If you are an individual Anthem Blue Cross of CA policyholder, you likely received a very confusing letter recently. It stated “Anthem will not offer the plan you have now in 2018” and your rate for the replacement policy was increased from 17-60%. Further it read that this may not be the final rate and if the rates change you would be notified. You are referred to a website that states “rates are not available at this time, contact your agent”.
This has been particularly annoying to agents. The letters are poorly worded at best. Agents have not been given any rate chart or client list with the rates for 2018 plans! We are operating in the dark. As indicated before, I was able to track down filed rates but they do not clearly identify to which plans they apply.
Why aren’t the rates final? First, the insurance companies are required to have rates approved by the respective state’s department of insurance. Those deadline to submit rates to the regulators wasSeptember 30th. But the state has not yet approved the rates.
The other reason is the uncertainty about the rules and whether or not the subsidies will be funded in 2018 by the Federal government.
As explained in previous columns, the current political situation has created chaos in the individual insurance markets. It is very important to understand that without the mandate requiring everyone to have insurance, insurers cannot offer guaranteed issue coverage at anything close to current rates. Yet, there is talk of requiring “guaranteed issue” and no pre-existing conditions limitations without a mandate. That scares insurers!
One of the taxes designed to fund the ACA is due to be assessed in 2018. This is the 8% tax to insurers in 2018. That tax is passed on to the rate payer, so we knew we would have an 8% increase as the bare minimum.
Anthem will continue to offer an EPO (Exclusive Provider Option) in only three rural regions of California. They have pulled all individual products in the remainder of the state. Blue Shield of CA will continue to offer its PPO (Preferred Provider Organization) product in our area, so we will have two carriers from which to choose.
Blue Shield announced expected rate increases of about 17%. Since Anthem was running 25-30% below Blue Shield in the past, it looks like Anthem rates may have caught up with Shield and likely passed them, absent any surprises. Blue Shield is a “not-for-profit” insurer that has no stockholders to satisfy. Anthem is publicly traded and has stockholders to satisfy, so there are different priorities.
Both Blues will be closing some grandfathered plans this year. Rather than mapping the client to a new plan, the consumer will be required to take some action to choose a plan. Plans are closed when enrollment in the pool is so low it’s not cost effective for the insurer to continue offering the plan. This will hurt young adults since those Grandfathered plans had a better rate structure for young adults.
An additional surprise will be that children are now rated individually down to age 14, rather than age 21. This will further impact family plan rates.
At a recent “select broker’ meeting, we were informed that Blue shield will be reporting a net loss of $200 million on the 2016 individual business pool. Fraud related to Special Enrollment Periods (SEP) is a big cost driver. One type of SEP is created when someone moves to a new service area.
Blue Shield has found that some individuals who don’t live in California are using phony addresses to indicate they moved here, creating a qualifying event and access to some of our stellar medical facilities for hospitalization and rehabilitation. This is one of the reasons the insurers want more restrictions on qualifying events.
So what to do now? All we say is “sit tight”. We simply won’t know until the final rates are released. Our quoting software will not guarantee access to those rates until 11/1/2017. Open enrollment in California begins 11/1 and ends 12/15 for a January 1 effective date. The open enrollment period is extended to 1/31 but any plans written after 12/15 will be effective February 1 and after 1/15 will be effective 2/1.
We expect November to be a very busy month!