Three of the four health insurers offering plans in the Austin area under the Affordable Care Act are angling to raise premiums in 2019 — with the nonprofit provider created by Travis County’s health district pushing for the largest rate increase by far.
Sendero Health Plans, an offshoot of taxpayer-supported Central Health, has requested a 33 percent rise in premiums for next year, saying in a filing to the federal government that “a substantial rate increase is necessary to allow Sendero to move forward with a break-even forecast after multiple years of painful losses.”
Oscar Health, a new entrant to the local market in 2018, is asking to raise its Texas premiums for plans sold under the Affordable Care Act, also known as Obamacare, by an average 17 percent for 2019. Celtic Insurance Co. has requested a 6.4 percent increase for its Ambetter health plans in Texas, while Blue Cross Blue Shield of Texas — which has had the highest premiums in the local area — has said it will lower its Texas rates by 6.1 percent for next year.
People eligible for federal subsidies will be shielded from the proposed premium increases, but those who buy plans on the Obamacare marketplace but earn too much for subsidies will have to pay them. The 2019 rates still must be approved by the federal government.
Officials of both Central Health and Sendero defended the nonprofit’s rate increase request, calling the proposal a byproduct of Sendero’s ongoing effort to balance its finances against its mission to provide low-income residents of the area with access to quality health care at affordable prices. Sendero offered the lowest Affordable Care Act premiums in the region in 2017, but Oscar bumped it from that spot for 2018.
Central Health CEO Mike Geeslin downplayed the notion that Sendero has actually “lost” money providing Affordable Care Act plans, even though Sendero cited losses in its official justification for the proposed 2019 rate increase.
The higher premiums are necessary “because we need to make sure that we have the funds to pay for people’s health care,” Geeslin told the American-Statesman. But “money was not lost — it was spent on paying for people’s hospital bills and their medical bills. We were going to pay for health care one way or another,” he said, because that’s the mission of Central Health.
Sendero’s mid-level — or “silver” — plan for a 40-year-old Travis County resident costs $454.50 a month for 2018 with no subsidies, according to healthcare.gov, so a flat 33 percent increase would add about $150 to that price.
Geeslin said Sendero still will be offering quality plans at good value if the rate increase takes effect, particularly when factors such as deductibles, co-pays and breadth of health network are considered.
Sendero has been struggling financially beyond the Affordable Care Act, however, and in May it stopped providing Medicaid plans and plans under the Children’s Health Insurance Program, or CHIP, because it was losing money on both. In addition, it received a $26 million infusion from Central Health in January to cover a fiscal 2017 deficit.
The nonprofit, which provides Affordable Care Act plans in Travis County and seven other area counties, said in its request for the 2019 rate increase that it has suffered “extraordinary losses” after entering the market in 2014. For instance, Sendero pegged its 2017 loss on Affordable Care Act plans at $25.9 million, after collecting premiums totaling about $150 million.
But Sendero CEO Wesley Durkalski agreed with Geeslin in a recent interview that those losses shouldn’t be viewed through the lens of a for-profit company. Such losses instead indicate Sendero was “providing a lot more care that people needed,” Durkalski said, which is in keeping with its mission.
Nationwide, health insurers that sell Affordable Care Act plans — most of which are for-profit companies — have been requesting relatively small rate increases for 2019 compared to previous years, and some, such as Blue Cross Blue Shield of Texas, have been trimming rates.
“Insurers are doing quite well in the individual market under the (Affordable Care Act), and many are starting to turn a profit for the first time,” said Rabah Kamal, a policy analyst in San Francisco with the Kaiser Family Foundation. “So going into next year, a lot don’t need to raise rates very much.”
Requests for rate increases are averaging about 5.4 percent from insurers in states such as Texas that use the health insurance marketplace run by the federal government, Kamal said, citing statistics from the federal Centers for Medicare and Medicaid Services. Still, she said double-digit increases have been proposed by some insurers based on individual factors.
Last year, premiums went up steeply across the United States after President Donald Trump — who has repeatedly said he wants to kill the Affordable Care Act — ended so-called cost-sharing reduction payments to insurance companies. Such payments were designed to reimburse insurers for discounts they provide to low-income policyholders for out-of-pocket expenses.
Both Sendero and Celtic raised their 2018 premiums by about 47 percent, and Blue Cross Blue Shield of Texas raised its premiums by 20.4 percent.
Kamal said the biggest uncertainty facing insurers heading into 2019 is the end of the federal mandate that requires individuals to have health insurance or pay a penalty. The Republican-led Congress approved a tax reform bill that repeals the so-called “individual mandate” for health insurance beginning Jan. 1.
“It’s possible (the lack of a penalty) will lead to fewer healthier people signing up for coverage,” Kamal said, which would impact the profitability of insurers if they’re left with a pool of policyholders who are sicker on average and require greater amounts of medical care.