Health insurers explain premium increases

The majority of Iowans who have signed up for health insurance plans compliant with the Affordable Care Act are older and less healthy, which has pushed up insurance premiums.

On Wednesday, the Iowa Insurance Division approved insurance premium rate increases for Wellmark Blue Cross and Blue Shield, CoOportunity Health and Coventry Health. Changes will go into effect on Jan. 1, 2015.

The rate increases affect those with individual policies that are ACA compliant, which means plans cover maternity leave and mental and preventive health as well as other benefits.

Wellmark, the state's largest insurer, will raise rates between 11.9 percent and 14.5 percent for 19,000 of its members who have individual polices that are ACA-compliant - a small portion of its 1.7 million customer base in Iowa.

The Des Moines-based company said earlier this year that it would not join the market place.

David Brown, executive vice president and chief financial officer for Wellmark, said these members have significantly higher health care costs than the overall block of individual policy holders and therefore use more services.

'They have pretty significant health issues - spending lots of time in medical facilities, or need more prescriptions,” he said.

In April, Wellmark offered an extension to its policy holders with non ACA-compliant plans, allowing them to keep their plans until October 2016. Brown said he is unsure what will happen to rates once those customers transition to ACA-compliant plans with Wellmark or another insurance company.

As for the two insurers who will offer plans on the state market place, Coventry Health will increase rates an average of 8.7 percent and CoOportunity Health will raise rates an average of 19 percent, varying by plan and region.

'People who sign up for ACA-compliant plans are less healthy and older than the general population,” said Cliff Gold, CEO of CoOportunity Health. 'This wasn't a surprise to anyone, but it does have to be factored in.”

Rising health care costs and ACA taxes and fees also factored into the rate increase, he said.

Because the not-for-profit insurer recently entered the market and therefore does not have non ACA-compliant plans to help supplement rate impacts, CoOportunity Health had a larger rate increase than its competitors.

'We have no business outside of ACA-plans, so we were disproportionally affected,” Gold said.

But a large percentage of CoOportunity customers qualify for subsidies, Gold said, so policy holders may not see the whole price jump.

Gold believes that rate increases will begin to stabilize over the next two to three years as more people purchase plans and insurance companies get a better idea of what the new market looks like.

'It'll take a few years to shake out,” he said.