Exchange premiums could rise more than 10 percent next year — or drop, for some

Updated: 10:25 a.m.

Two insurers selling health plans through Connecticut’s exchange want to raise rates by more than 10 percent next year, while a third wants to lower its premiums, according to proposals filed with the Connecticut Insurance Department.

Meanwhile, individuals who buy coverage through the exchange are likely to get a fourth option in 2015. UnitedHealthcare indicated in a filing with the insurance department that it intends to sell individual-market plans through Access Health CT, the state’s exchange.

Some caution about what the filings mean, and what they don’t: These proposals are not the final say on what insurance will cost on the exchange next year. State regulators must first review the proposals, and that could lead to changes.

Any rate hikes that get approved won’t necessarily translate to significantly higher bills for the majority of Access Health’s customers who get federal financial assistance with their premiums.

And while the proposals provide insights into the companies’ expectations for 2015, they’re not based on the claims filed by current exchange customers — meaning that they’re not a gauge of how sick or healthy the people who bought coverage as part of the federal health law are.

Still, the rate proposals could mean significant cost changes for people who don’t qualify for help with their insurance premiums — a considerable number of people in Connecticut.

Here’s what you should know.

What are the proposed rate increases and decreases?

Anthem Blue Cross and Blue Shield proposed rate increases that average 12.5 percent for its plans sold on and off the exchange. The actual rate increases vary by plan.

Under the proposal, Anthem’s exchange plans would see premium increases ranging from 4.39 percent to 17.38 percent. There is one exception: Premiums for the catastrophic plan, which is available to people under 30, would drop by 4.8 percent.

Insurance premiums vary based on a person’s age, county and the specific plan. Anthem’s proposal would also increase the cost people outside Fairfield County pay.

ConnectiCare Benefits proposed an 11.8 percent increase to its base rates.

But that doesn’t mean all customers would see that level of increase. A base rate is the starting point for calculating premiums. It then gets multiplied by specific numbers corresponding to the person’s age, county and plan type. ConnectiCare’s 2015 proposal wouldn’t change the multipliers for age or county, but does vary the multipliers for plan type. Why is that significant? It means that even if the base rate rises by 11.8 percent, the actual increase for individuals’ premiums would vary.

HealthyCT proposed decreasing its rates by an average of 8.9 percent. The companies rates are among the highest on the exchange this year. As with Anthem’s proposal, the level of proposed premium change varies by plan.

HealthyCT also proposed changing the amount that people in each county would pay. Although the overall rates would still drop, people in Litchfield, Middlesex, New Haven and Tolland counties would see somewhat less of a decrease, while people in Fairfield, Hartford, New London and Windham counties would see a somewhat larger price drop.

Why do the insurance companies say they need to raise or lower their premiums?

Anthem’s filing indicated that it expects sicker people to join its insurance pool in 2015, including people who were previously uninsured and have pent-up demand for health care that will make them particularly costly to cover.

The company’s proposal also indicates that it expects the increase in the use of medical services and cost of care to account for an 8.4 percent increase in costs. Other factors cited include changes in benefit design, anticipated changes from contracts with health care providers, and changes in taxes, fees and other expenses.

Anthem’s proposal also cites the expected cost of expensive new Hepatitis C drugs on the market, including the high-profile medication Sovaldi.

ConnectiCare’s proposal indicates that the company expects the use of medical services and cost of care to lead to a 10.7 percent cost increase, and that fees and costs related to the health law will add to the cost of each member’s premium.

HealthyCT’s rate decrease is largely the result of changes in projections about the health of the insured population.

As a new company in 2014, HealthyCT didn’t have any customer experience to use to develop its rates for this year. In coming up with its 2014 rates, the company anticipated that members would have pent-up health care needs because they had been uninsured in the past, and factored in additional costs to account for their medical care.

But since then, HealthyCT reviewed other companies’ filings and determined that that adjustment wasn’t necessary, according to the 2015 rate filing. In addition, the filing noted, the previously uninsured members anticipated in 2014 are now insured, and their costs are expected to be more typical of the rest of the insurance marketplace. As a result, HealthyCT removed the additional premium costs associated with having a sicker-than-usual population.

What happens now?

Actuaries at the Connecticut Insurance Department will review the rate proposals and issue a decision on each one. The department can approve the rates as proposed, reject them or require that the company adjust them to a different percentage.

As part of the review process, the department accepts comments from the public. The comments will be accepted through June 23.

What about people who get subsidies?

People who get financial assistance with their premiums — more than three-quarters of Access Health’s current private insurance customers — won’t face cost hikes or drops that match any premium changes the insurance department approves.

That’s because of the way their financial assistance is calculated. Under the federal health law commonly known as Obamacare, the level of subsidies that people get are set so that they won’t pay more than a certain percentage of their income to purchase a certain plan (in technical terms, it’s the second-cheapest silver plan). People can apply that dollar amount to buy any exchange plan they want.

But people who don’t qualify for subsidies will have to pay the full cost of any rate hike if they want the plan — and they’ll get any savings that come with a rate decrease. The income limit for getting financial aid next year will be about $46,680 for a single person and $95,400 for a family of four.

What do these proposals say about the health of the people currently in exchange plans?

Not much, according to the insurers.

One of the big questions about exchange plans is what the medical needs – and, by extension, cost – of the newly insured will be. An insurance pool with sicker-than-expected members could lead an insurer to seek higher premiums to cover additional costs in the future. A healthier-than-expected population could help keep rate hikes down.

But according to the insurers, these rate proposals weren’t based on the health care costs of the current exchange customers because there’s not enough data to draw conclusions yet. Members have only been insured for five months at most, and many people don’t use their insurance as soon as they get covered — meaning that it can be tough to gauge the health of people in each plan after only a few months of coverage.

“The actual 2014 experience is too small and immature to be a credible source for setting the 2015 rate levels,” Karen Clarke, HealthyCT’s vice president for external affairs said. The company had the smallest enrollment of exchange plans, with 3 percent of members. She said the company’s 2015 rates were based on public information about rates, rate filings and actuarial analysis.

Similarly, ConnectiCare said in a statement that, “Due to the submission date deadline, premium rates submitted reflect limited insight into the health of individual members purchasing their policies through Access Health CT.” The company expects to have a better understanding of health care usage later in the year.

Anthem’s rate filing indicated that the rates were developed using data from the small group market, which the company considered to have some similarities to the current individual market.

“In developing rates effective January 1, 2015, only limited 2014 experience is available. This experience is not deemed credible for purposes of rate development,” the rate filing said.

So what happens if the exchange population is much sicker than insurers expected? Insurers selling plans on the individual exchange markets are shielded some financial losses and expensive claims by protections built into the federal health law. Those expire after 2016.

What else do the rate filings show?

The filings indicate that Anthem, ConnectiCare and HealthyCT all plan to offer more plan options next year.

In addition, ConnectiCare proposed selling a platinum plan, which would have the highest premiums but the lowest out-of-pocket costs for members when they get care. No carriers offered a platinum plan this year, and Anthem’s filing indicates it does not intend to offer one in 2015.

Read more about Access Health’s plans for next year, including what’s changing and the benefit details of each standard plan.