Whenever a health insurance company or health plan wants to change their health insurance rates in California they must submit a justification for the rate change in the monthly premium amounts to the Department of Managed Health Care or Department of Insurance. Regardless of which agency they must submit their rates to, the agencies just review the rates. They have no power to deny them. While the rate filings by each of the health insurance carriers can be sort of dry to read, there can be some nuggets of information included with the volumes of documents submitted to justify the rate changes.
There is far too much information presented in each Individual and Family Plan (IFP) rate filing justification to perform a proper comparison and contrast between the health plans. I’ve included the most comprehensive of the documents presented by the carriers for your review that has been posted by the respective state agency performing the rate review. While the rate filing forms are standard, each carrier can submit additional and different information to justify, or sometimes undermine, their requested rate changes.
One interesting aspect of the rate justifications is the difference in the expected cost increases for health care services and prescription medications. One health plan may state they are expect a 3% increase while another report that 2016 will have a 6% increase for health care services. All carriers report a higher expected increase in the cost and coverage for prescription medications. Some of the actuarial reports will include the total compensation for their top tier executives. Unfortunately, some of the fields requesting data on the rate filing forms are left blank. You wonder how the state can even properly review some of the rate filings. The Department of Insurance does post the questions they ask of carriers and the respective responses. Those questions and answers are available for review under the new health plan being offered in California call Moda Health Insurance.
Fifteen carriers have filed 2016 rate changes with either the Department of Managed Health Care or the California Department of Insurance for individual and family plans. Three of the submissions for review are from health plans who will be offering new individual and family plans. There can be some anomalies between what is reported on the agencies’ websites and what is included in the rate filing justifications. Because the initial rate filings were submitted before Covered California released their final standard benefit design, the carriers may have added additional files correcting information from the original filing.
The thirteen carriers have submitted health insurance premium rates and justification for any rate changes to the Department of Managed Health Care. To review all the documents filed for each specific carrier visit http://wpso.dmhc.ca.gov/ratereview/
Three carriers submit their rates to be reviewed by the California Department of Insurance. Health Net has plans reviewed by both DMHC and CDI. To review those rates visit -> https://interactive.web.insurance.ca.gov/apex/f?p=102:2:0::NO:::
United Healthcare (UHC) is offering individual and family plans in California for the first time since initiation of the ACA and Covered California. UHC will only be offering plan in Northern and Central California counties excluding the Bay Area and Sacramento region.
- Plans will be offered in California Rating Regions 1, 9, 11, 12, and 13.
- In an amendment letter dated June 8, 2015, UHC reported that they revised their rates as a result of Negotiation discussions with Covered California.
- On the DMHC filing form they UHC states they will be offering PPO and EPO plans under the name of United HealthCare Benefits Plan of California
- The Milliman Actuarial Memorandum states the UHC has no IFP members currently in California but the DMHC website reported they had 6,671 subscribers.
- The Actuarial Memorandum reports that UHC is pricing their plans for a 4.1% pre-tax margin.
- For 2013, Stephen Hemsley was the highest paid employee with a base salary of $1,300,000, Non-Equity Incentive Compensation of $3,100,000 for total Compensation package of $4,400,000. Other executive compensation were: David Wichmann received $3,501,411. Gail Boudreaux received $2,901,411. Larry Renfro received $4,751,411.Marianne Short received $1,711,538.
- They are projecting an earned premium of $37,715,438,000 for 2016.
- UHC expects to realize a 10.6% administrative expense load on the IFP plans which includes agent commissions, and quality improvements. Agent commissions are expected to be 2.9% for 2016.
- UHC anticipates that Region 12 will account for the largest share of their business at 30%, while Region 13 will only provide 4.1% of their 2016 sales.
- Download file -> UHC 2016 IFP Rate Filing
Oscar Health Plans of California
Oscar Health Plans is another new entrant to the IFP market for 2016. Within their rate filing they actually included the Subscriber Agreement and Combined Evidence of Coverage document for 2016. It looks like all their plan offerings will be Exclusive Provider Organization plan types.
- Oscar anticipates enrolling approximately 7,500 individuals for a projected earned premium of $31,830, 753.00
- They reported that they estimate they will incur claim amounts of $30,373,416.00 on the California membership base.
- They will be offering several plans off the exchange that do not follow the Standard Benefit Design of Covered California plans. The Oscar Simple off-exchange plans depicted in the rate filings show indicated they will have no coinsurance percentage beyond office visit copayments. In other words, once a member has met their deductible, if there is one, all covered benefits are paid by the health plan. Of course, this means that instead of a standard 2016 Silver plan deductible of $2,250, it might be as high as $5,900. Once that is met, then there may only be a copayment for certain office visits.
- “[…] premium incorporates a 5.2% administrative charge (inclusive of general administrative expenses, profit, and commission).”, Milliman study.
- Rates were based on Oscars anticipated service areas of Region 16 (West Los Angeles) and Region 18 (Orange County).
- They expect 69% of their members to reside in West Los Angeles and the remaining 31% to come from Orange County.
- Download file -> Oscar 2016 IFP Rate Filings
Anthem Blue Cross of California
Overall requested change to premiums from 2015 is stated as 5.7% with a maximum increase of 17.1% and minimum rate decrease of -13.4%.
- Requested rate changes will generate projected earned premiums of $3,547,416,311.00 with projected claims of $2,831,992,852.00 for on and off exchange plans covering 492,593 individuals in California.
- Letter No. 8-K, Guidance Related to Premium Rate Filings to the DMHC is particularly informative and easy to read regarding how Anthem Blue Cross arrived at their new rates. It is one of the better outlines of the methodologies and assumptions used to generate IFP market premiums.
- Anthem Blue Cross lists by region and plan type the premium rate increase or decrease.
- With the exception of the San Francisco, all of the Northern California regions will experience a rate increase .
- Southern California regions of Los Angeles, Orange, and San Diego will see premium rate decreases from 7.85 to 17.5%.
- Exhibit O projects the membership in the Enhanced Silver Plans eligible for cost-sharing reductions by plan.
- Anthem Blue Cross reported that the overall Medical Trend Factor, part of the basis for rate changes, is 6.45%. The prescription drug aggregate benefit was reported to have the largest increase at 17.8% for 2016 which would include inflation plus any enhanced coverage benefits such as new drugs or caps on member responsibility.
- The 2014 historical claim per member per month was stated as $264.89. The projected 2016 claim per member per month is expected to be $346.79, or an increase of 31%.
- Non-Benefit expenses were reported on a per member per month basis to be $31.19 for Administration, $3.20 for Quality Improvement, $9.45 for selling expense, and $0.70 for specialty expenses.
- Download file -> Anthem Blue Cross IFP 2016 Rate Filing
Blue Shield of California
Blue Shield submitted their rate filing stating an overall premium increase of 4.6%. The maximum increase is 43.8% with a maximum rate reduction for some plans of -9.5%.
- They estimate the written premium change to be $220,539,364.00 affecting 353567 policy holders.
- The actuarial review states the Medical administration cost per member per month is $28.28 in 2015 and will grow to $36.13 in 2016. When they add the pediatric administration costs of $1.08 per member per month, for a total of $37.21 in 2016, which calculates to 9.28% of the premium for administration costs.
- The Blue Shield actuarial review states they expect an annual trend increase of medical and prescription drug costs of 6.4% for 2016.
- Their filing states that in addition to Medical administration costs of $37.21, broker commissions will be $7.71, and Medical management of $2.56 per member per month. This yields a total administration cost of $47.48 pmpm.
- Blue Shield 2016 IFP Rate Filing
Kaiser Foundation Health Plan, Inc.
Kaiser reports in their filing that the maximum rate decrease is a -8%, while the maximum rate increase is 68.3%. In another part of the rate filing they state the minimum is -8% and the maximum is 6.9% with a weighted average of 4.6%. So it could be that the 68.3% increase was a typographical error.
- The company’s actuarial review states Kaiser’s administration costs per member per month is 10.5%.
- The stated aggregate trend of cost increases is 2.5% for all categories except prescription drugs which is expected to increase 9.1%.
- The rate filing lists the compensation for the top ten executive for 2013. The lowest compensation reported was for the Senior Vice President & Chief Compliance Officer at $1,424,478. The highest paid executive was the Chairman and CEO at $10,049,725.
- Kaiser 2016 IPF Rate Filing
Sutter Health Plans
Sutter Health Plus was introduced in 2014 for individuals, families and small groups. All Sutter Health Plus plans are offered off-exchange. Sutter HP is an HMO that works with Sutter physicians and Sutter hospitals. For the individual and family plans Sutter has submitted rates with an 18.5% decrease. For 2016, Sutter will be offering Health Plans in part or all of Regions 1, 2, 3, 4, 5, 6, 7, 8, 9, and 10.
- Download file ->Sutter 2016 IFP Rate Filing
Moda Health Insurance
Moda has filed rates with the California Department of Insurance to offer health plans in Regions 1, 3, 10, and 17. It will be a patch work of counties from Northern California to Southern California excluding the Bay Area and metropolitan Los Angeles. Moda would be offering plans off-exchange and not eligible for any Premium Tax Credits. Included for download is not only initial filing, but all the questions asked by CDI staff and subsequent question from Moda justifying their rate methodology.
You can view the Initial PDF Pipeline rate justification filings for the other carriers not listed above –
- Chinese CHP 2016 IFP Rate Filing
- Cigna 2016 IFP Rate Filing
- Health Net 2016 IFP PPO Rate Filing CDI
- Health Net DMHC 2016 IFP Rate Filing
- LA Care 2016 IFP Rate Filing
- Molina 2016 IFP Rate Filing
- Sharp 2016 IFP Rate Filings
- Valley HP 2016 IFP Rate Filing
- WHA 2016 IFP Rate Filing