Big health insurance hikes coming
Health insurance companies are expected to jack up rates in Florida for people who buy their own policies and for small businesses to a lesser degree as the federal Affordable Care Act goes into effect next year, according to information provided by the Florida Office of Insurance Regulation.
A rate analysis by the state Office of Insurance Regulation projected that health insurance premiums for individual mid-level “silver plan” policies purchased under the law will rise by an average of 35.2%, with a range of 7.6% to 58.8%.
The state also projected individual policies not purchased under the provisions of the law will see an average premium increase of 39.3%, with a range of 14.3% to 55.3%.
In addition, the state projected that premiums for small group policies – generally for businesses with fewer than 50 employees – would rise by an average of 10%.
The projections did not incorporate federal subsidies or credits that would be available under the law to many consumers to offset some of their insurance costs.
“Although the form and rate review process is ongoing, we have released this information to help the public and our state policymakers understand the full extent of federal health care reform and its imminent impact on our state,” Florida Insurance Commissioner Kevin McCarty said in a statement.
Despite the rate increases, health care industry observers have said most consumers nationwide will end up paying less for health insurance purchased under the Affordable Care Act due to the tax credits and other subsidies. They also have said the tax credits and subsidies will have a financial impact on the federal government.
“The Congressional Budget Office estimates that the subsidies will cost roughly $350 billion between 2010 and 2019, although the overall effect of the Act is estimated to reduce the [federal] deficit over the same time period,” said the Kaiser Family Foundation, a California-based nonprofit that focuses on health care issues.
In addition to subsidies, industry observers have said consumers will get better policy products under the Affordable Care Act, although it will almost certainly result in higher costs for insurers.
As of Jan. 1, for example, insurers will be required to offer certain sets of benefits; they can no longer turn away people with pre-existing medical conditions; they will be limited in what they can charge older policyholders; and policyholders’ financial exposure will be capped, among other changes.
Beginning Oct. 1, individuals and small businesses with fewer than 50 employees can enroll in health insurance plans under state exchanges set up under the Affordable Care Act.
In Florida, the federal government will assume the responsibility of running an exchange beginning in 2014 after Gov. Rick Scott and other state officials refused to implement an exchange, returning a $1 million federal grant to do so.
The state analysis of individual “silver plan” policies looked at how monthly premiums will change before and after the Affordable Care Act for 12 insurers in Florida, including 11 who will offer policies under the federal exchange.
The analysis used a hypothetical mid-level “silver plan” created by the state using adjustments to a standard plan in Florida and compared that pre-Affordable Care Act silver plan to actual silver plans filed with the state. The average increase was 35.2%.
The analysis included several of the largest insurers in the individual policy market in Florida. For Blue Cross & Blue Shield of Florida Inc., which ranked first in market share in that segment, the analysis showed that its average monthly premium would jump to $384 from the standardized base figure of $293 – a 31.2% increase.
In 2012, Blue Cross & Blue Shield of Florida – also known as FloridaBlue – collected $1.08 billion in individual major medical policy premiums in Florida for a 42.13% market share, covering 421,048 individuals, state statistics show.
The next largest insurer in the analysis was Aetna Health Inc., which ranked fifth in Florida’s individual market. It showed that Aetna’s average monthly premium would rise to $422 from the standard base of $293 – a 44.2% increase.
Last year, Aetna collected $117.5 million in individual major medical policy premiums in Florida for a 4.59% market share, covering 42,691 individuals, statistics show.
A second analysis looked at 12 insurers in Florida that provide small group health insurance, including five offering policies under the federal exchange and seven that do not. The analysis used a different gap analysis method, looking at average monthly premiums per person both before and after the Affordable Care Act. The average increase was 10%.
It found that Blue Cross & Blue Shield of Florida, which also ranked first in Florida’s small group market, would see its average monthly per-person premiums rise to $499 from a marketwide base of $431 – a 15.8% increase.
In 2012, Blue Cross & Blue Shield of Florida collected $1.09 billion in small group major medical policy premiums for a 30.65% market share, covering 229,877 individuals, statistics show.
The next largest insurer in the small group analysis was United Healthcare Insurance Co., which ranked second in market share. The analysis found that United’s average monthly per-person premium would rise to $495 from the base figure of $431 for a 14.8% increase.
Last year, United collected $856.2 million in small group major medical premiums in Florida for a 24.14% market share, covering 182,957 individuals.
Large group policies were not included in the analysis because they are not covered by the exchanges set up under the Affordable Care Act. Under the law, the exchanges initially will apply to individuals and businesses with fewer than 50 full-time equivalent employees, but that threshold will eventually rise to those with fewer than 100 employees.
Last year, the top three large group health insurers in Florida were Blue Cross & Blue Shield of Florida, which collected more than $1.6 billion in large group premiums for a 23.58% market share; United Healthcare Insurance, which collected more than $942 million in large group premiums for a 13.78% market share; and Aetna, which collected more than $760.4 million in large group premiums for a 11.13% market share, statistics show.
Beginning next year under the law, individuals will be required to either have health insurance from their employer or purchase it and will pay roughly a $100 penalty if they do not. Anyone making below the poverty line – $11,490 for an individual or $23,550 for a family of four – will not be eligible to buy insurance through the online marketplace exchanges.
The Kaiser Family Foundation has been critical of the state for not releasing more information about how the Affordable Care Act will affect rates in Florida.
Florida Office of Insurance Regulation spokeswoman Amy Bogner said her office is aware of the criticism and plans to release more information about rates in the future.