First published in Landings, December, 2015.
Open enrollment for the Health Insurance Marketplace began on November 1 and will continue until January 31, 2016. Mainers purchasing health coverage through the Marketplace will see rates increasing only slightly. All three insurance companies in Maine’s exchange have modest rate increases for their plans which are significantly below the national average and much lower than the double-digit increases projected for some cities.
Rates reflect many influences. Significant drivers for 2016 are the basic growth in health care costs; a decrease in funds available through the Monetary Reinsurance Program; and the composition of a risk pool and just how well the pool matches projected costs. Don’t worry, I’ll explain what these mean!
Overall, it’s the simple increase in health care costs that largely drives this year’s rate increases. One of the biggest increases is a growth in prescription drug spending as well as a rise in spending on specialty drugs. Other medical costs will continue to grow as well.
The Monetary Reinsurance Program was established to offset costs to insurers which provide coverage to high-claim enrollees through health insurance plans offered through the Marketplace. Reducing the claim costs for insurers allows them to offer lower overall rates. The funding for this program comes from contributions required by the Affordable Care Act (ACA) from all health plans including individual, small and large group markets and self-insured plans. When availability of these funds decreases, health insurance rates in turn increase.
Health insurance companies form a risk pool in order to buffer the costs they might experience from high-claim customers. The risk pool is created by anticipating who will enroll by gender, age, and health status. The changes to Maine’s risk pool for 2016 are based on data from how enrollees used their coverage in 2015. Maine has one of the highest enrollment rates in the country. Because of this we also have a large number of chronically ill or injured people who are now covered by the ACA which creates Maine’s high risk pool. The increased enrollment of younger, healthier people, however, has helped to control overall rate increases.
Maine’s health insurance rates didn’t rise as steeply as others did across the country. The rates for Community Health Options’ (originally, Maine Community Health Options) 2016 plans have increased by 0.5%. The rates for Anthem’s 2016 plans increased by an average 5%, and Harvard Pilgrim’s rates for 2016 plans will experience an average decrease of 4.8%.
All health insurance rate proposals have to be approved by Maine’s Bureau of Insurance, where they are reviewed, negotiated, and finalized. Some studies have shown that in states where there are health insurance cooperatives, such as Community Health Options, premiums remain lower than in states that do not have a cooperative. The health insurance cooperatives were formed under the ACA as a way to ensure competition with long-established insurance companies. Federal loans were provided to these cooperatives to help get them off the ground. In Maine, Community Health Options received a federal loan that has been mainly used for startup costs and sustaining stability.
With health insurance premiums holding steady in Maine, be sure to visit the Marketplace at www.healthcare.gov, or call the MLA at 967-4555, to get a quote on 2016 coverage for you and your family.Category: Programs