Coventry wants to raise health insurance rates 18%

Iowans buying Obamacare-subsidized health insurance could be in for a big price increase next year.

The main insurance carrier selling such plans to Iowans wants to raise rates to most of its customers by at least 18 percent.

Coventry Health Care has notified the Iowa Insurance Division of its proposed 2016 rate increases, which would affect about 47,000 Iowans.

The rate increases would only affect people who purchase their own Coventry health insurance, instead of obtaining policies via an employer or a government program, such as Medicaid or Medicare. Most of Coventry's Iowa customers bought 2015 policies via an electronic marketplace called healthcare.gov. The marketplace, also called an exchange, was set up under the Affordable Care Act, also known as Obamacare. It is the only place where moderate-income people can purchase plans that qualify for premium subsidies from the Affordable Care Act.

Rohan Hutchings, a spokesman for Coventry parent company Aetna, said the carrier seeks to balance costs and quality. "Our goal is to offer competitively priced products at a rate that will allow us to cover the cost of doing business, while offering our customers high quality products that meet their health care needs," he wrote in an email to the Register.

Coventry explained in its filing that it needs to raise premiums for several reasons, including medical costs that it said are climbing nearly 9 percent. The company also said that it needs to adjust benefits to comply with state and federal rules, and that it needs to prepare for the phasing out of an Obamacare program that helps cushion carriers that take on extra risk.

Iowa Insurance Commissioner Nick Gerhart said some other states have seen increases that are even steeper. "We're not alone in this," he said. "I know that doesn't make anybody feel better."

Another Iowa carrier, CoOportunity Health, went belly-up last winter after losing tens of millions of dollars. Experts said CoOportunity had been swamped with chronically ill customers, who were costly to treat. Once CoOportunity folded, many of those customers turned to Coventry for 2015 policies.

Gerhart said Coventry hadn't planned on being the sole choice for most Iowans looking to buy subsidized insurance. "They took on a few more members and a little more risk than they priced for," he said. He added that he hopes the market settles down over the next couple of years, as carriers learn the ins and outs of selling policies on the public exchange.

Janis Van Ahn, a Johnston agent who sells health insurance, said she'd been expecting Coventry to propose a large rate increase for 2016. "I figured they took on more risk than they expected," she said.

"You've got people who've never had coverage and then they come in and get major services," she said. Some people who were uninsured have been signing up for coverage, obtaining expensive care for longstanding medical problems, then dropping their policies, she said. Although the Affordable Care Act requires most Americans to have health insurance, the penalties for failing to do so lack teeth, she said.

For most Iowans, Coventry is the only carrier selling individual policies that qualify for Obamacare subsidies this year. That should change next year. UnitedHealthcare, which is the nation's largest health-insurer, and Medica, a nonprofit carrier based in Minnesota, have announced that they plan to sell 2016 policies to Iowans on healthcare.gov. Their prices won't be released publicly until later this summer.

Van Ahn said it's too soon to predict whether those two carriers' entry into the Iowa market will moderate pressure on premiums. "I think it's going to spread the risk, but I don't know how much," she said.

News of Coventry's proposed rate increase came two weeks after Iowa's dominant health-insurer, Wellmark Blue Cross & Blue Shield, proposed raising some customers' premiums by 28 percent for next year. That increase would affect about 30,000 Wellmark customers who bought individual policies that comply with Affordable Care Act rules taking effect in 2014. Most of Wellmark's 1.8 million Iowa customers either have insurance purchased through employers or have individual policies they bought before the Affordable Care Act took effect.

Some experts have said Iowa's market is distorted because so many people here have been allowed to keep their old policies. To buy such insurance, people had to pass health screenings, a requirement that is no longer allowed. That could mean the new pools have more than their share of people with pre-existing health problems.

The Iowa Insurance Division will have independent experts analyze both carriers' proposed rate increase. The proposals also will be the subject of a public hearing scheduled for July 25. The proposed increases are averages. Some policy holders would face bigger or smaller increases, depending on their circumstances.

Customers who qualify for Obamacare subsidies wouldn't have to pay the entire Coventry increase, because their subsidies should rise too. But Van Ahn said such customers should fill out new applications next fall, to update their income information and to check to see if they could get a better deal from other carriers.

Most Iowans who make less than 400 percent of the poverty level — or about $47,000 for a single person — can qualify for Affordable Care Act subsidies to help pay for premiums. But only about 38,000 Iowans — about 1 percent of the population — have received such subsidies, averaging $260 per month. The Kaiser Family Foundation has said that is the lowest participation rate in the country.

Even larger rate increases are being seen in some other states. The Wall Street Journal reported last week that individual policy holders in several states are facing proposed rate increases of more than 30 percent. Some in New Mexico are facing a proposed rate increase of nearly 52 percent, the newspaper reported.