Wellmark cites increase for 13.3% individual premium hike

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March 28, 2014 | 9:35 am

Wellmark Blue Cross Blue Shield's request for a 13.3 percent overall increase in individual health insurance premiums will be up for discussion at a statewide public hearing today.

Wellmark's Nov. 7 request would affect roughly 150,000 of Wellmark's 1.8 million Iowa members under age 65 who have individual policies rather than policies issued through an employer.

The amount varies by insurance product, from a 3 percent proposed increase in Wellmark's HMO-Blue Advantage to a 12.2 percent increase in the company's Direct Pay and Blue Transitions plan, and a 13.3 percent increase in Farm Bureau, Basic and Standard plans.

The Iowa Insurance Division could approve the request as is, or modify the level of increase if it finds the request is not warranted.

Not everyone is pleased by the request.

Rick and Sarah Fromm of Decorah would see their Blue Cross Blue Shield Major Medical premiums go up from $24,000 per year to $26,000 per year, according to Rick, managing editor at Decorah Newspapers.

Rick said he's stayed with Wellmark since 1985 because he didn't want to go through underwriting again after experiencing a manageable heart condition. But his insurance premiums skyrocketed when he recently hit 60, which he said was the top age bracket in Wellmark's classification system for determining rates.

"I'm very much opposed," Fromm said of Wellmark's rate hike. "I don't understand how a person with an average salary can afford it."

An increase in the size of large claims, an increase in the use of out-of-state health service providers, and an increase in musculoskeletal claims were the main drivers of the increase, according to Wellmark.

The state's largest medical insurer cited a continuing rise in the number of members with claims over $100,000, associated with serious conditions such as heart failure, septicemia and meningitis.

Wellmark said the number of visits to out-of-state providers increased 8 percent in 2012, while total medical claims paid to out-of-state providers increased by 6 percent.

Nearly $45 million was reimbursed for visits to out-of-state offices and clinics, where services on average cost two times more than they would if delivered by an Iowa-based provider, Wellmark indicated.

The state's largest medical insurance provider also saw an increase in claims for things such as chiropractic services and knee replacement surgeries that it linked to sedentary lifestyles and body weight issues.

The increased use of expensive drugs was also a factor. The number of people using cholesterol-lowering drugs increased 13 percent, and the amount of claims paid increased 16 percent, the company said.

Wellmark Executive Vice President of Health Care Policy and Strategy Laura Jackson said Wellmark would prefer not to be bringing such an increase to the state for approval. She said the company's goal is to bring rate increases into line with the consumer price index over a period of time by taking waste out of the system and improving the health of the populations the company serves.

Jackson noted that the vast majority of insured are in employer-sponsored health plans, which often include wellness and education components that help improve health and use patterns. She said the individual health plan market includes self-employed and unemployed Iowans, and tends to include more individuals who don't have full-time employment due to health-related issues.

The cost of Wellmark's operations are only 7.5 cents of every premium dollar, according to the company, while payments for health care services are 86.9 cents per dollar. The remaining 5.6 cents includes 4 cents in broker commissions, 1.3 cents in corporate earnings and 0.3 cents in premium taxes.

The Affordable Care Act requires insurance companies to spend 80 cents of each premium dollar on medical claims in the Individual Under 65 market.

Some of Wellmark's medical plans, including Medicare Supplement plans, will have no increase in base rates. Jackson said Wellmark's premiums were among the lowest in the country, citing  a report issued by eHealth in November 2012.

The state insurance regulator approved a 9.35 percent overall increase for Wellmark's individual plan for 2012.

Wellmark boosted rates on individual health policies by 18 percent in 2010 and by 8.5 percent in 2011.

The new rates when approved are expected to take effect in April.

Golden Rule Insurance, a United Healthcare company, requested permission to raise individual health insurance base premiums by 15 percent in 2013, according to the Iowa Insurance Consumer Advocate's office. Hearings on that request are scheduled for 11 a.m., Jan. 12.

If you go:

The Iowa Insurance Division will conduct the hearing on Wellmark's rate requests at 11 a.m. via teleconference at Iowa Communications Network locations statewide, including Linn Hall Room 2184 at Kirkwood Community College in Cedar Rapids.

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