Key points on health insurance costs
- As health insurers filed requests to raise rates in recent months, Ohio Department of Insurance says its seen "slight" increases in rates
- The rate increases have a bigger impact on individual and small group plans than they do large employee groups or employer-sponsored plans
- Insurers say premiums are rising due to higher costs of health care
- Insurance experts say costs also include expectations of future higher risk
- How changes in premiums affect you depend on when the plan is renewed, benefits covered by the plan and the insured pool's health risk
- These are average rate increases — some people will pay less and some more
Health insurance premiums are rising this year for many Ohioans, and some will see larger double-digit percent increases than they’ve seen before, according to rate requests filed by health insurers.
The rate hikes come ahead of implementation in 2014 of key provisions of the federal healthcare law, which industry watchers expect to dramatically increase insurance costs for some people even though the law’s intention is to help make health care more affordable.
Some individuals could see their rates rise 55 to 85 percent next year, according to a recent study for the state.
Here’s a sampling of rate increases in Ohio according to www.healthcare.gov, a website managed by the U.S. Department of Health and Human Services:
• Anthem Blue Cross and Blue Shield in Ohio raised rates for one of its small group plans by an average 11.6 percent, effective Jan. 1. The increase will impact 29,795 people.
• Aetna said it filed for an aggregate 14 percent increase in rates for individual Ohio plans to go in effect April 1. The company requested for small group plan rates to go up 12.3 and 13.2 percent. Aetna’s small group and individual health plan rate changes affect 40,794 people.
• Celtic Insurance Co., a Chicago-based health insurer specializing in individual health plans, requested Ohio’s highest proposed rate increases. The average of its proposed increases is 38.9 percent. The rate increases will be phased in over a year, and affect 1,934 Ohioans, Celtic said.
• Golden Rule Insurance Co., a company of UnitedHealthcare, requested and was approved for a 19 percent average increase in individual health plan premiums in Ohio, affecting 24,281 people.
The federal health care law requires scrutiny of health insurers who request annualized rate hikes of 10 percent or more.
Premium increases are larger for people who buy their own health insurance or work for small businesses because costs associated with large claims can’t be spread among a bigger group of participants. The expenses of large groups are also more predictable, insurance industry experts said.
Health insurance experts say some insurers are factoring higher future costs next year into their calculations this year.
What someone actually pays for health insurance depends on their plan, their benefits, age and health, so some people will pay less and some will pay more, experts said.
Ohio Department of Insurance reviews these rate requests, which carriers file throughout the year. The average rate increase in Ohio for individual and small group plans is still below 10 percent, according to the insurance department.
“We have seen rates or increases be up slightly this year over the last several months of filings we’ve seen compared to what they’ve been last year,” said Carrie Haughawout, assistant director for health policy of the Ohio insurance department. “Ultimately health insurance rates are just reflecting the cost of health care and the cost of health care (has been) going up for years, so the cost of health insurance has correspondingly been going up.”
Insurers say rates are rising due to the cost of health care services. The national trend is for medical costs, including hospital stays, to rise 7 to 8 percent a year, according to the state insurance department.
“Our rates reflect the underlying health care costs and care consumption of our members as well as projections of future trends in the cost of care and its delivery,” said Mary Krutiak, spokeswoman for Celtic, in a statement.
Celtic said in its rate request it has a medical loss ratio of 128.4 percent, which means it’s spending more money from enrollees on health care services than it is on overhead. The standard is 80 percent on health care costs.
The largest part of a member’s rate is the cost paid for medical claims, said Anthem spokeswoman Kim Ashley in a statement.
“The rate increases in the individual market are not unique to Anthem, but rather represent an economic reality faced throughout the entire industry, indicating health care costs continue to escalate faster than the growth of premiums,” Ashley said.
Scot Roskelley, Aetna spokesman, said in a statement premium increases “are being propelled by the increasing prices of hospital care, prescription drugs, doctor’s visits and other health care services. Other underlying cost pressures — from the underpayment for government insurance to the rising rates of obesity — also drive up premiums.”
U.S. Health and Human Services says the federal health care law is helping costs. Insurance rate reviews have saved $1.1 billion and medical loss ratio rebates have returned $1 billion to consumers and businesses, the department said.
The Patient Protection and Affordable Care Act requires insurers to stick to an 80/20 rule — that at least 80 percent of premiums paid by consumers be spent on health care and improving care quality.
A new report shows the nation’s health care tab was $2.7 trillion in 2011, up 3.9 percent from 2010, the third straight year of historically low increases in the United States, according to analysis by Health and Human Services.
“The health care law will help bring down costs and save money for American families and businesses. A number of provisions in the Affordable Care Act are already helping us to reduce the increase seen in health care spending over the past decade, keeping down costs for consumers, and ensuring better health and access to health care for millions of Americans,” said Fabien Levy, spokesman for Health and Human Services in a statement.
Insurers won’t be allowed to adjust rates based on health risk under the health care law the same way they have been.
“They’re trying to homogenize the rates so that everybody pays a similar rate and there’s not such wide swings from the lower, healthier end and the higher, older, sicker end,” said Haughawout of the state insurance department.
The effect of that will be so “those that have low risk are probably going to experience higher costs,” said Chris Brock, spokesman for state insurance department.
Health insurance premiums for individuals buying insurance in Ohio are poised to rise an average 55 to 85 percent in 2014, according to a study done by consulting firm Milliman Inc. on contract for the state. That estimates the impact of health care reform, and is in addition to the amount costs would increase to cover rising medical costs.
Employers with two to 50 employees are projected to see average increases of 5 to 15 percent in 2014 for the impact of the health care law, not including yearly medical trend increases, according to the Milliman study.
The Associated Press contributed to this report
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