Insurance rise affects relatively few

Less than 2 percent of Iowans will be affected by steep health insurance increases announced this week by state regulators.

The Iowa Insurance Division announced Wednesday that it had approved premium increases averaging 8.7 percent to 19 percent for Iowans who purchased individual policies from Coventry Healthcare, Wellmark Blue Cross & Blue Shield, and CoOportunity Health.

The insurance division determined that those premium increases were justified, in part by costs associated with the federal Affordable Care Act. Those costs include the fact that starting in 2014, insurers could no longer deny coverage or charge extra to people with pre-existing health conditions, such as high blood pressure or diabetes.

But the decisions announced Wednesday affect only about 50,000 of Iowa's 3.1 million residents, according to Iowa Insurance Commissioner Nick Gerhart.

"Those numbers may mean a lot to the people who have those plans, but to the whole market, it's not that big of an impact," Gerhart said. The commissioner added that Iowa's overall health-insurance climate is "stable," with most premium increases being relatively small.

Leaders of Wellmark Blue Cross & Blue Shield stressed Thursday that most of their customers are not facing such steep increases. Among the 149,000 Iowans who buy individual policies from Wellmark, only 19,000 are seeing premiums rise by the 11.5 percent to 14.5 percent that the insurance division publicly approved Wednesday. The rest are facing increases of less than 6 percent, said Wellmark Vice President David Brown.

That is a much smaller increase than such Wellmark customers were seeing several years ago. For example, Wellmark raised individual rates an average of 18 percent in 2010.

The plans with the smaller increases also needed approval from the insurance division, but they were not subject to public hearings, and the division did not publicly announce the approval of their rates.

Wellmark dominates Iowa's insurance market, where it sells policies covering 1.7 million people. Most people obtain coverage via an employer or through a federal program, such as Medicare or Medicaid. But individual policies get the most attention, because their prices have been most volatile.

Starting this year, Americans could purchase individual policies on a new online marketplace run by the government under the Affordable Care Act. People with modest incomes can obtain subsidies toward the premiums of such policies.

Wellmark is not selling policies on the public marketplace, also called an exchange. But it continues to sell individual and employer policies through traditional methods. Most of its individual policies were purchased before the Affordable Care Act went into full effect. The federal and state governments are letting Wellmark extend those policies through at least 2016.

CoOportunity Health President Cliff Gold said Thursday that the main reason his company had to raise rates for 2015 by about 19 percent was because Iowa's risk pool is skewed.

Gold said the problem is that Wellmark is being allowed to extend old policies, which they sold before the Affordable Care Act banned insurers from discriminating against people with chronic health issues. By extending those old policies, he said, Wellmark is hanging onto relatively healthy people, leaving companies like his with a sicker customer population than they expected. "They're clearly trying to keep those people in those old policies," he said of Wellmark.

Brown, the Wellmark executive, said his company's duty is to help its customers. "It would have been unconscionable" not to take the government up on its offer to let insurers extend old policies, he said.

Both insurance executives said that even with the increases announced Wednesday, many people with the new plans will be paying less for health insurance than they were two years ago. Brown said the reason many people chose to switch to new plans for 2014 was that they were cheaper than old plans. That was especially likely for people who had been charged extra in the past because they were older or because they had health problems. Under the Affordable Care Act, insurers are limited in how much extra they can charge people based on age, and they are banned from charging more to cover people with health problems.

Gold added that most consumers who buy health insurance on the new public marketplace qualify for public subsidies to help pay for premiums. Those subsidies weren't available before this year. On average, he said, consumers buying CoOportunity plans on the public exchange are paying less than $100 per month toward their premium.

Brown also said that the approximately 100,000 Iowans who purchase Wellmark insurance via a small employer are seeing premium increases of less than 5 percent for next year.

Editor's note: An earlier version of this story said 67,000 Iowans would be affected by the steep premium increases. That was changed to 50,000, based on an estimate from Insurance Commissioner Nick Gerhart.