Highmark seeks high premium increases for individual health plans

Highmark Inc. wants to raise premium prices by as much as 39 percent for individual policies to offset steep financial losses from selling those plans under the Affordable Care Act.

The state's largest health insurer is asking Pennsylvania regulators to approve the rate increases, which range from 23 percent to 39 percent depending on the policy, for plans it would sell next year on the health law's online marketplace.

Gov. Tom Wolf on Monday called the requests from Highmark and three other companies “extremely concerning” and pledged to review them and “reject excessive rate increases,” his office said.

“The most important consideration for the governor is the impact these rate proposals could have on consumers,” according to the statement.

Highmark seeks increases ranging from 9 percent to 28 percent on policies it sells directly to individuals outside the marketplace and to small businesses.

If approved, the rate hikes would affect nearly 270,000 Highmark individual customers and about 30,000 policyholders who have plans through a small business.

Policyholders would have a chance to shop for coverage from other carriers when open enrollment for 2016 starts Nov. 1.

Highmark spokesman Aaron Billger said the rate increases were caused by customers, most of whom were uninsured, using more medical services than the company predicted when it set rates.

“The pent-up demand for services from this population is driving greater utilization than anticipated,” Billger said. “In fact, our data has found that, on average, individuals who purchased an ACA plan utilized services more than those who purchased coverage through an employer.”

The proposed rate increases are being made two years after Highmark debuted marketplace rates in fall 2013 that were among the least expensive in the country. It attracted 131,000 customers for 2014, the most of any insurer in the state that year.

The low rates resulted in financial losses for the company. Highmark said it expects to recover $155 million from the government through a program meant to reduce losses for insurers selling marketplace plans.

In addition to Highmark, three insurance companies in Pennsylvania are proposing rate increases greater than 10 percent — a level that triggers greater scrutiny under the health law.

First Priority, a joint venture owned by Highmark and Blue Cross of Northeastern Pennsylvania, requested rate hikes between 21 percent and 35 percent; Geisinger Health, which sells plans in Central Pennsylvania, wants increases of 40 percent to 58 percent; and Time Insurance Co., a subsidiary of Assurant Inc., requested a 61 percent increase.

Other insurers selling marketplace plans in Western Pennsylvania — Aetna Inc., United Healthcare and UPMC Health Plan — requested increases of less than 10 percent, according to the state Department of Insurance.

James McTiernan, a vice president at Downtown benefits consulting firm Arthur J. Gallagher, said insurers had little idea of what to expect when they set rates for marketplace plans. Some companies, such as Highmark, greatly underestimated how much it would cost to cover medical expenses for people gaining health insurance for the first time, he said.

“They probably have a better feel now for what their risk looks like,” he said. “This is just bringing the premium to accurately reflect the risk they've attracted.”

Dozens of health insurers want price hikes well beyond 10 percent for individual coverage next year, according to preliminary rate information released on the government's HealthCare.gov website. Health plans in North Carolina, Illinois and Florida, among other states, asked for hikes of 20 percent or more.

Premium prices are expected to be finalized this fall.

Alex Nixon is a Trib Total Media staff writer. Reach him at 412-320-7928 or anixon@tribweb.com. The Associated Press contributed.