BlueShield of Northeastern New York requested premium rates for individuals – which affect just over one percent of our 120,000+ members – in 2018 that directly reflect the cost of providing health care coverage in New York State. These are driven by restrictive marketplace and regulatory dynamics.
These rate requests do not involve most businesses, Medicare Advantage, Medicaid or self-funded group coverage.
On top of anticipated rising costs of doctor, hospital and especially pharmaceutical care in 2018 there are three main reasons why our requested rate increases, specifically for individual members, are more significant than they have been in years past:
1. An un-level playing field - Almost half of our requested premium increase is directly tied to changes state regulators made to a federal funding program, known as “risk-adjustment.” That was put in place as part of the ACA to create a level playing field for health plans, starting in 2015. The changes DFS made to this program will have a severe impact in 2018 on upstate New York health plans like ours that need to receive additional funding for serving sicker members, which is what the ACA designed the risk-adjustment to do.
2. Artificial rate adjustments - For three consecutive years, DFS unreasonably reduced the company’s premium rate requests for these two categories – individuals and small groups – with little to no explanation or dialogue. This caused nearly $15 million in losses over these three years.
3. Taxes and mandates – In addition to the reinstatement of the federal Health Insurance Tax and extension of the state’s Health Care Reform Act taxes, several state-mandated benefits in recent years must be incorporated into our insurance packages for these two groups. These taxes and mandates represent over 15% of our premium rates prior to factoring in the actual costs of care for our members.
All of these dynamics can put even the most well-established plans in peril, and have forced other health plans out of the marketplace entirely.
Our mission as a not-for-profit, community-based health plan is to serve all Capital Region residents, including individuals and families. However, if losses persist due to being force by the state to operate with premium rates that don’t reflect the true cost of care, we would be left with very difficult decisions pertaining to our offerings. These rates are not final but are necessary for BlueShield to continue to offer sustainable individual products in the markets we serve.
Although a great deal of uncertainty exists around the future of the health insurance marketplace, BlueShield remains committed to working with regulators and lawmakers to create a competitive, private health insurance market.