Blue Cross Blue Shield seeks 60% rate hikes in 2017

Blue Cross and Blue Shield of Texas, the state's largest insurer, has asked for rate hikes of nearly 60 percent for next year in three popular HMO plans, filings with federal regulators show.

The company, which is the only carrier to offer health coverage in all of Texas' 254 counties, would not specify Wednesday what would happen if does not get the rate increase it says it needs.

"No final decisions have been made regarding our 2017 Texas offerings," spokesman Gustavo Bujanda said in a statement emailed to the Houston Chronicle.

"The rates we have submitted for review and approval are supported by strong actuarial principles, science and data," the statement continued.

According to filings listed on healthcare.gov, Blue Cross and Blue Shield seeks increases between 57.33 percent and 59.35 percent for two of its Blue Advantage Plus plans. A Blue Advantage Health Maintenance Organization Plan is asking for a 58.6 percent hike.

The company said in its request that the hike could affect nearly 603,000 Texans buying individual policies through the federal exchange mandated by the Affordable Care Act. It is not known what increases will be requested for employer-sponsored group policies.

"The anticipated health risk of the people in any given market is the largest component of determining rate changes," the company statement said.

Insurers across the nation, including Blue Cross and Blue Shield of Texas, have complained vigorously that they are losing money in the federal exchanges as some customers have proven more costly to cover than anticipated. Under the health-care law, an insurer can no longer deny coverage to someone based on her or his health status or pre-existing condition.

Texas Department of Insurance spokesman Ben Gonzalez confirmed his agency had received requests for rate hikes, but he said that because the insurer had marked them "confidential" he was unable to comment on the amounts.

He said the department is "going to go back to ask more questions."

In Texas a rate request, especially one so large, must be deemed "not excessive, unfairly discriminatory and premiums must be reasonable in relations to the benefits provided," Gonzalez said. In other words, he said, the agency will ask, "Is it justified, does the company need this?"

Stacey Pogue, a senior policy analyst at the Center for Public Policy Priorities in Austin, said Texas typically lacks the teeth in its insurance regulations to block a rate increase.

"There's not a process in Texas for it to be denied," she said.

'They can't stop it'

Texas is one of five states that does not determine its own rate reviews for the federal exchange. Instead, any rate hike request is checked by the Insurance Department to make sure it complies with state law and is considered "actuarially justified."

The request then moves to the federal level, for the U.S. Health and Human Services Department to conduct the rate review for exchange plans.

While HHS can ask for an adjustment, in practice the final rate increase is typically left up to the insurance company, Pogue said.

"Even if they find it unreasonable they can't stop it," she said.

Gonzalez said the state insurance commissioner could withhold approval forms so a company could not actually sell plans, but he does not recall that ever happening in his 10 years with the department.

In recent weeks, the insurance industry has telegraphed rate increases and other potential changes in 2017 in an effort to contain costs.

Blue Cross and Blue Shield of Texas, for example, has said it lost $321 million last year in the individual market, both on and off the exchange, and that it spent $1.26 for every $1 it took in. Still, the not-for-profit insurer said it made $3 billion in revenue in that market.

The loss was also less than the $400 million loss it reported in 2014. It was due to those losses that the insurer said it was necessary to drop all preferred provider organization plans, typically favored by those with greater medical needs, across the state. Many of those who lost PPO coverage, including 88,000 in Houston, were shifted to HMO plans.

UnitedHealthcare to leave

Other insurers have also complained. UnitedHealthcare, which said it plans to leave the exchanges in 2017 in Texas and most other states, has predicted it will lose about $650 million in the Affordable Care Act marketplace this year.

Humana warned earlier this month it plans "a number of changes … to address the significant risk selection issues we have and continue to face."

The company reported a 46 percent loss in the first quarter of 2016, but analysts have said some that is due to expenses involved in a takeover bid by Aetna.

Cigna has called its participation in the exchanges "contingent upon future market conditions and approval of our regulatory filings," according to a previous email to the Chronicle.

Last year Blue Cross and Blue Shield of New Mexico, a division of the same parent company of Blue Cross and Blue Shield of Texas, asked for a 51 percent rate increase for its exchange plans.

When New Mexico insurance officials refused, the company withdrew all individual plans from the state.

Texas is the health-care law's third-largest market behind Florida and California.

Wichita Falls insurance broker Kelly Fristoe told the Associated Press that people in rural areas of Texas will be the hardest hit by the rate increase because Blue Cross and Blue Shield is often the only option in remote areas.

Pogue said insurance regulators in many other states are more aggressive against large rate increases.

"We need people who can push back in Texas," she said.