While several health insurers have blamed large rate increase requests on what they say is a deteriorating individual market, Blue Cross and Blue Shield of North Carolina said Wednesday that the market is improving.
The Durham, N.C.-based insurer announced that it has lowered its 2018 rate increase request to 14.1%. Blue Cross initially asked to hike rates by 22.9% on average to account for higher medical costs, the return of the health insurance tax, and the possibility that the Affordable Care Act's cost-sharing reduction subsidies would go away. The rates still must be approved by the state's insurance department.
"The individual market in North Carolina has become less volatile," Brian Tajlili, the insurer's director of actuarial and pricing services, wrote in a blog post on the health plan's website. "We have gotten a better handle on the anticipated medical costs of people covered in this group which has made it easier for us to estimate the necessary price of our ACA health plans."
Blue Cross' announcement highlights that not all insurers are struggling on the individual health insurance market. Cynthia Cox, an associate director at the Kaiser Family Foundation, said the plan's revised rate request isn't surprising because the market is stabilizing.
A recent KFF analysis found that insurers' average medical claims costs grew slowly in the first quarter of 2017 at a rate of 5% per person. The number of days that individual market enrollees spent in a hospital in the first quarter of 2017 was also similar to the rates experienced over the past two years. The findings suggested that the exchange members this year are not noticeably sicker than they were last year, the analysis concluded.
Tajlili cautioned that not all of the ACA's challenges have gone away. The revised 14.1% rate increase request still assumes there will be no funding in 2018 for the ACA's cost-sharing subsidies, which help lower deductibles and co-pays for certain lower-income exchange members. The Trump administration has threatened to stop funding the subsidies, labeling them an insurer "bailout."
Insurance experts and industry groups have warned that the cost-sharing subsidies are essential to the stability of the individual market. Without funding, they warn that insurers would raise premiums even higher and some may choose to exit the market altogether. Insurers have until mid-August to finalize their 2018 ACA plan rates.
Meanwhile, Premera Blue Cross and Blue Shield—Alaska's lone health insurer selling plans on its exchange—filed for an average rate decrease of 22% next year. Premera said Alaska's new reinsurance program and a sharp reduction in the use of healthcare services by members led to the rate decrease. The rate request assumes the cost-sharing reductions won't be funded next year.
Alaska's reinsurance program helps cover people with high medical claims. The state set up the program under a Section 1332 innovation waiver, which was approved in July. Alaska asked for the funding after insurers projected premium hikes of 42% this year.