Iowa Insurance Commissioner Nick Gerhart has approved health care premium rate increases for four companies ranging from 19 percent up to 43 percent.
Gerhart says his office reviews the rate increase requests to be sure they are “nondiscriminatory, fair and adequate” under the Affordable Care Act (ACA). He says they use several actuarial tables for the review.
“We look for cost trends, how much premium dollars are being spent as a percentage of premiums collected,” Gerhart says, “So it’s really a math problem we are looking at — how much money are these carriers spending vis-a-vis the premium they are collecting.”
The information released Monday shows approval for Wellmark Blue Cross and Blue Shield of 42-point-six percent for 22,000 customers. About 7,700 policyholders of Wellmark Health Plan of Iowa will see an increase of 37-point-eight percent. Another group of 2,300 Wellmark planholders who enrolled prior to the Affordable Care Act becoming law will see a 42-point-six percent increase. Requests for a 23 percent increase for 42,000 Aetna Health of Iowa policyholders, 19 percent for Medica Insurance Company users, and 19-point-8 percent for Gunderson Health Plan participants were also approved.
Gerhart says the variation in the amount of premium increases is based on what those actuarial numbers show for each company. “Every company has its own individual risk pool in this new ACA world,” Gerhart explains. “So a Wellmark pool is distinct from a Coventry pool. Wellmark’s products are a little bit broader in network and have a little bit more sick folks. In fact, if you read the actuarial report, there is one claimant who is costing about ten percent of that increase alone. So, one claimant is driving about 10 percent of this increase, and that’s just how it works under the Affordable Care Act, unfortunately.”
Gerhart says the companies have to collect enough in premiums to cover their costs.”Within the premiums they’re allowed to have down to an 80 percent medical loss ratio. So that means 80 percent of every dollar spent on health care . And for Wellmark for instance — they were well over 100 percent. So, for every dollar collected they were paying about a dollar-sixteen. Coventry and Medica were a little bit less than that — so therefor their rate increases that they proposed were less,” Gerhart says. Gerhart has this advice for those in Iowa who face rate increases.
“You need to shop around,” Gerhart says. “When the prices are available in November and you can go to Healthcare.gov, maybe check out products in the exchange. There are some new products that are coming to the market for the first time in several different of Parts of our state. Look at those options — make sure your doctors are in your network, make sure the product suits your needs — but I think you have to shop around.”
The increases will begin January 1st.