The Maine Bureau of Insurance this week approved double-digit increases for the three insurers offering Affordable Care Act individual marketplace plans.
The bureau – which regulates rate requests by insurance companies – gave the OK Wednesday to a 25.5 percent increase for customers of Community Health Options, 21.1 percent for Harvard Pilgrim and 18 percent for Anthem. The rates still must be approved by the federal government and most of the increases will be offset by subsidies for those who qualify for government assistance.
About 90 percent of the roughly 84,000 Mainers who have individual plans under the ACA qualify for subsidies because they earn between 100 percent and 400 percent of the federal poverty limit. In Maine, the 400 percent threshold is $97,000 for a family of four.
“I do worry that the rate increases will be a hardship for people making just over the 400 percent,” said Emily Brostek, executive director of Consumers for Affordable Health Care, an Augusta-based health advocacy group. “If they were just barely able to make their payment now, they may not be able to afford it next year.”
For instance, a midrange Anthem plan for a 40-year-old non-smoker is currently about $300 per month without subsidies. Rates for that customer would increase by about $50 to $60 per month.
Brostek said the “cliff” effect increases when rates rise substantially. For a family on the edge of qualifying for subsidies, there’s a financial disincentive to earn more money and then lose the subsidy.
The rates mostly matched the requests by the insurance companies, except for Anthem, which was reduced from a 19.4 increase to 18 percent.
A fourth insurer, Aetna, had filed paperwork to join the Maine marketplace, but withdrew last week. Aetna has drastically pulled back on ACA marketplace insurance offerings nationwide. The company is mired in controversy over leaked letters that indicate Aetna may have pulled out of state marketplaces in retaliation for the Obama administration blocking the company’s proposed merger with Humana.
Aetna will, however, offer off-marketplace individual plans in Maine in 2017, according to bureau filings.
The rate increases are due to a number of factors, including the overall cost of medicine, elimination of an ACA program that helped insurance companies mitigate losses and the insurance companies’ failure to predict the health of ACA customers who would be in the pool, Brostek said. If the customer pool is older and sicker, for instance, patients make more insurance claims and insurance companies can lose money.
Anthem, in a filing with the state on Aug. 5, said that the 19.4 percent rate increase it requested should not be reduced, due to the ripple effect of Aetna pulling out of the marketplace.
Aetna’s withdrawal “materially increases” Anthem’s financial risk for a number of reasons, including that Anthem is “likely to receive significantly greater enrollment than contemplated in its rates,” Anthem attorney Christopher Roach said.
When asked whether Anthem agreed with the decision by the bureau of insurance to reduce rates, Anthem spokesman Colin Manning did not directly respond to the question.
“We believe the rates that we requested appropriately reflected anticipated claims costs driven by the increased use of medical services and higher drug costs,” Manning wrote in an email.
Open enrollment begins Nov. 1 for the fourth year of the ACA’s individual marketplace.