Issued August 25, 2015
Introduction
The Iowa Insurance Division (the “Division”) received an annual individual health insurance premium rate (“rate”) filing for Wellmark’s individual plans compliant with the federal Patient Protection and Affordable Care Act (“ACA”) in May, 2015. Wellmark proposed a rate increase, varying by plan, effective January 1, 2016, of an average of 26.5% for approximately 23,000 policyholders of ACA compliant plans. After review and analysis, the Division approved a reduced average rate increase of 24.5%. Rates for 2016 were based on Wellmark’s experience with existing individual business, and projected member movement from the entire insured and uninsured population. When 2016 rates were formulated Wellmark utilized data from 2014 and the first six months of 2015, which are the first data sets to review ACA compliant experience. The rate filings were reviewed to ensure compliance with ACA requirements and instructions from the Centers for Medicare and Medicaid Services of the United States Department of Health and Human Services (“CMS”), ensure the proposal is justified based upon the experience of the plans, and ensure the proposed rates are expected to produce an 80% medical loss ratio (“MLR”) for 2016.
Rate Filing and Review Procedures
Pursuant to a Governor’s directive from 2010, and in accordance with Iowa Code section 505.15, whenever any health insurance company that conducts business in Iowa submits a health insurance premium rate increase request to the Division, the Iowa Insurance Commissioner (the “Commissioner”) must utilize an independent, qualified third-party actuary to conduct a secondary review to determine the adequacy and appropriateness of the proposed rate. The Division maintains a list of independent actuarial firms, and selected Magnum Actuarial Group to perform the independent actuarial review. The report of Magnum Actuarial Group is attached to this press release. Specific tests and criteria used to determine the validity of the request is outlined in each of the detailed reports. The independent review is performed simultaneously with the statutorily required Division in-house review.
In addition, Iowa Code section 505.19 requires the Commissioner to hold a public hearing on a proposed health insurance rate increase which exceeds the average annual health spending growth rate as published by CMS. The current rate is 6%. Prior to the public hearing, the Consumer Advocate for the Division solicits and receives public comments on the proposed health insurance rate increase. Those comments are posted online here.
A hearing on the proposed rate was held on Saturday, July 25, 2015 at 10:00 a.m. at the Mercy College of Health Sciences, Sullivan Center, Des Moines, Iowa. Access to the hearing was made available at six locations around the state via the Iowa Communications Network (“ICN”).
The Commissioner reviewed the actuarial reports from Magnum Actuarial Group. The Commissioner also consulted with financial and actuarial staff within the Division.
Consumer Concerns and Issues
The Consumer Advocate has received comments or concerns directly from policyholders or members of the public which may be viewed here.
Conclusion and Decision
The Division is mindful that several key provisions of the ACA impacted health insurance premium rates and pricing. With only 18 months of ACA compliant experience available to review, projecting future anticipated experience for purposes of pricing is difficult.
The Commissioner studied the actuarial report, and consulted with various Division staff regarding the Wellmark rate increase proposal. Whether to approve the rate increase is not a decision the Commissioner has taken lightly. Many Iowans will be impacted by this decision. Balancing the needs of Iowa consumers and the solvency of an insurance carrier must be weighed carefully.
The Commissioner finds that there is no evidence that the proposed rate filings are discriminatory or excessive under Iowa statute. The Commissioner therefore approves the proposed individual rate increase filed by Wellmark and has sent his approval to CMS for their approval prior to implementation.
Dated August 25, 2015
Nick Gerhart
Commissioner
Iowa Insurance Division