase, but a significant boost might be allowed. She said data her team examined reflected big medical-claim costs.

CareFirst said its monthly claims per member nearly doubled to $391 in 2014 from $197 the year before. Its monthly premium for a 40-year-old nonsmoker in Annapolis with a silver plan would rise to $306 in 2016 from $244.

In Maryland, “premiums cannot be excessive but they cannot be too little,” said Insurance Commissioner Al Redmer. His predecessor rejected a similar 30% request from CareFirst last year, but allowed a 16% increase.

Moda Health said that with more than 100,000 individual members, it had the best data “on the care actually being received by these Oregonians. Our proposed rates reflect that.”

Under Moda’s proposal, a 40-year-old nonsmoker in Salem would pay $296 a month in 2016 for a silver plan, up from $245 a month this year. “It is a balance,” said Oregon Insurance Commissioner Laura Cali of her rate-review process.

Greg Thompson, a spokesman for Health Care Service Corp., the carrier seeking a 51.6% increase in New Mexico, said the proposed rates reflected high medical costs, and, like everyone else’s, were based on actuarial science. “There’s really no incentive for us to overprice,” he said.

New Mexico Insurance Commissioner John Franchini said insurers can revise their requests before June. He also has the power to reject rates.

“This is round one,” he said.

http://www.wsj.com/articles/health-insurers-seek-hefty-rate-boosts-1432244042

And Obama was tauting it's success this week, just laughable if it weren't so sad so many of us are going without health care because we can't afford in now under the Affordable Care Act.

 

It is pretty bad when my monthly health insurance premium is higher than my monthly mortgage. At least paying my mortgage buys me equity in my house. My health insurance premium? Not so much.

 

Make medicare available for all and cut out private insurers and save hundreds of billions in health care costs.

 

one third of doctors will not take medicare/medicaid patients as the rates are too low. The rates would need to be increased. Also, how to you expect to pay for the increase in medicare patients? You will not be "saving hundreds of billions", you will just be changing which pocket the $$s are coming out of.

Personally, I absolutely DO NOT want the Government in the health insurance business.

 

From OP story:

"Insurers say they face significant pent-up demand for health care from the newly enrolled, including for expensive drugs"

This is the key to premium increases, right here. Everyone seen it coming, except Obama and his administration... or, did not they? While it is, of course, good that these previously uninsured folks cal now get their health in order, but how can you knowingly insist an average family will get $2,500 in premiums decrease when it is obvious that rush of newly insured patients will pressure premiums to go up and not down?

You Liberals been sold a bill of goods.

 

Please cite your source that 1/3 of doctors will not take medicare. I doubt that is true. I also doubt that would be true if it was universally availble and options for private payment are limited.

Switching to a single payor (e.g. Medicare) for all could save over a trillion dollars a year in health care costs. The reasons are that the Govt operates with a much lower overhead than insurance companies, and the Govt's greater leverage means it can negotiate prices from health care providers like hospitals based on a percentage over costs, and not based on their absurd mark-ups. Medicare typically pays *much* lower rates to health care providers than insurers do.

Medicare operates with 3% overhead, non-profit insurance 16% overhead, and private (for-profit) insurance 26% overhead. Source: Journal of American Medicine 2007
http://www.healthpaconline.net/health-care-statistics-in-the-united-states.htm

I did a little research on the portion of health care that goes to seniors covered by Medicare (a single payor system) versus overall health care costs in the country.

In 2006, (the latest data I've found so far), those 65 and older (and covered by Medicare) account for 38% of all inpatient hospital visits.

By 2006, 38 percent of inpatients were aged 65 years and over, with those aged 75 years and over comprising 24 percent of all inpatients.
http://www.cdc.gov/nchs/data/nhsr/nhsr005.pdf page1

In 2003, one study reported that almost 44% of total hospital costs were spent on seniors:

Persons age 65 and older had more hospital stays than any other age group in 2003. While the elderly comprised about 12 percent of the U.S. population,* they accounted for one out of three hospital stays (13.2 million hospitalizations) and 43.6 percent of the national hospital bill—nearly $329 billion.
http://www.hcup-us.ahrq.gov/reports/statbriefs/sb6.pdf [2003]

I have not found data that details variations in procedures, but the typical stay of those 65 and older is longer than that of other age groups:

The average length of stay for those aged 65 years and over was 5.5 days; for those aged 45–64 years, it was 5.0 days; for those aged 15–44 years, it was 3.7 days; and for children under age 15 years, it was 4.8 days.
http://www.cdc.gov/nchs/data/nhsr/nhsr005.pdf page1

The mean length of stay for patients 65 and older was 1.7 days longer and mean hospital charges were 46 percent higher than non-elderly hospital stays, but there was no difference in mean charges per day.
http://www.hcup-us.ahrq.gov/reports/statbriefs/sb6.pdf

Furthermore, "The federal government estimates that 70 percent of health-care expenditures are spent on the elderly, 80 percent of that in the last month of life"
http://www.mercurynews.com/opinion/ci_19905093

This data suggests it is unlikely that the hospital visits by seniors on average are less costly than those of younger people.

In 2006, total US health spending was $2.1 trillion.
http://content.healthaffairs.org/content/27/1/14.abstract

Medicare spending in 2006 was $373.6 billion.
Source: CBO Historical budget data. http://www.cbo.gov/publication/42911 Table F-5.

So what this means is that although Medicare covered 38% of inpatient hospital care (and probably a higher percentage of total health care cost), it spent only 18% of total health care costs.

Now, I don't know for sure whether hospitalizations is a perfect substitute for total health care costs, but it seems reasonable, and the 43% from 2003 suggests that if anything, the total health care cost incurred by seniors is proportionately higher. The data suggests that the proportion of total use of health care procedures on seniors would be a little higher that the proportion of inpatient hospital stays.

But if we assume that the proportion of total health care use by seniors is equivalent to the proportion of hospital stays, and that the cost of services used would equivalent, then, extrapolating the data, we can say that if Medicare covered 100% of health care, the cost would be $938 billion. Or a savings of over $1 trillion compared to the $2.1 trillion total health care cost in 2006.

The vast bulk of Americans (and certainly most seniors) like Medicare, and the data suggests that it provides health care coverage far more efficiently than the private system. Essentially making the Medicare system available to all Americans, and reap huge overall cost savings, certainly makes some sense to me.

No problem. You can pay for private coverage if you want. Kind of like folks can pay to send their kids to a private high school.

 

Three words - Veterans Administration?

 

1) Polls show most vets are happy with VA.

2) Medicare is single payor of private providers, not government provided health care like VA.

 

You are right, only 1 out of 5 doctors (20%) will not take Medicare patients, but 1/3 will not take Medicaid patients.

http://khn.org/news/third-of-medicaid-doctors-say-no-new-patients/

If the number of Medicare patients increase, I predict that the trend will transfer to Medicare patients as well.

 

http://khn.org/news/third-of-medicaid-doctors-say-no-new-patients/[/quote]

In comparison, more than 80 percent of doctors nationally accept new patients on Medicare, the program for seniors and the disabled, or those with private insurance, the Health Affairs study found.

Doesn't sound like a big problem to me.

What do you predict the doctors who don't take Medicare will do when the vast majority of Americans are covered by medicare?

 

You do realize that 80% is 4 out of 5, which means 1 out of 5 do not take medicare patients......which is exactly what I said.

Retire.....or become more specialized, which will limit the number of doctors available, which in turn will drive up the cost of medical treatments.

The problem is not insurance coverage, the problem is COST. The medical and pharmaceutical companies (especially the pharmaceutical) need to be regulated to keep costs down. however, that is not likely to happen with our current group of politicians. The AMA has too many (R)s and (D)s in their back pocket

 

No evidence it would do so.

 

"More than 80%" which is more than 4 out of 5.

Who know so many working doctors were so rich they could retire so easily. Please provide proof of that.

How would their becoming "more specialized" mean they could avoid working with Medicare?

- - - Updated - - -

See my post above citing data showing my assertion.

 

Not when you make real comparisons

Myth vs. Fact: Administrative Costs in Medicare & Private Health Plans
Posted on January 3, 2014 by AHIP Coverage
It’s a familiar refrain, one we’ve blogged about multiple times - comparing Medicare’s administrative costs to those of private health plans is inaccurate.

As Avik Roy noted in a blog post, “A more accurate measure of overhead would therefore be the administrative cost per patient, than per dollar of medical expenses. And by that measure, even with all the administrative advantages Medicare has over private coverage, the program’s administrative costs are actually significantly higher than those of private insurers.”

According to a study in Health Affairs, “Ironically, Medicare’s low administrative costs — about 3 percent compared with 17 percent in the private sector — may be to blame for the high spending. The private sector uses these funds to do a better job controlling excessive use. Tomas Philipson and colleagues have shown that the variation in Medicare hospital use is four times larger than the private sector when it comes to heart disease. Because it can rely on its monopoly power to control overall spending, Medicare has a weaker incentive to limit overuse. Meanwhile private insurers have become more efficient, employing tools such as utilization review and case management (which count as administrative costs) to assess patient needs and then either restrict services or steer patients towards more cost-effective care. In a world without private insurance, we would likely see more money wasted on care that produces no benefit for patients.”

“In addition, administrative spending protects against fraud. By some estimates, the Medicare program loses a staggering $60 billion to fraud each year. This amounts to 11 percent of the Medicare budget and would be enough to double Federal spending on primary and secondary education. No private company would ever tolerate this abuse. Imagine the fraud if Medicare covered 300 million Americans.”

These findings have been echoed elsewhere. A Heritage Foundation report found that from 2000-2005, Medicare’s administrative costs per beneficiary were consistently higher than those for private insurance, ranging from 5 to 48 percent higher, depending on the year.

And according to a BNA study, “Popular comparisons of Medicare and private group health plan ‘overhead’ costs wrongly compare only a part of administrative expenses related to the Medicare program to the whole of private sector administrative expenses for comparable large group health plans.” The report also says that Medicare’s costs for claims administration “are really about the same as claims administration costs in the private large group health plan market.” Moreover, some of Medicare’s general administration costs are expensed elsewhere in the federal budget, and others, like premium taxes, do not apply to the Medicare program.

As Ezra Klein noted on the Wonk Blog, “It’s also important to note that you don’t necessarily want administrative costs as low as they could possibly be. Some activities that are considered ‘administrative’ are useful. Disease management, for instance, which accounts for some of the difference between Medicare and Medicare Advantage. Mental health counselors who are available by phone. Good-faith investigations into waste, fraud and abuse. Care coordination. Nurses who use e-mail or telephones to remind patients to take their drugs. Administration is not always wasteful.”

- See more at: http://www.ahipcoverage.com/2014/01...re-private-health-plans/#sthash.viJ8BDJK.dpuf

Medicare vs. Private Admin Costs: Let the facts stand
If one assumed from Table 2 that Medicare administrative cost is just 5.01%, compared to 12.21% for private insurance, it might seem that Medicare is administered at a significantly lower rate. However, comparing the percentage of cost for activities not directly related to patient care paints a far different and truer picture: Private insurers’ non-patient care costs are 12.21% compared to 11.68% public healthcare. Yet, this still leaves out vital data.
Table 3 shows the cost of care in dollars per capita and leads to the truth. Considering “Government Administration and Net Cost of Private Health Insurance” in isolation, the net cost of administering Medicare is 11% greater than that of private insurers on a per capita basis. Including all non-patient care cost indicates that public healthcare administration is 281% greater than that of private insurance administration. This assessment still does not include the cost of collecting taxes, nor does it include the providers’ cost of complying with insurance billing and collection requirements.

Americans have always been mistrustful of the concept of “government efficiencies” (the ultimate oxymoron). The idea that government can manage health care more effectively and more efficiently is counter-intuitive, and for good reason: The facts show it is not true.
Let the facts stand, and in so doing, let us quit considering the nonsense of a government-run health system. Instead, let us move toward the kind of reforms that will unlock the power of American consumers, and watch effectiveness and efficiencies fall into place.
http://www.medibid.com/blog/2011/05/medicare-vs-private-admin-costs-facts-stand/

 

Don't see the logic. If Medicare is made universal for all instead of just those over 65, there would be less, not more, privately insured patients.

Thanks for the story, but personal anecdotes aren't evidence of the system as a whole. The fact is that overwhelming majorities of seniors support Medicare. Even "Tea Party" folks (remember the signs "government hands of my medicare!"?). But your analogy is an example of why Medicare is much more cost effective.

 

Accepting the data as accurate, administrative costs are only one (small component) of total health care costs, which was the data I used. Medicare, because of its leverage, pays much less per procedure than private insurers.

In 2004, the rates charged to many uninsured and other “self-pay” patients for hospital services were often 2.5 times what most health insurers actually paid and more than three times the hospital’s Medicare-allowable costs. The gaps between rates charged to self-pay patients and those charged to other payers are much wider than they were in the mid-1980s, and they make it increasingly more difficult for some patients, especially the uninsured, to pay their hospital bills. This has triggered lawsuits and some recent government efforts involving price transparency. Three specific policy options that could lower the markups are a voluntary effort by hospitals, litigation, and legislation.

http://content.healthaffairs.org/content/26/3/780.full

http://americablog.com/2013/03/health-care-costs-hospitals-america.html

Uninsured Americans Get Hit With Biggest Hospital Bills
http://www.bloomberg.com/news/2013-...cans-get-hit-with-biggest-hospital-bills.html

Also, comparing the cost per capita as a basis for comparison is obviously completely deceptive. Seniors use multiples more health care per capita than younger people, so of course the per capita cost will be much higher for seniors.

 

See above where the notion is refuted.

But the fact remains we do no have a single Medicare system and will not have one so no need to discuss your pipedreams. We have Obamacare and we have more and more evidence of it's failure.

 

Yes.....at the cost of degraded medical treatment and service.

 

Again, you personal anecdote is not evidence of the system as a whole.

The undisputed fact is that seniors overwhelming support Medicare.

 

And doctors are leaving the system because of it.

And the fact remains, the cost of medical insurance is NOT going down for we the citizens and that is causing less access to health care. Obamacare is a failure and should be scrapped for more market oriented and consumer oriented plans.

 

10 million more Americans have health care coverage than before Obamacare. Doesn't sound like a failure to me.

But if you're really concerned about cost, support making universal health care for seniors universal for all.

 

Well we have no other choice do we since we are forced into it. The REAL issue is whether future generations support it and Obamacare and the more each fails how much that support will fall.

 

In my experience, and talking to others in my town: doctors like Medicare less than non-medicare, and many are looking to bail out of medicare altogether.

 

Where are they going?

See post above.

- - - Updated - - -

Thanks for sharing your story. Personal anecdotes are not evidence as to the system as a whole. The fact that vast majorities of seniors support Medicare suggests they are not having a real hard time finding a doctor they need and are happy with.