Oklahomans who purchase health insurance policies next year from the leading insurer in the Affordable Care Act marketplace could face unsubsidized rate increases averaging 31 percent, Oklahoma Watch data research shows.

That’s how much Blue Cross Blue Shield of Oklahoma has asked the federal government to approve, on average, for all of its “Obamacare”-compliant individual health policies in 2016, according to an actuarial memo filed by the insurer. The proposal doesn’t apply to policies offered through employers.

Oklahomans experiencing rate shock will have at least two alternatives to Blue Cross: CommunityCare, a Tulsa-based provider of health maintenance organization (HMO) policies, and UnitedHealthcare, a big national insurer that wants to enter the Affordable Care Act market here for the first time.

They also will have opportunities to reduce their monthly payments even if they stick with Blue Cross, by considering different provider networks, policy types, and deductible and coinsurance options the company already offers.

“The big story is, rates are going up,” said Mike Rhoads, deputy commissioner of the Oklahoma Insurance Department.

Rhoads said the increases reflect several factors. Among them:

• Medical cost inflation is averaging about 6 percent to 9 percent across the board.
• Companies made inaccurate cash flow estimates for 2014 and 2015 and now have more data.
• Prescription drug costs were higher than estimated, partly because of expensive Hepatitis C treatments.
• Companies underestimated how much treatment Affordable Care Act policyholders would seek once they obtained insurance.

“They didn’t get the numbers right in 2015. They were guessing,” Rhoads said. “Every carrier I talked to had lost money.”

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The premiums paid by any individual policy purchaser could vary significantly from the average rates. The variables include age, location, tobacco use, policy type, deductible and coinsurance options, and most important, the amount of any federal subsidy for which he or she qualifies.

For some policyholders, the net increase could be zero. For some, it could be more than company-wide averages cited in rate filings.

Any policy-type rate increase exceeding 10 percent is subject to approval later this year by the U.S. Department of Health and Human Services. The Oklahoma Insurance Department also has jurisdiction over Oklahoma rates. So far it has not attempted to reduce those approved by the federal government.

Enrollment for 2016 coverage will begin Nov. 1.

Blue Cross

The 31 percent company-wide rate increase proposed by Blue Cross is cited in an actuarial memo the company submitted in May to the federal government. It was part of a detailed rate filing required by the Obama administration for proposed plan-specific rate hikes exceeding 10 percent. Final approved rates won’t be announced until this fall.

Tulsa-based Blue Cross offers a number of provider networks in Oklahoma. It listed three individual networks exceeding the 10 percent threshold: Blue Preferred PPO, 44 percent; Blue Advantage PPO, 34 percent, and Blue Preferred PPO MSPP (a multi-state network), 23 percent.

PPO stands for preferred provider organization. PPO plans generally pay more if patients use doctors and medical facilities in the “preferred” network. They cover a smaller portion of costs if patients seek treatment “out of network.”

HMO plans generally require patients to only use medical professionals and facilities that belong to its network. That restricts patient freedom to see anyone or go anywhere they want for treatment, but it allows the HMOs to control costs better.

Blue Cross is the dominant insurer in Oklahoma’s Affordable Care Act market. In 2014, it collected more than half of all premiums paid by individual policy purchasers here.

Ted Haynes, president of Blue Cross Blue Shield Oklahoma, said in an emailed statement the proposed increases reflected the company’s ability to use data from more than a year of Affordable Care Act market experience to calculate 2016 premiums.

“The main driver of the rate increases of our individual ACA plans are the higher than expected claims experience with the members in these plans,” Haynes said. “…We are committed to our members to maintain the affordability of our products.”

Haynes said the out-of-pocket cost to customers could be considerably less than the unsubsidized rates since most Obamacare market users qualify for federal subsidies. He also noted that the percentage increases did not reflect the fact that some policies might have been underpriced in comparison to competing plans.

Blue Cross declined to provide any information about the dollar costs associated with its rate filings or plans. Other than the percentage figures reported higher in this story, all plan-specific details were redacted from the actuarial memo submitted to the federal government. The details will become public later this year.

Other Insurers

CommunityCare, also based in Tulsa, mainly issues HMO plans in Oklahoma. Its proposed rate filing and supporting documents for 2016 HMO plans are not publicly available yet.

That’s because it did not propose any HMO individual plan rate increases exceeding 10 percent and because HMO rate filings are exempt from the Open Records Act, according to the Oklahoma Insurance Department.

CommunityCare Vice President and spokesman Greg Burn did not respond to interview requests.

UnitedHealthcare was not required to report 2016 premium rate increases because it did not offer individual policies in Oklahoma’s Affordable Care Act market in 2015. It has filed proposed rates for next year, but they will not be posted publicly until this fall.

A company spokeswoman in Houston declined to provide Oklahoma Watch with any information about UnitedHealthcare’s proposed rates for 2016.

Blue Cross, CommunityCare and United Healthcare will be the only insurance companies offering Obamacare-compliant policies to Oklahomans next year.

One competitor, Assurant Health, recently announced plans to curtail its health policy business nationwide and has begun notifying its Oklahoma policyholders. Another company, GlobalHealth of Tulsa, is expected to drop out of the market. Aetna Life Insurance Co. and its Coventry Health Care subsidiary bailed out of the Oklahoma market this year.

The proposed rate increases are unfortunate but not necessarily surprising, said Andrew Rice, former executive director of the Variety Care Foundation in Oklahoma City. Variety Care provides low-cost medical care to lower-income people.

“It just points to how expensive the care is,” said Rice, who also was a state senator.

“We’re still dealing with the ramifications of a broken system. It’s evidence of how much time it’s going to take to get the metrics going in the right direction … It’s going to take years.”

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