Copyright © 2015 Albuquerque Journal
Citing higher-than-expected costs, Blue Cross and Blue Shield of New Mexico wants to raise premiums by an average of 51.6 percent on individual Affordable Care Act plans in 2016.
The company made the request in a preliminary rate proposal filed with New Mexico Insurance Superintendent John Franchini. Blue Cross and Blue Shield – which insures an estimated 600,000 people statewide – said the proposal affects an estimated 35,000 customers who signed up for qualified individual health plans through the New Mexico Health Insurance Exchange, but also those who bought the same plans off the exchange.
Franchini has the final authority to approve or not approve Blue Cross and Blue Shield’s request.
His office – including an in-house actuary and a contracted actuary – also will consider rate increase proposals from Presbyterian Health Plan and New Mexico Health Connections. Franchini said Presbyterian wants an average increase of 6 percent on its individual plan premiums, while New Mexico Health Connections seeks a bump of 4 to 5 percent on its individual plans.
Franchini said the other two companies selling through the exchange – Molina and Christus – did not ask for premium hikes in their preliminary proposals, though final requests are not due until June 15.
The new rates would go into effect Jan. 1.
Customers will have had a chance to shop around for coverage during an open enrollment period that begins Nov. 1.
Kurt Shipley, president of Blue Cross and Blue Shield of New Mexico, told the Journal this week the requested increase reflects the real costs of coverage rather than the projections the company used when setting initial rates. He said those who bought the individual plans tended to be older and in poorer health than expected. Others came to the company having not previously had health coverage.
“The rates we thought would be adequate were not enough,” Shipley said in a Journal interview. “As we obtained more information and paid claims and have gotten that additional experience, it’s clear to us that rates need to be higher in order to cover the costs associated with those plans.”
He said Blue Cross and Blue Shield lost money on such plans in 2014 and in 2015, but he would not provide an exact figure. Shipley did say “we’ve seen some very large and significant claims with this block of business.”
The size of Blue Cross and Blue Shield’s requested increase has made national news. The Wall Street Journal last week highlighted it in a story about the large increases insurers want for plans they sell under the federal health law.
Shipley cautioned that the rate increase was not final and that, even if approved, would likely impact different members differently. He said federal subsidies – for which two-thirds of the affected Blue Cross members qualify – could soften the blow of higher premiums.
Since the federal health law requires insurers to spend at least 80 percent of premiums on medical care or else offer refunds, Shipley said “there’s really no motivation for charging more than is necessary.”
Franchini said his office has asked Blue Cross and Blue Shield to answer a series of questions related to its initial increase request and is also reviewing the other insurers’ proposals.
He said he has not yet seen any of the five companies’ final requests yet but plans to move swiftly after receipt so that all rates are cemented by Aug. 1.
About 80,000 New Mexicans have qualified individual health plans today. An estimated 50,000 were sold through the exchange. Blue Cross and Blue Shield represents about 30 percent of the exchange-bought plans, Franchini said, about the same amount as Presbyterian and New Mexico Health Connections. Christus and Molina have significantly smaller pieces.
Blue Cross and Blue Shield was one of three companies on the New Mexico exchange that lowered its average premium for 2015. At the time 2015 rates were announced, some insurers expressed optimism that a new wave of previously uninsured people – and not just those with major health conditions and the greatest medical needs – would start signing up. Blue Cross and Blue Shield also touted better contract terms with some of its health care providers for its own ability to cut premiums from 2014 levels.
Insurance premiums vary widely based on an individual’s age, smoking habits, location and level of coverage, making it difficult to compare general rates among companies.
But a Journal analysis of 2015 rates for a 50-year-old nonsmoker in Albuquerque found that the lowest-priced, “bronze” level plan for Blue Cross and Blue Shield comes with a monthly premium of $199.56. That’s higher than New Mexico Health Connections ($182.62) but lower than the other three companies on the exchange, including Christus, which offered its cheapest “bronze” coverage at $365.25.
Premiums are just one factor in health care costs. Customers must also consider associated out-of-pocket expenses.