The Iowa Insurance Commissioner has approved double-digit rate increases for the insurance policies held by about 19,000 Iowans.
According to a news release from the Iowa Insurance Commissioner’s office, individual health insurance polices from Wellmark Blue Cross and Blue Shield will increase an average of 14.5 percent on January 1. The rates for the Wellmark Health Plan of Iowa will go up an average of 11.9 percent. Wellmark has announced rates for 130,000 individual members will see rate increases of 5.9 percent.
State Insurance Commissioner Nick Gearhart says he found “no evidence” Wellmark’s rate hikes were “discriminatory or excessive.” Gearheart says due to the Affordable Care Act, Wellmark faces higher costs partly because insurers can’t deny coverage to applicants with pre-existing conditions, plus new rules restrict how much a client’s age, potential health risks or gender can factor into rates.
Read the Insurance Commissioner’s announcement below:
2014 WELLMARK RATE PROPOSAL
Issued October 8, 2014
The Iowa Insurance Division (the “Division”) received annual individual health insurance premium rate (“rate”) filings for Wellmark Blue Cross and Blue Shield and Wellmark Health Plan of Iowa, (collectively “Wellmark”) in July, 2014. Wellmark proposed rate increases, varying by plan and region, effective January 1, 2015, of an average of 14.5% for plans of Wellmark Blue Cross and Blue Shield, and of an average of 11.9%, for plans of Wellmark Health Plan of Iowa. The proposed rates for 2015 were based on experience from Wellmark’s existing individual business, and projected member movement from the entire insured and uninsured population. There was little claims experience available in 2013 when Wellmark filed its 2014 rates for Wellmark plans that were compliant with the Affordable Care Act (“ACA”). Ultimately, the claims experience proved to be higher for these plans than was projected in 2013. Therefore, a significant portion of the filed rate increase is due to the claims experience that was higher than expected.
Rate Filing and Review Procedures
Pursuant to a Governor’s directive from 2010, and in accordance with Iowa Code section 505.15, whenever any health insurance company that conducts business in Iowa submits a health insurance premium rate increase request to the Division, the Commissioner must utilize an independent, qualified third-party actuary to conduct a secondary review to determine the adequacy and appropriateness of the proposed rate. The Division maintains a list of independent actuarial firms, and selected from them Magnum Actuarial Group to perform the independent actuarial review. The report of Magnum Actuarial Group is available on the Division website (as an attachment to the posted version of this Review Decision at www.iid.iowa.gov). Specific tests and criteria used to determine the validity of the request is outlined in each of the detailed reports. The independent review is performed simultaneously with the statutorily required Division in-house review.
In addition, Iowa Code section 505.19 requires the Iowa Insurance Commissioner, (the “Commissioner”) to hold a public hearing on a proposed health insurance rate increase which exceeds the average annual health spending growth rate as published by the Centers for Medicare and Medicaid Services of the United State Department of Health and Human Services. The current rate is 6.1%. Prior to the public hearing, the Consumer Advocate for the Division solicits and receives public comments on the proposed health insurance rate increase. Those comments are posted online (as an attachment to the posted version of this Review Decision at www.iid.iowa.gov).
A hearing on the proposed rate increases was held on Saturday, August 23, 2014, at 10:00 a.m., at the Mercy College of Health Sciences, Sullivan Center, Des Moines, Iowa. Access to the hearing was made available at six locations around the state via the Iowa Communications Network (“ICN”). The Division’s Consumer Advocate presented public testimony on the written comments previously received from consumers. The Commissioner took comments from policyholders and concerned citizens present at the hearing. Comments also were received from citizens accessing the hearing through the ICN sites. Laura Jackson, a representative of Wellmark, spoke on behalf of Wellmark and answered questions from the audience. A transcript of the hearing is posted (as an attachment to the posted version of this Review Decision at www.iid.iowa.gov).
The Commissioner reviewed the actuarial report from Magnum Actuarial Group. In addition, the Commissioner reviewed the comments made at the public hearing on August 23, 2014, and the comments received through phone calls, mail and the internet to the Consumer Advocate. The Commissioner also consulted with financial and actuarial staff within the Division.
Consumer Concerns and Issues
The Consumer Advocate received 24 comments and concerns directly from policyholders or members of the public. The notable trends are as follows:
• 66% commented on affordability
• 50% commented on the disparity between ACA plans and grandfathered plans
• 41% commented on Wellmark’s available funding and chosen spending allocations
• 41% requested that the increase be denied
• 5% expressed weariness of Wellmark’s increases
Other comments included:
• Too soon for an increase
• Will have to drop coverage
• Deny due to being over the average annual growth spending rate
Conclusion and Decision
The Division is mindful that several key provisions of the ACA went into effect in 2014 that impacted health insurance premium rates and pricing. As noted earlier, carriers did not possess much claims data on these changes prior to formulating their rates for the 2014 enrollment season. Even at the time of this rate increase request for 2015, the carrier did not possess much claims data. Some of the items impacting health insurance premiums, beginning in 2014, include: insurers are not able to decline coverage to applicants with pre-existing conditions; insurers are required to provide plans with minimum essential health benefits that may be broader than benefits provided under certain pre-ACA plans; and gender and health risks were eliminated as rating factors and limits were placed on age rating.
The Commissioner has reviewed the testimony of policyholders and consumers, studied the actuarial reports, and consulted with various Division staff regarding the Wellmark rate increase proposal. Whether to approve the rate increase is not a decision the Commissioner has taken lightly. Thousands of Iowans will be impacted by this decision. Balancing the needs of Iowa consumers and the solvency of an insurance carrier must be weighed carefully.
The Commissioner finds that there is no evidence that the proposed rate filings are discriminatory or excessive under Iowa law. The Commissioner therefore approves the proposed individual rate increase filed by Wellmark for implementation.
Dated October 8, 2014
Iowa Insurance Division