By Katie Kerwin McCrimmon
Consumer advocates are challenging proposed health insurance rate hikes that could hit western Colorado residents especially hard, with a 49 percent increase proposed for one plan there.
Vreni and John Diemoz of Glenwood Springs have faced extremely high health insurance prices. Photo: Katrina Smith, Denver Business Journal.
In recent years, Colorado’s mountain resort region has had some of the highest health insurance costs in the U.S. (Click here to read Priced out of health care reform.)
Rate experts with the Colorado Consumer Health Initiative filed comments this week, calling on regulators at the Colorado Division of Insurance to carefully scrutinize proposed 2016 rates from Rocky Mountain Health Plans, which has proposed a 34.4 percent increase overall; the Colorado HealthOP, which is asking for hikes of nearly 22 percent; and Humana, which has proposed exchange plan hikes of 15 percent.
Rocky Mountain Health Plans and the HealthOP are nonprofit health plans that enticed large numbers of customers through Colorado’s health exchange, Connect for Health Colorado. The HealthOP edged out Kaiser Permanente for sign-ups for 2015 through the exchange, grabbing about 40 percent of the market compared to about 35 percent for Kaiser and 15 percent for Rocky Mountain Health Plans. Kaiser is the outlier in rates for 2016, holding prices relatively flat with proposed increases of just 2 percent.
Consumer Advocates Question Proposed Rate Hikes
34.4% increase – Read concerns about Rocky Mountain Health Plans’ proposed hikes.
21.6 % increase – Read concerns about Colorado HealthOP’s proposed hikes.
15% increase – Read concerns about Humana’s proposed hikes.
Read overall concerns about rates.
Managers at Rocky Mountain say they would have much preferred not to raise rates like last year, but they could not.
“We have a sicker population and higher costs than any other carrier in Colorado,” said Neil Waldron, chief marketing officer and director of strategic initiatives for Rocky Mountain Health Plans.
Rocky Mountain just learned it’s getting a $68 million payment from the federal government to reimburse it for insuring the sickest patients in 2014. The next highest payment in Colorado will be less than one-third of that amount: $21 million to CIGNA. The HealthOP will get about $15 million, but will have to pay a state pool about $4 million to reimburse others. Kaiser gets about $27 million back from the feds, but has to pay $34 million into the state risk pool, leaving Kaiser with a net payment of nearly $7 million.
“If we hadn’t put any rate increase in, we estimate we would lose about $1,900 per member in 2016,” Waldron said. “We have no choice. We have to put in the rate increase to avoid that kind of loss.”
Colorado insurance regulators are reviewing proposed rates and plan to finalize them by September.
According to an analysis from the Colorado Consumer Health Initiative, nearly all insurance carriers are proposing relatively steep price hikes, among them:
- 34.4 percent for Rocky Mountain Health Plans
- 26.6 percent for Colorado Access
- 21.6 percent for the Colorado HealthOP
- 20.9 percent for Humana
- 12.7 percent for Denver Health
Health Policy Analyst Matt Valeta of the Consumer Health Initiative called on state regulators to be sure that insurers are not passing unnecessary costs on to consumers. He also said some carriers like Rocky Mountain are seeking to raise rates, while keeping unnecessarily high reserves and are failing to be fully transparent about their rates.
Consumer advocates want state regulators to hold insurance companies more accountable by requiring public hearings to allow consumers to ask insurers questions about price hikes, requiring reports from carriers on how they are trying to hold down costs and improve quality, and giving consumers plenty of warning about price increases prior to open enrollment to avoid “unpleasant surprises.”
“We would be hopeful that they’re taking a hard look (at proposed rates),” said Adela Flores-Brennan, executive director of the Colorado Consumer Health Initiative.
She called for much greater transparency from carriers and from Rocky Mountain Health Plans in particular, which cited trade secrets in many cases.
“There was a lot of information that we were not able to see, so we don’t know everything that is driving those rate increases,” Flores-Brennan said.
In letters to regulators, the consumer analysts said they were especially concerned about the western region, where a new geographic rating system was supposed to drive rates down by 17 percent. Instead, Rocky Mountain is proposing significant increases in the area with specific hikes ranging from 32 to 49 percent.
Waldron of Rocky Mountain said the company “is not a big player” in the mountain resort region even though Rocky dominates Grand Junction, where it is headquartered.
He said the HealthOP and Anthem Blue Cross Blue Shield have a much larger share of customers in resort areas. And Kaiser — which is moving into western Colorado for the first time in 2016 — is likely to have a big impact.
“They are the ones that are really going to dictate what consumers are going to experience,” Waldron said. “We’re a player there, but a small player.”
Waldron said he thinks many of the states sickest patients chose Rocky because they were familiar with their plans.
“We were the administrators on the high-risk people under Cover Colorado. Those people knew us very well. It’s very possible they decided to stay with us and they were the least healthy,” Waldron said.
Even with the hefty reimbursement from the federal government, Rocky lost about $5 million on individual plans in 2014, Waldron said.
“We’re getting hit especially hard. I think that the ACA (Affordable Care Act) as an overall architecture did a pretty good job. I just think we got hit particularly hard,” he said. “I would prefer to put in a very modest rate increase. But there is a process by which you have to do your rate calculations. You have a standard way of doing it.”
So even though consumer advocates and Rocky Mountain itself would like to see lower rates, Waldron thinks the proposed increases are about right.
As fluctuations in the market continue, Rocky’s membership has declined from about 30,000 in 2014 to 26,000 this year. It may decline further since Rocky is choosing to drop some of its plans in the Denver area for next year.
“We obviously want to be a major player, especially on the Western Slope where we originated. But we are going to see some shrinkage. We’re in a very volatile period,” Waldron said.
“What you’ll see is different carriers adjusting their rates and membership will shift between plans. What happens in 2016 is only part of the story.”
Rocky Mountain has traditionally offered broader networks with more choice of doctors and hospitals than some other carriers like the HealthOP.
“A broad network is likely to attract people with greater health needs,” Waldron said. “We’re going to continue the broader networks, but not on the Front Range.”
In 2014, about one-third of the Rocky’s patients lived on the Front Range. Their costs amounted to about $1.70 for every dollar collected while Rocky was able to break even on its 20,000 patients on the Western Slope.
The Colorado Consumer Health Initiative also raised questions about the Colorado HealthOP. Insurance Commissioner Marguerite Salazar is keeping a close watch on the upstart insurance co-op because it’s grown so fast and has posted high losses. (Click here to read Insurance commissioner puts HealthOP on tight leash, requires special fund.)
On the one hand, Valeta, the consumer analyst, acknowledges that it’s vital for the HealthOP to have enough money to cover costs for more than 77,000 customers.
“As a new entrant into the health insurance market in 2014, we understand that capital acquisition is critical to the Colorado HealthOP’s continued presence in Colorado,” Valeta wrote. “Their exit from the marketplace would create significant shockwaves.”
Still, he urged regulators to keep a close eye on “dramatic rating swings from year to year.”
“In 2015, tens of thousands of enrollees in Connect for Health Colorado saw significant decreases to their advanced premium tax credits due to the Colorado HealthOP’s insurance rates,” Valeta wrote. “In 2016, tens of thousands of Coloradans will see an average rate increase of 21.6 percent, but they will likely not have another viable option as the Colorado HealthOP will likely remain the lowest cost insurer for much of the state.
“Even though consumers will still be purchasing the most affordable plan on the marketplace (health exchange), this increase will still be a significant hit to their budget.”
Added Flores-Brennan: “We just want to be wary of going in low and adjusting radically in subsequent years. We want to make sure that the DOI (Division of Insurance) is keeping an eye on the HealthOP.”
Overall, Flores-Brennan said Colorado consumers are lucky to have many, many choices. But it can be difficult to change insurance from year to year.
She does expect thousands of healthier people to come in to the exchange in 2016, as people who had non-compliant plans must buy new coverage.
In addition, penalties go up for failing to buy health insurance. In 2016, they will go up to $695 per person of 2.5 percent of income.
“We think it should be evening out quite a bit in 2016,” Flores-Brennan said.
These increases illustrate the gigantic flaw in the ACA. Republican hostility (in public, at least) to the ACA is largely disingenuous because the ACA – written in large part BY and FOR insurance companies – is a huge gift from Congress to health insurance companies, especially for-profit companies like UnitedHealth. Follow the money, folks, especially in terms of campaign donations. Where the ACA has saved consumers money has largely been around the edges of our huge, mostly unaddressed health care problem, which is cost, and more specifically, cost-effectiveness.
Most industrialized nations get better results than we do, and for far less money, because they control costs. We not only don’t do that, we’ve even written failure to control costs into law: Congress has prohibited price negotiations between government health-care agencies and “big pharma” for medications. In the cases of commonly-prescribed prescription drugs, this is a multi-Billioni-dollar gift to pharmaceutical companies, and at consumer (i.e., taxpayer) expense.
It won’t happen in my lifetime, but if we want to avoid – and we OUGHT to avoid – a health care scenario in which 3 or 4 huge companies monopolize and set prices for what is not, and never has been, a “free market,” we should scrap the ACA and put in its place a single-payer, government-run health care system based on Medicare and Social Security. Health care providers – individual (i.e., doctors and nurses) and institutional (i.e., hospitals and clinics) ought to either run directly by the government, with those who deliver health care being civil service government employees, or closely and relentlessly-monitored private entities subject to government scrutiny, with criminal penalties for fraudulent claims and fraudulent billing, among other things.
Health care ought to be, like education, street paving, clean water, and numerous others, a public service provided by people that we elect, not a profit-driven corporate enterprise wherein prices and costs are both hidden from the public which pays the bills.