Insurance regulators believe health insurance rates need to rise next year even more than Oregon carriers requested, after companies lost $127 million in 2014.
The Insurance Division posted its preliminary rate decisions today. In most cases, regulators raised rates to reflect medical costs that are higher than the 13 carriers in the individual market projected for next year.
Rates set by the division at this point range from $271 for Kaiser Health Plan of the Northwest to $389 for PacificSource Health Plans. The division projects monthly claims costs of $321 per member per month, so some carriers still fall short.
Patrick Allen, director of the Oregon Department of Consumer and Business Services, said health premiums fell short and need to rise.
“While we’re seeing a vigorously competitive market, we’re seeing a line of business priced below the cost of providing health care to the population, and that’s a long-term problem we need to fix,” said Patrick Allen, director of the Department of Consumer and Business Services, which oversees the state’s Insurance Division.
While the decisions are preliminary, with public hearings yet to be held, Allen said he would expect the numbers to hold when final decisions are made July 1, given that the division’s actuaries did a thorough analysis.
“It’s conceivable someone could come back to us with an important piece of data we inadequately understood that could result in a change,” he said. “I’m not expecting that to happen.”
The division is also adjusting small group rates, though not as much as the individual rates.
Most of the losses and focus have been on the individual market. Insurance Commissioner Laura Cali said it boiled down to increasing costs for medical services and prescription drugs.
“We thought the filings were very aggressive and made assumptions about costs that are lower than what’s reasonable,” Cali said.
The total cost to provide coverage was $830 million for individual plans last year, while premiums were only $703 million, resulting in a loss of $127 million, or $624 per person, on average.
The division is concerned that losses will be similar this year, based on carriers’ first quarter performance. If the division approved carriers’ 2016 requests, they would lose another $120 million. The preliminary decisions cut that collective loss in half, to a projected $60 million.
“It’s still possible they could lose money in 2016, with the rates we’re approving,” Cali said.
Zoom+ Performance Health Insurance had initially filed the lowest request, at $233 a month for a standard “silver” plan for a 40-year-old in Portland. The division found the rate needs to be $291 a month.
The division has recommended certain requests remain in tact, including Moda Health’s 25.6 percent hike, for $307 a month. Moda is the largest player in the individual market, with 101,000 customers, or 46 percent market share. The division also let stand LifeWise Health Plan of Oregon’s 38.5 percent requested increase and Health Republic Insurance Co.’s requested 37.8 percent increase.
Kaiser had been the only carrier to request a reduction in the individual market. The division wants to adjust that request from a 2 percent cut to an 8.3 percent increase.
The division wants to more than double Providence Health Plan’s 10 percent increase, to 21.6 percent, and to nearly quadruple Health Net Health Plan of Oregon’s 9 percent request, to 35 percent.
Oregon’s Health Co-Op’s 5 percent increase request was also inadequate, the division found. It said the company must raise rates by 20 percent, after cutting them last year.