Iowa: Preliminary requested 2019 rate increase: Less than 5.6%, likely would DROP ~5% w/out ACA Sabotage

2018 MIDTERM ELECTION

Time: D H M S

Last year, Iowa's already-ugly individual market was rocked further yet by Big Kahuna Wellmark announcing that after finally entering the ACA exchange market in 2017, they were dropping back out again this year, leaving Medica as the only carrier offering ACA-compliant policies throughout the whole state. In response, Medica raised their 2018 ACA rates by a whopping 57% this year. This, in turn, led to the state legislature passing a law which stripped away pretty much any type of restriction or regulation of "Farm Bureau" plans, exacerbating the risk pool problem further yet.

By an amazing coincidence, right at the same time the farm bureau law was being passed and signed into law, Wellmark just happened to announce that they had changed their minds again for 2019 and will be jumping back into the ACA exchange market. Of course, this was no coincidence, seeing how Wellmark somehow just happened to secure exclusive rights to the newly-expanded Farm Bureau market anyway.

If I worked at Medica I'd be none too thrilled with the situation, but according to the Des Moines Register, they're sticking it out again next year anyway:

Iowans who buy their own health insurance will have at least three choices of carriers next year — after nearly going without any options for 2018.

Medica, which is the sole carrier selling individual health insurance policies in Iowa this year, will continue doing so for 2019, an executive said Friday. Wellmark Blue Cross & Blue Shield has previously said it would resume selling such policies for 2019.

Besides resuming sales of its own individual policies next year, Wellmark plans to partner with the Iowa Farm Bureau Federation to sell a new kind of health coverage. However, those plans might not be offered to people who have pre-existing ailments and they won't qualify for federal subsidies to help pay premiums.

Well, that's one way of putting it, I suppose. Another way would be to say that they're junk plans which will be completely unregulated by the state Insurance Dept.

...Aetna and Wellmark pulled out of Iowa’s individual health insurance market for 2018, citing financial losses and uncertain risks. Medica was the only remaining carrier, and its leaders said they were considering exiting as well. Medica decided at the last minute to continue selling individual policies in Iowa for 2018, but only by raising premiums an average of 57 percent.

Medica now has about 45,000 individual health insurance customers in Iowa. About 85 percent of them qualify for Affordable Care Act subsidies, which help pay consumers’ premiums and shelter them from big price increases.

...Bartsh declined to say how big of a premium increase it will propose in its filing to the Iowa Insurance Division. That figure will become public in the coming weeks.

In any event, it looks like the big 57% spike must've done the trick, because they're "only" requesting a single-digit rate increase this time around:

Medica, the sole carrier now selling individual health insurance policies in Iowa, plans to raise its 2019 premiums by less than a tenth as much as it did for 2018.

Medica raised its Iowa health insurance premiums by a staggering average of 57 percent for 2018. It was the steepest such health insurance increase in Iowa history. Company leaders said last summer they needed the higher premiums to stay in the market. But this time around, the Minnesota-based carrier is planning to raise Iowa premiums by an average of less than 5.6 percent, state regulators disclosed Wednesday.

The actual filing and average rate increase hasn't gone public yet, but the Iowa Insurance Dept. did say that Medica is below the 5.6% threshold which would trigger a public hearing. Based on that, it's conceivable that there could even be a price drop for Medica, but the article goes on to note that...

..."As a result we'll need a smaller increase to account for these challenges heading into 2019," [Medica VP] Bartsh wrote in an email to the Register Wednesday.

So, Medica's 2019 ACA-compliant individual market policy rate hikes will average somewhere between 0.1 - 5.6%. Fair enough.

But what about the ACASabotage factor? How much of Medica's increase request is due to either the ACA's individual mandate being repealed or the expansion of #ShortAssPlans?

Well, the Urban Institute estimates around a 15.8 percentage point hit. I've been erring on the side of caution and going with 2/3 of that. However, I have to figure Iowa's new Farm Bureau plans will likely have pretty much the same effect as #ShortAssPlans by stealing away unsubsidized, healthy enrollees from the ACA risk pool, so I'm going to go with 1/2 of the Urban Institute estimate instead. That suggests roughly an 8% impact, which means that if the individual mandate hadn't been repealed, Medica would likely be lowering 2019 premiums by somewhere between 2-8%. I'm gonna call it -5% for the moment.

If and when Medica's actual rate filing becomes available, I'll be sure to revise/update this entry; I could be way off on this one.

As for Wellmark, their 2019 rates won't be counted as an "increase" of any amount at all, because...

...[Wellmark] will not face a public hearing for those policies, because they are considered new to the market and the premiums don’t represent increases from existing plans.

However, Wellmark will face a rate hearing on 63,500 individual health insurance policies that consumers bought before the Affordable Care Act took effect in 2014. The average rate increase Wellmark has proposed for those plans is 8 percent, according to the insurance division.

...The division also will hold a public hearing on an 11 percent proposed premium increase for 3,780 longstanding policyholders of Golden Rule Insurance, which is owned by UnitedHealthcare.

In other words, there's around 67,000 Iowans still enrolled in grandfathered or transitional policies who are looking at an 8.1% rate increase.