Blaming the cost to implement health care reform, the state's largest health insurer has proposed eye-popping rate increases to state regulators for individuals and small businesses.
CareFirst BlueCross BlueShield wants to raise rates an average of 25 percent on those who buy coverage individually. Chet Burrell, the insurer's CEO, said the increase was needed to cover the cost of more sick people who will be joining the insurance rolls under health care reform.
People with pre-existing conditions were denied coverage prior to health care reform, keeping insurance costs down.
In recent years, rates for individual insurance coverage have risen an average of 7 percent to 11 percent, according to various studies.
"We have always supported the intent and goal of the Affordable Care Act, but this is the practical result of it by opening the pool to everybody," Burrell said.
The rate increase must be approved by the Maryland Insurance Administration, which indicated it would closely examine rate increase proposals made by CareFirst and other insurers who operate in the state.
"I want to stress that these rate filings reflect the carriers' requested rates," said Maryland Insurance Commissioner Therese M. Goldsmith in a statement. "In Maryland, the premium rate a carrier requests is not always the rate that is granted."
The rate proposals are for health insurance plans that would be offered under a state exchange — an open marketplace where people would be able to shop for insurance. Most people would continue to purchase insurance through job-based plans separate from the exhange.
Burrell said small businesses purchasing through the exchange would see CareFirst rates rise on average 14 percent to 15 percent because of rising health care costs and new taxes, fees and assessments required under health care reform.
Older individuals could see decreases under the proposed rates, but younger people could see increases of as much as 150 percent, reflecting limits on how much rates can vary based on age, Burrell said.
Insurance companies around the country have been warning about higher rates because increased fees required under health care reform and the higher expense to cover more people, said David Heupel, a senior health care analyst at Thrivent Financial in Minneapolis.
"What all these companies are doing is they are trying to pass it along," Heupel said.
Advocates for health care reform have argued that it ultimately will help stem rising costs and may even reduce premiums as more people are required to buy insurance. Part of the law is designed to limit insurance companies' profits. But even advocates acknowledged that insurers would raise rates for many at first.
Other insurers proposed lower rate increases than CareFirst to the state, but also expressed concern about the cost and uncertainty of health care reform. Insurance companies can only predict how many new people will buy insurance and will not know the health of new customers.
"It is a brave new world and there is great deal of uncertainty," said Dr. Phil Polakoff, chief medical executive with FTI Consulting, an Annapolis-based business advisory firm. "I don't know how the health companies can come up with plans with any validity."
Coventry Health Care, a Bethesda-based insurer, said it based its numbers on the best estimates it could.
"While we have taken great care to ensure that our projections are as accurate as possible, health exchanges are new territory for the industry, and many uninsured individuals will be entering the market for the first time," said Kristine Grow, Coventry's vice president of corporate communications.
Coventry did not provide an average rate increase as CareFirst did. Rates for its "small group" HMO plan — used by small businesses — will rise 3.9 percent. The company said it couldn't say how much the rate increased for its individual HMO plan because it is a new plan from what was offered last year.
CareFirst also is offering new plans, but was able to come up with its rate increases by comparing new plans with plans it offered last year.
In its proposal, Kaiser Permanente laid out nine plans for individuals and said "the weighted average rate increase across all pools" is 4.3 percent. It will offer 15 plans under the small group market at an average rate increase of 2.8 percent.