Sticker Shock On Its Way for Many Newly Insured Oregonians

by Curtis Farmer on September 28, 2015

in Administrative,Benefits

Health Care Costs

These last two years have seen many changes for individuals and employers thanks to the Affordable Care Act (ACA), including the mandate that all individuals have insurance that meets “Minimum Essential Coverage” and that large employers provide coverage to employees. For those not covered under their employer, a large number of the previously uninsured (or under-insured) Oregonians flocked to the individual healthcare market. This led to a large increase in enrollment for many of the state’s top insurance carriers, as the percentage of uninsured individuals in Oregon plummeted from 14% in 2013 to just 5% in 2014.

While on the surface that would sound very lucrative to an insurance carrier, the opposite has turned out to be true for most of these carriers’ bottom lines.

One key feature of the individual market also impacted by the ACA has been the requirement for “guaranteed issue,” meaning insurers can no longer exclude individuals or charge them higher rates based on health status or pre-existing conditions. This forced the carriers to do a lot of estimating claim costs, projecting usage of services, and good old-fashioned guessing. Unfortunately, many carriers guessed wrong.

Guessing wrong is, of course, bad enough when it means the profit margins for the top insurers were negative for the first time in over a decade, but those highly competitive rates drew in large numbers of new enrollees. Moda Health, for instance, tripled its membership in 2014. With limited claim data on which to base their 2015 rates, carriers are now forced to try and adjust for this imbalance by – you guessed it – hiking up rates for 2016.

What kind of rate hikes can we expect to see? The average rate request being proposed by the major carriers has ranged from a small 1.9% decrease from Kaiser Foundation Health Plan to a 42.7% increase from PacificSource. Other average rate requests from major carriers include a 38.5% requested increase from LifeWise, a 25.6% increase from Moda, and a 12.3% increase from Regence. These types of rate increases are likely to either drive more individuals to lower tier health plans with decreased benefits or back to their employer to try to get group coverage, where the rates may be more favorable.

If you are an employer looking for group coverage or a competitive quote for your current health insurance offering, please contact me at benefits@cascadeemployers.com.

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