2018 Rate Hikes: Iowa (early look)

Things are looking pretty precarious in Iowa for 2018, with Wellmark and Aetna bailing entirely on the state's individual market.

The good news, such as it is, is that Medica has stepped up to the plate as the sole insurance carrier filing to offer indy market policies (on the ACA exchange or off, I believe) across all 99 counties next year.

The bad news--although I can't really say that I blame them under the circumstances--is that they're insisting that they'll need a big rate hike to do so.

Here's the thing, though: First check out the headline in this story about it from The Hill:

Only ObamaCare insurer in most Iowa counties to hike premiums by 43.5 percent

One of the last insurers on Iowa's ObamaCare exchanges announced Monday it would sell plans in 2018 but proposed an average rate increase of 43.5 percent.

Medica's decision means every county in Iowa will have at least one insurer on the exchanges next year.

Now check out this from the article itself:

"We've filed with the intent to provide access to insurance for all Iowans, whether they are farmers, small business owners or other individuals who need coverage."

Because of the uncertainty surrounding ObamaCare, Medica will ask for 43.5 percent increases in its premiums, however.

"Rate increases of 43 percent are not sustainable long-term," Bartsh said.

"We know this will impact people who do not currently receive a subsidy particularly hard. The bottom line is that the individual market still needs reform. We will continue to work with federal and state officials to provide the certainty and stability needed for markets to succeed long-term."

Insurers all over the country have asked for double-digit rate increases for next year because the Trump administration has yet to provide clarity on whether it will continue ObamaCare insurer subsidies known as cost-sharing reductions.

Those subsidies reimburse insurers for giving discounts to low-income customers.

Insurers are also unsure about whether ObamaCare's individual mandate will be enforced and how the GOP overhaul of ObamaCare will affect them in 2018.

Without seeing the actual filing (it's not available on the SERFF website yet), I can't really say just what portion of that 43.5% consists of the two primary TrumpTax factors (CSR reimbursements/individual mandate enforcement uncetainty), so I'll have to apply my standard 50/50 split for now:

  • WITHOUT TrumpTax: 21.8%
  • WITH TrumpTax: 43.5%

Of course, while this resolves the immediate problem, it also raises two additional ones:

  • Again, those enrollees who receive tax credits (under 400% of the federal poverty line, or around $48,000 for an individual, $97,000 for a family of 4) should be relieved, but those who don't qualify for tax credits are kind of screwed.
  • As the sole carrier in the state willing to participate in the individual market, Medica is pretty much in the driver's seat here whether the regulators decide their 43.5% hike request is reasonable or not. If they shoot it down, Medica can simply take their ball and go home.

This, again, is why tying managed Medicaid (MCO) contracts to exchange participation is something I'm pushing hard--it's one of the best bargaining chips state governments have in getting carriers to stick around.