Rate Request: Average increase of 6 percent for plans on and off exchange
Decision: Disapproved July 29, 2014, Anthem to submit recalculated rates and exhibits using revised assumptions
On June 4, 2014, Anthem Health Plans, Inc. filed a rate request for an average 6 percent increase on small group health plans for employers with 50 or fewer workers. The proposed rates are for plans marketed on and off the state’s health insurance exchange and would take effect January 1, 2015. The plans provide coverage for approximately 70,000 employees and their dependents.
Anthem noted in its filing that the plans meet all the Essential Health Benefits criteria mandated under the federal health care reform law.
The company projected that from Feb. 1, 2015 to Jan. 3, 2016, the costs of medical services and demand for those services, known as “trend” will account for an 8.5 percent impact over the current rates. The price projection also included the cost of adding benefits for pediatric dental and vision services. In its filing, the company stated that its “goal is to price to the average risk of the 2015 ACA market.”
Because small group business renews on a quarterly basis, Anthem stated in its initial filing that subsequent rate changes may be requested on a quarterly basis.
After an actuarial review, the Department concluded that Anthem overstated the impact of “trend” and should recalculate rates using a trend impact of 7.72 percent rather than 8.5 percent.
The Department also strongly disagreed with the company’s new mechanism for developing premium rates at the plan level. The company attempted to incorporate the impact of cost-sharing on economic behavior and market rates. This approach, the Department noted, represented a “major change” in the development of premium and is not consistent with ACA regulations.
As a result, the Department disapproved the rate filing request on July 29, 2014 and directed Anthem to recalculate the rates based on the Department’s findings.