Illinois: *Final* avg. unsubsidized 2024 #ACA rate changes: +4.9% (semi-weighted; updated)

Originally posted 8/08/23; updated 11/02/23

A few months ago, the Illinois legislature passed, and IL Gov. Pritzker signed, a new law which made my healthcare wonk heart sing, including:

• Provides that beginning before or on May 1, 2026, and each May 1 thereafter, the Department of Insurance shall report to the Governor and the General Assembly on health insurance coverage, affordability, and cost trends.
• Amends the Illinois Insurance Code.
• Provides that any forms and rates filed for large employer group accident and health insurance shall be automatically deemed approved after 90 days after filing.
• Provides that beginning plan year 2026, rate increases for all individual and small group accident and health insurance policies must be filed with the Department for approval.
• Provides that unreasonable rate increases or inadequate rates shall be modified or disapproved.
• Provides that beginning plan year 2025, the Department shall post all insurers' rate filings and summaries on the Department's website.

• Provides that the Department shall open a 30-day public comment period on the date that a rate filing is posted on the website.
• Provides that after the close of the public comment period, the Department shall issue a decision to approve, disapprove, or modify a rate filing within 60 days, and post the decision on the Department's website.
• Provides that the Department shall adopt rules implementing specified procedures.
• Defines terms.
• Makes conforming changes in the Health Maintenance Organization Act and the Limited Health Service Organization Act.

Unfortunately, the requirement to clearly "post all insurers' rate filings and summaries on the Department's website" provision doesn't kick in until plan year 2025...which means next fall. That means that until then, Illinois is yet another state which doesn't make it easy to analyze annual health insurance premium rate filings.

As of today, there's no details on their insurance department website, their SERFF listings don't seem to include the actuarial memos or URRT forms, and only half the federal Rate Review listings include summaries which state the enrollment data; the actuarial memos themselves are mostly heavily redacted.

During the 2023 Open Enrollment Period, around 343,000 Illinois residents signed up for on-exchange individual market plans. This probably amounted to perhaps 310,000 actually effectuated enrollees as of March. Add to that perhaps ~90,000 off-exchange indy market enrollees (a very rough guess on my part) and the states total ACA market is likely around 400,000 people, give or take.

Six of the eleven carriers offering individual market plans in Illinois have provided their actual enrollment data, although all six have a pretty small market share. Those six have requested weighted average rate hikes of 10.7%...but combined they only make up around 11% of the total Illinois market.

Assuming 400K as the total, this means that the semi-weighted average requested rate increase for the Illinois individual market is far lower--around 4.3% or so.

For the small group market I have to go with the fully unweighted average of 9.2%. The only other noteworthy item about the Illinois small group market is that both Cigna and Humana appear to be dropping out of it next year.

UPDATE 11/02/23: The final/approved rates have now been posted at the federal Rate Review database; for the most part they're unchanged, although there were a few tweaks here and there, especially re. Molina Healthcare, which saw their 3.2% increase bumped up to 7.8%. The semi-weighted average comes in at 4.9%, while the small group market's unweighted average remains pretty much the same.

From the SSM Health Plan summary:

Scope and Range of the Rate Proposal

SSM Health Plan (SHP) is proposing a rate change for individual market Affordable Care Act (ACA) coverage beginning January 1, 2024. The proposed average rate change is +22.21% and will impact an estimated 722 members. This rate change will impact members differently depending on the specific member’s chosen benefits.

SHP Financial Experience

SHP first offered insurance coverage in Illinois in 2021. In 2022, SHP collected nearly $5 million in premium, from which SHP used 79% to pay for member medical care and services.

Primary Components of Proposed Rates

• Anticipated payments to care providers for healthcare: Most of the total premium is allocated to pay for member medical care. These payments for services include, amongst other items, payments to physicians for office visits, to hospital facilities for overnight inpatient stays and outpatient services, and to pharmacies for member prescription drugs. This component of costs is referred to as the “loss ratio”, and accounts for 94% of premium. (The “loss ratio” means that 94 cents of every premium dollar is expected to be spent on this medical care cost)
• Benefit changes: SHP offers a multiple benefit plan options, each with differing cost-sharing (i.e. member payments towards deductibles, copayments, etc.). This variation in cost-sharing leads to differing premiums by benefit plan.
• Required payments for government taxes and fees: SHP is required to pay taxes and fees to federal and state government as required by law, for which we anticipate paying nearly 3% of total premium dollars.
• Internal SHP administrative expenses*: The majority of administrative expenses include employee salaries and benefits, commissions paid to agents. For 2024, SHP expects to spend 8% of premium on these expenses.
• Margin and Surplus: SHP expects to pay more in payments for healthcare, payments for government taxes and fees, and to pay for internal SHP administrative expenses than it expects to receive in premiums. In total, SHP expects to have a financial loss equaling 5% of premium in 2024.

*administrative expenses are required day to day costs to run an insurance company (other than paying for medical services required by members)

From the Quartz summary:

Scope and Range of Rate Increase

Quartz Health Benefit Plans Corporation (Quartz) is requesting an average rate increase of 14.41%. Quartz members would receive premium increases ranging from -0.03% - 24.62%, depending on their plan selection. As of February 2023, there are 1,614 individuals that will be impacted by this increase. Additionally, premium rates may change for individual contracts by an amount outside of the filed rates due to changes occurring at the contract level. These contract level changes may include changes in various characteristics, such as age, benefit plan, and tobacco user status.

Financial Experience of the Product

For the experience period, this product had a loss ratio of 88.6%. The proposed rate increase is needed to maintain a target projected loss ratio of 86.7%. Please note that this MLR calculation is purely an estimate and not meant to be a true measure for purpose of calculating the Federal or State MLR rebates. The products contained in this filing represent only a subset of Quartz’s Individual business.

Changes in Medical Service Costs

The requested rate increase is impacted by both medical and pharmacy trends increasing due to utilization and service cost changes.

Utilization Changes – A portion of the rate increase is due to the changes in claim costs associated with utilization increases from the number of services, severity of services and change in mix of services.

Service Cost Changes – A portion of the rate increase is due to the changes in the plan claim costs due to increased reimbursement payments to healthcare providers.

Changes in Benefits

Quartz has added optional dental benefits and has made some minor cost sharing changes to current plan designs to maintain compliance within the federally mandated benefit ranges.

Administrative Costs and Anticipated Margins

Administrative Costs as a percentage of premium is not contributing to the requested rate increase

From the Oscar summary:

1. Scope and Range of Rate Increase

The purpose of this document is to present rate change justification for Oscar Health Plan, Inc. (Oscar’s) individual Affordable Care Act (ACA) products, with an effective date of January 1, 2024, and to comply with the requirements of Section 2794 of the Public Health Service Act as added by Section 1003 of the Patient Protection and Affordable Care Act (ACA).

Using in-force business as of March 2023, the proposed average rate increase for renewing plans is 6.8%. Rate increases vary by plan due to a combination of factors including shifts in benefit leveraging and cost-sharing modifications. This rate increase is absent of rate changes due to attained age.

The rate increase impacts an estimated 3,781 members.

2. Reason for Rate Increase(s)

The significant factors driving the proposed rate change include the following:

Medical and Prescription Drug Inflation and Utilization Trends: The projected premium rates reflect the most recent emerging experience which was trended for anticipated changes due to medical and prescription drug inflation and utilization.

Administrative Expenses: Changes to the overall premium level are needed because of anticipated changes in administrative expenses.

Prospective Benefit Changes: Plan benefits have been revised as a result of changes in the Center for Medicare and Medicaid Services (CMS) Actuarial Value Calculator and state requirements, as well as for strategic product considerations.

Changes in Conversion Factor: The distribution of contracts anticipated for the 2024 plan year varies from those in 2023 premium rates.

Risk Adjustment: There is an impact to premium due to projected changes in risk adjustment transfer — namely changes to the statewide average premium, changes to the changes to the Health and Human Services Hierarchical Condition Categories (HHS-HCC) coefficients from the 2023 plan year to the 2024 plan year.

From the MercyCare summary:

MeryCare HMO, Inc. (MercyCare) has offered comprehensive and fully insured coverage to members in the Individual ACA market in Illinois since 2021. MercyCare is filing a rate increase for its 2024 products. All plans will be offered on and off-Exchange and sold only in McHenry, Winnebago, and Boone counties, which are located within Illinois Rating Areas 2 and 5.

The products associated with this filing will cover a wide range of benefits, including all Essential Health Benefits (EHBs) required under the ACA. All plans will utilize an HMO network. MercyCare will offer plans at the silver and gold metallic levels. Cost share reduction plans will be offered for those eligible. Services will be subject to deductibles, copays, and coinsurance; member cost-sharing will be limited to out-of-pocket maximums (OOPMs). A range of cost-sharing options will be provided to consumers, including deductible options ranging from $0 to $6,500, member coinsurance options ranging from 0% to 50%, and OOPM options ranging from $550 to $9,100 for single coverage. Some plans will feature copays for physician services and prescription drug fills.

The average rate change for individuals renewing in 2022 is 11.8%, with the minimum and maximum rate changes equal to 2.3% and 17.0%, respectively. The proposed rate changes vary by plan due to changes in the paid to allowed ratios and induced utilization factors underlying the actuarial value and cost sharing components of the Plan Adjusted Index Rates. The paid to allowed ratios for all plans were updated to reflect the anticipated claim costs associated with the projected 2024 MercyCare Individual ACA population.

The primary drivers of the average rate change are summarized below:

• Updated experience using calendar year 2022 allowed claims;
• Medical and prescription drug trends;
• Updated induced utilization factors

The rate change is estimated to impact approximately 1,650 members.

From the Health Alliance Medical Plan summary:

This is the Part II preliminary justification for Health Alliance Medical Plans (HAMP's) individual comprehensive medical rate increase effective January 1, 2024.

This justification is intended to comply with the requirements of Section 2794 of the Public Health Service Act as added by Section 1003 of the Patient Protection and Affordable Care Act. This justification may not be appropriate for purposes or scopes beyond those described above and, therefore, should not be used for other purposes.

HAMP is requesting an average 10.68% rate change for its ACA members on renewing plans. The lowest rate change requested is a 0.82% increase on HAMP's 2024 POS 7500 Elite Bronze plan (HIOS Plan ID 20129IL0340082) in region 6. The highest rate change requested is a 17.07% increase on HAMP's 2024 POS 1500 Elite Gold plan (HIOS Plan IDs 20129IL0340079). These changes affect 34,815 members currently in force.

Financial Experience of the Product

A 3-year summary of our financial results after risk adjustment transfers is shown in the table below. With COVID hitting in 2020, many service and surgeries were postponed so providers and facilities could focus on pandemic cases. This is clearly reflected in our 2020 loss ratio coming in at a very low 78.3% despite lowering premium rates 3.4% for that year. Moving to 2021, many of these postponed services started coming back as well as other pent up demand and additional costs for COVID hospitalizations, testing, and vaccine administration. Some of the pandemic costs and pent up demand continued into 2022 as well.

Changes in Medical Service Costs

We are using an annualized allowed claim trend of 5.5% to project our 2022 allowed claims forward to 2024. This trend assumption includes medical and prescription drug inflation as well as changes in utilization. Paid claim trend incorporates the additional component of plan benefit leveraging and directly affects our financial results. This additional component adds 1.4 points to the trend bring total paid claims trend to 6.9%. This trend was estimated based on internal data and published industry trend studies.

Changes in Benefits

Our plans continue to cover the same set of benefits as in past years.

Administration and Profit Assumptions

For 2024, our estimate for non-benefit costs has increased by $10.46 PMPM, but is a 0.3 percentage point decrease to 14.90% of premium. The remaining 85.10% of premium is allocated to cover anticipated 2024 claims. This year’s increase is largely due to increases in variable administrative costs, commissions, fees and taxes that are a paid as a percentage of premium.

Summary

The overall impact of this rate change results in our projecting a loss ratio of 89.07% using the methodology prescribed for calculation of the federal ACA loss ratio as outlined in Actuarial Memo Exhibit 6.