ROSENDALE’S REINSURANCE PROGRAM PREVENTS DOUBLE-DIGIT RATE INCREASES
HELENA, Mont. – Montana health insurance companies are proposing small overall average rate increases for individual market (ACA/Obamacare) plans in 2021, with premium decreases on some plans and premium increases on others.
Blue Cross and Blue Shield of Montana submitted plans with an overall average premium increase of 2.3% to Insurance Commissioner Matt Rosendale’s office. The Montana Health CO-OP submitted plans with an average 3.3% increase and PacificSource submitted plans with an average 5.0% increase.
Blue Cross has 29,700 enrolled members in the individual market. The Montana Health CO-OP has 18,200 and Pacific Source has 12,300.
Rosendale is pushing back on the proposed increases.
“I’ve already notified each of the companies individually that I’m having my actuaries go through their numbers with a fine-tooth comb and I think it’s unacceptable for them to submit any rate increases, especially in the midst of our current health pandemic,” Rosendale said. “At a time when insurance companies are seeing profit increases in the Obamacare markets and when we’re seeing such an under-utilization of elective health care during the COVID-19 pandemic that hospitals have had to furlough hundreds of employees, the insurers can do better.”
Under Montana law, insurance companies set their own rates. Rosendale does not have the authority to “approve” or “disapprove” the changes except in limited circumstances; the State Auditor’s role is limited to reviewing the companies’ proposed rates.
The insurance companies would be proposing much higher rates were it not for the Montana Reinsurance Program. The reinsurance program provides a financial backstop against high-cost insurance claims, allowing companies to mitigate risk and lower prices while continuing to provide insurance to Montanans with preexisting and expensive medical conditions.
Rosendale fought to establish a reinsurance program since he was elected State Auditor. Governor Bullock vetoed Rosendale’s reinsurance proposal twice in 2017 before finally coming around to the idea in the 2019 legislative session, when the new program was established. Reinsurance helped reduce premiums on every single 2020 individual market health insurance plan, with double-digit rate decreases on average.
If Montana didn’t have the reinsurance program, health insurers’ proposed premium increases for 2021 would be 10.3% for Blue Cross, 12.5% for the Montana Health CO-OP, and 14.6% for PacificSource.
“The Montana Reinsurance Program is doing its job and I’m glad we’re preventing double-digit rate increases next year after successfully lowering rates on every single plan this year,” Rosendale said. “The stability provided by reinsurance is another reason why I think the health insurance companies should be able to hold their rates flat.”
In the small group market, where the reinsurance program does not apply, the overall average rate changes are a 1.7% increase for Blue Cross, a 4.5% decrease for Montana Health CO-OP plans, and a 3.7% increase for PacificSource.
Blue Cross has 27,000 enrolled members in the small group market, Montana Health CO-OP has 500, and PacificSource has 17,700.
Rosendale highlighted the need to reduce health care costs to drive long-term health insurance rate reductions and called out the industry for its complicity in ever-increasing costs.
“Everyone agrees we have to reduce the cost of health care, but almost none of the major players will step up to the plate. When we passed a bill to reduce prescription drug costs by $8 million with overwhelming, bipartisan support in the legislature, the health insurance companies and pharmacy benefit managers fought it tooth and nail, and ultimately convinced Governor Bullock to side with them and veto the bill,” Rosendale said.
“Health care businesses got the most federal COVID-19 relief money, yet hospitals and other providers continue to increase prices at unsustainable levels. The filings submitted by the insurers say the biggest cause of rate increases continues to be the ever-increasing costs charged by providers. Obamacare incentivizes the insurance companies to pay those higher prices because then they can keep more money themselves, and it does nothing to address the actual cost of care. Every one of the major players employs well-paid lobbyists to give lip service to reducing costs while working to kill serious attempts at reform,” Rosendale continued. “I’ll keep fighting to reduce health care costs, just as I have throughout my service in the legislature and state auditor’s office.”
Rosendale has pushed several reforms to lower health care costs, including:
- Senate Bill 71 to lower prescription drug costs by about $8 million for 50,000 Montanans. SB 71 passed the legislature with veto-proof majorities, Governor Bullock vetoed the bill at the urging of lobbyists, and legislators failed to override the veto.
- Direct Primary Care, a system in which patients pay doctors a monthly fee directly for their services. Bullock vetoed DPC legislation twice before Rosendale took executive action allowing DPC clinics to move forward. So far, at least six DPC clinics have opened in Montana: Billings, Missoula, Bozeman, Kalispell, Polson, Whitefish
- The Montana Reinsurance Program, which lowered insurance premiums on every single 2020 individual market plan and is currently preventing double-digit rate increases for 2021. Bullock vetoed reinsurance legislation twice in 2017 before signing onto the idea for the 2019 session.
2021 health insurance rates will be finalized later this summer once the rate review process is completed. The submitted rate changes announced today are overall averages, meaning that individuals may see greater or lesser impacts than the average. These rate changes do not affect Montanans who get their health care coverage through a large employer or a government program like Medicare, Medicaid, or the VA.
Open enrollment begins in November of this year, which is when Montanans will be able to shop for plans and see how rate changes affect them on an individual basis. Job loss is a “qualifying event” for people to get ACA plans outside of the normal enrollment period.
Although public comment is only required on rate increases over 15 percent, the insurance commissioner’s office will accept all public comments related to proposed 2020 rate changes. Public comments can be emailed to CSIPublicComment@mt.gov through August 1, 2020. The commissioner’s office will then compile the comments and forward them to the relevant insurance companies to consider before rates are finalized in August.
More details on the rate review process, proposed 2021 individual and small group health insurance rate changes, and how to submit public comments can be found HERE.