Health insurance rates could jump nearly 50 percent for some

Health insurance rates for people who buy coverage on their own or with a small business will see rates increases by up to 47.41 percent next year.

This comes after a year of rate increases that ranged up to 25 percent for those groups – people who work for a small business or who purchase health policies directly from an insurance company or from the government’s health exchange created through the Affordable Care Act, called HealthCare.gov.

But despite the increases, many people won’t pay higher premiums each month because federal subsidies and tax credits often pick up the additional costs.

Nonetheless, health insurance plans now have yearly out-of-pocket costs that can range up to $6,550 for single person, or $13,700 for a family.

In Kansas, insurance companies proposed rate changes ranging from a decrease of 1.37 percent to an increase of 49.4 percent for plans that begin Jan. 1, 2017. Open enrollment begins Nov. 1.

The Insurance Department approved all rate changes at the amounts requested by insurance companies. And in the cases of three plans, the department approved rate increases higher than what the companies proposed.

“The rates that were submitted were actually less than the companies could have submitted, said Cindy Hermes, director of public outreach for the Kansas Insurance Department.

“The companies were justified in their rate increases and could have asked for more.”

Nationwide, when the Affordable Care Act went into effect, insurance companies underestimated how sick consumers would be who purchased coverage. And companies, under the Affordable Care Act, can only calculate a person’s insurance premium using the individual’s age, location and tobacco use.

For people with family plans, the size of the family and ages of each family member also factor in.

Hermes said insurance companies also saw an uptick in the number of people who purchased insurance during the height of a serious illness and dropped the insurance after treatment.

“We’re not the only state that is experiencing this, “she said. “It’s a nationwide phenomenon.”

Large employers saw big hikes

Large employers generally have more leverage to negotiate rates with the insurance companies compared to individuals or small businesses.

Because of that, the Kansas Insurance Department reviews insurance companies’ actuarial data and assumptions, then chooses to accept, revise or deny each proposed hike for individuals and small businesses.

Employees of large companies typically don’t find out the cost of their health insurance plans until later in the fall. Last year, many companies with more than 100 full-time employees saw rate hikes of around 15 to 20 percent.

Three companies will provide individual plans in Kansas: BlueCross BlueShield Kansas Solutions, BlueCross BlueShield of Kansas City and Medica. United Healthcare announced in May that it would bow out of the individual market in Kansas and Aetna, which owns Coventry Health and Life, backed out of 11 states where it previously offered plans, including Kansas.

Medica, a Minnesota-based insurance company, will offer exchange plans in Kansas for the first time. Medica’s rate increases weren’t posted for Kansas because the company didn’t have rates in 2016 for it to propose increases on.

A silver lining in Kansas is that each county has at least two insurance companies that will offer health plans for individuals and small businesses in 2017.

Other states are grappling with gaps in coverage in rural areas where insurance companies pulled out of the market and left counties without any health insurance options, or with only one plan to purchase.

“We’re working really hard to keep the insurers in Kansas, and we’re happy to be able to offer this,” Hermes said.

This story was originally published October 8, 2016 at 10:51 AM with the headline "Health insurance rates could jump nearly 50 percent for some."