SEATTLE – While some states are expecting double-digit increases in individual health care insurance premiums next year, some Washington insurers on the state exchange plan to lower their rates for 2016.
Most Washington residents who buy health insurance through Washington Healthplanfinder, however, should expect to pay more next year. A big chunk of those increases is tied to an exchange user fee collected to pay to run the state exchange, Washington’s answer to the federal Affordable Care Act.
Lawmakers are considering a budget request from the state exchange that would increase that fee from just over $4 per person per month to $14.
One of the region’s biggest health insurance companies, Premera Blue Cross, has requested an average rate hike of 9.6 percent for its individual policies in Washington. This year, Premera is insuring about 80,000 Washington residents with individual insurance plans, according to the state.
Premera spokeswoman Melanie Coon said the state user fee increase is driving the rate increase, along with a better understanding of how much it costs to cover the Washington residents who are new to health insurance and have what she called a “pent-up demand” for medical care.
Premera’s sister company, LifeWise Health Plan of Washington, is taking a different approach for 2016, offering more limited plans but dropping its rates slightly, Coon said. That company has more than 56,000 customers, according to the state.
The state insurance commissioner has estimated insurance rates within the health care exchange would go up 5.4 percent as a weighted average if the companies’ proposed rate increases – and decreases – are approved by his office. In most years, however, insurance rate increases are approved at lower amounts than company requests.
In some other states, insurance companies are requesting double-digit premium boosts because they say they experienced higher-than-expected care costs and other expenses.
Coon said prices are going up faster in places such as Alaska, for example, because there are fewer people to share the costs. And while insurance companies have done the best they can at estimating their true costs, the rates they will set for 2016 are the first prices based on 12 months of real experience.
“People didn’t have data to go on. They didn’t have the claims experience. They ball-parked it,” Coon said. “Over time, they’re figuring it out.”
Washington Insurance Commissioner Mike Kreidler said Washington’s insurance market is more stable than in other states and most companies have managed to make money in the first few years of health care reform.
He credits the way Washington set up its exchange, the state’s quick embrace of Medicaid expansion, other state laws that have kept things competitive and his decision to refuse to allow insurance plans out of compliance with the Affordable Care Act to be sold here, despite President Barack Obama’s request to do so.
Even with the proposed $10 increase in the exchange user fee, health insurance rates are still more stable in Washington state, Kreidler said. He doesn’t think consumers would get a better deal on the federal exchange, because there still would be costs to run the state’s Medicaid program and to administer the Washington portal to the federal exchange.
Kreidler has concerns about the legislative process and what the final state budget will say about user fees and the exchange. The Senate and House versions of the budget are millions of dollars apart and philosophically different.
The Senate version puts more weight on the user fees within the exchange. Only individual insurance policies – not group health policies sold to companies – that are sold on the exchange and those sold both on and off the exchange are subject to the proposed $14 fee per person per month. Insurance companies could offer slightly different policies and drive more people to buy insurance outside the exchange, which would hurt its long-term financial viability.
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