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Premium hikes designed to keep insurers in ACA market

In a bid to keep insurers in the Obamacare marketplace, the Pennsylvania Insurance Department is allowing insurance companies to charge more for individual health plans than the insurers themselves originally requested.

The department approved an average rate increase of 32.5 percent for individual health plans sold under the ACA. Insurers across the state originally requested to raise premiums an average of 23.6 percent.

Premium rates for small-group health plans under the ACA are also increasing, but by an average of 7.1 percent. That jump is slightly less than what insurers requested.

In giving its blessing to rate hikes, the state insurance department cited Minnesota-based UnitedHealth, which has left all state ACA marketplaces, and Connecticut-based Aetna, which recently announced it was bowing out of the Pennsylvania exchange.

The moves changed the competitive landscape for remaining insurers.

“After United Healthcare and Aetna withdrew from the marketplace, other insurers expressed concerns about Pennsylvania’s individual market, their ongoing losses, and federal actions that have impacted market stability,” said department spokeswoman Ali Fogarty. “The department had to work with these insurers to ensure that they continued to view Pennsylvania as a viable market.”

Across the country insurers are claiming that they have paid out more than they’ve made on health plans sold under the ACA, pointing out that health care services for newly insured consumers are costing more than what those consumers are paying in premiums.

The department is allowing insurers to raise premiums while keeping in mind that 75 percent of people insured under the ACA are receiving subsidies from the federal government to help pay those premiums, the department said.

The department, which did not approve premium-increase requests last year, is hoping that the hikes in 2017 will help stabilize insurers after the losses they’ve experienced over the past three years.

“But given the timing, anything we say right now is speculative,” Fogarty said.

In addition to approving premium increases, the department is  supporting Highmark Inc. in its lawsuit against the federal government, the department announced this week.

The Pittsburgh-based insurer is suing the federal government over losses it has experienced in the ACA marketplace.

Highmark is attempting to collect money that was promised to insurers for the calendar years 2014-2016 through what is known as the risk corridor program.

The government created the program to make funds available temporarily to insurers that were offering health plans through the ACA as they adjusted to a new market.

Other insurers have also filed lawsuits against the government for not funding the risk corridor program, such as Oregon-based Health Republic Insurance.

“Washington’s refusal to live up to the law it passed and fund risk corridor payments to insurers that incurred higher claims than expected has led to large insurer losses and companies leaving the exchange,” said insurance commissioner Teresa Miller. “That is why I am announcing that the Insurance Department on Friday asked the court for permission to file an amicus brief in support of Highmark Inc. in its lawsuit to require the federal government to make these payments.”

The brief would be filed with the United States Court of Federal Claims, Fogarty said.

Lenay Ruhl

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