Idaho health insurers post double-digit rate increases

BOISE – Workers at a Meridian company move rebar and pack building supplies for Idaho’s construction industry. They used to have health insurance through their jobs at Concrete Construction Supply. But when the Idaho insurance exchange opened its virtual doors for 2014, the company canceled its policy. Now, some workers aren’t insured, but those who are bear a lower cost.

It wasn’t a change that happened overnight. It was a slow bleed.

Three years ago, owner Ken Fernandez and office manager Shelby Rayl told the Idaho Statesman that Concrete Construction Supply’s premiums were out of control.

Fernandez had started offering health insurance in a benefits package in the mid-1990s, footing 100 percent of the bill for workers. Over the next decade, the cost of those benefits grew much faster than the economy. One year, premiums went up by 50 percent. The company pared back, asking workers to pay more of their share, offering skimpier packages and eventually slashing coverage altogether.

Rayl said the cost of Concrete Construction Supply’s plan through Blue Cross of Idaho, plus family coverage, had reached $660 a month when the company decided to send employees to the insurance exchange instead. Insurance for Rayl’s entire family purchased through Your Health Idaho cost $199 last year and $349 this year.

“We thought long and hard about our decision to drop company health insurance and ultimately felt like this was the best decision for our employees,” Rayl said this month. “The insurance companies had placed double-digit increases on our company insurance for the past 10 years that I have worked here. We went from a $500 to a $5,000 deductible.”

Some health insurance costs are soaring in Idaho. Idaho’s largest health insurers tacked on double-digit rate increases for people and small businesses in 2015.

Blue Cross of Idaho, the state’s biggest insurer, has set rates for certain plans 16.6 percent higher this year.

Regence BlueShield of Idaho, the second-largest insurer, set up a sister company called BridgeSpan to sell insurance on exchanges. BridgeSpan added 10.4 percent to one set of premiums this year on an exchange plan. Rates increased 6.2 percent on average across all BridgeSpan insurance plans sold on Idaho’s exchange. The average customer is paying $22 more per month than in 2014.

Insurers cite three key reasons for the increases:

1. Rising medical claims. BridgeSpan cited medical costs rising 7 percent a year.

PacificSource Health Plans – an Oregon insurer that covers some Idahoans – raised its rates this year. Sujata Sanghvi, executive vice president and chief operating officer of PacificSource, told the Statesman in November that the company projected its customers’ medical and pharmacy costs to rise 11 percent in 2015, and for new enrollees to cost more.

Twelve categories of medical problems gobbled up a large share of Blue Cross of Idaho’s claims between 2012 and 2013. Orthopedic and cancer care alone took up more than $25 a month per person across the company, according to a Blue Cross summary provided to the Statesman.

2. Costly new enrollees. The companies say Idaho consumers who got insured for the first time by using the exchange cost more than expected.

“We had a large percentage of our new membership (that) was a population of people who hadn’t previously had access to health insurance or health care,” said Josh Jordan, spokesman for Meridian-based Blue Cross of Idaho, which gained about 50,000 new individual-plan customers last year because of the health law.

3. Affordable Care Act taxes and fees. Blue Cross also paid $37.6 million in taxes and fees “associated specifically with the Affordable Care Act” in 2014, Jordan said. That included $2.2 million to participate in the exchange. Law requires the exchange to be self-sustaining, so insurance companies pay a fee to sell plans. Those fees can be passed on through higher premiums.

Any insurer with a double-digit or higher rate increase each year is now automatically subject to review to make sure that rate increase isn’t “unreasonable.” That change is part of the Affordable Care Act.

The state Department of Insurance reviewed and deemed all proposed double-digit rate increases for nonexempt plans this year to be “not unreasonable.” Based on justifications filed by insurers, the continuing rise in medical claims is what drives the rates.