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Health Insurance & Affordable Care Act

Health Plans Scramble To Calculate 2015 Rates

WebMD News from Kaiser Health News

By Jay Hancock

Fri, Apr 25 2014

With the results sure to affect politics as well as pocketbooks, health insurers are already preparing to raise rates next year for plans issued under the Affordable Care Act.

But their calculation about how much depends on their ability to predict how newly enrolled customers – for whom little is known regarding health status and medical needs -- will affect 2015  costs.    

"We're working with about a third of the information that we usually have," said Brian Lobley, senior vice president of marketing and consumer business at Pennsylvania's Independence Blue Cross. "We've really been combing the data to get a first look."

At stake are price increases that buyers on the federal exchange, healthcare.gov, and other online marketplaces will encounter when they get renewal notices later this year. Forecasting success or failure could also affect whether insurers stay on the exchanges, a key pillar of the health overhaul.

The official 2014 enrollment period closed at the end of March for most consumers. But  carriers selling medical plans on healthcare.gov must file initial 2015 rate requests with federal regulators in late May or June -- even though they have little idea about the health and potential costs of their newly enrolled members. Deadlines also loom for state-run exchange filings.

WellPoint, the biggest player in the online exchanges, is already talking about double-digit rate hikes for 2015. Such increases would give ammunition to Republican critics of Obamacare before the November elections.

Analysts' expectations vary, but nobody is predicting decreases.

"We'll see rate increases in the marketplaces, but I think it's anyone's guess" about what the precise changes will be, said Sabrina Corlette, project director at the Georgetown University Center on Health Insurance Reforms. "It's like nailing Jell-O to a wall."

The health law required insurers to accept all applicants this year for the first time without asking about existing illness. That reduces what they know about customers and raises chances they'll sign sicker, more expensive members who were previously denied coverage.

At CoOportunity Health, a nonprofit carrier in Iowa and Nebraska, many enrollees scheduled medical treatments -- including surgeries -- as soon as possible after their new coverage began Jan. 1, said Cliff Gold, its chief operating officer. Among the procedures were several expensive transplant operations including heart-lung procedures that can cost over $1 million each.

But insurers tend to receive pharmaceutical claims long before hospital bills. They are poring over these early prescription records for clues about new members' medical status.

Pharmacy-benefit manager Express Scripts published data April 9 showing that marketplace enrollees in January and February were substantially more likely than average to have HIV infections, chronic pain, depression and other high-cost ailments.

But that doesn't necessarily mean average costs will soar.

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