Citing what they called flawed data and unreasonable assumptions, Maryland insurance regulators on Friday for health plans that will be sold to individuals and families through the state鈥檚 insurance marketplace starting Oct. 1.
In some cases, the final premiums were cut by a third for the Maryland Health Connection exchange, pleasing advocates of affordable coverage but prompting others to question whether such low prices can be sustained.
Regulators reduced prices for all nine carriers filing to sell policies in the marketplace.
鈥淧eople are going to have access to plans at reasonable prices,鈥 said Maryland Health & Mental Hygiene Secretary Joshua Sharfstein, whose department is not involved in insurance regulations. 鈥淧lus people are going to have access to tax credits on top of that. So we think that鈥檚 good news.鈥
While Oregon, Rhode Island and other states have also lowered insurers鈥 proposed prices for new insurance policies, Maryland鈥檚 move is one of the most aggressive, analysts said.
鈥淢aryland appears to be among the lowest鈥 for prices disclosed so far for exchanges created by the Affordable Care Act, said Gary Claxton, a vice president at the Kaiser Family Foundation. 鈥淚t looks like the [insurance] department was pretty successful in getting insurers to accept less than they wanted 鈥 pretty sizable reductions.鈥 (Kaiser Health News is an editorially independent program of the foundation.)
Under the revised prices, monthly premiums for a 25-year-old nonsmoker buying a lower-benefit 鈥渂ronze plan鈥 in the Baltimore area . For a 50-year-old Baltimore nonsmoker buying a higher-benefit silver plan, prices go from $267 to $470 per month. Families with incomes below about $94,000 and individuals with incomes below about $46,000 are eligible for tax credits to help pay for the coverage.
Joseph Antos, a health economist for the conservative-leaning American Enterprise Institute, wondered whether Maryland鈥檚 Democratic politics hadn鈥檛 trumped the interest of ensuring that premiums collected are enough to pay members鈥 medical claims.
鈥淥bviously the governor and the administration in Maryland really want to make health reform work 鈥 by a particular definition,鈥 Antos said. 鈥淭heir definition is extremely low premiums. If you have very low premiums, you鈥檙e going to get more people signing up. If you have really low premiums, you鈥檙e going to have fewer insurance companies doing business in Maryland.鈥
The Obama administration was quick to draw attention to the final numbers.
鈥淭he news out of Maryland is yet another example of how the reforms in the Affordable Care Act are providing families with affordable and new choices,鈥 said Joanne Peters, spokeswoman for the Department of Health and Human Services.
CareFirst BlueCross BlueShield sells the most Maryland plans directly to individuals and families of any carrier. In April, the company filed exchange plan premium requests it said were 25 percent higher than similar plans sold now. Even at those prices, 鈥渨e鈥檙e expecting to lose money,鈥 partly because of an expected influx of consumers with chronic medical problems into the plans, CareFirst CEO Chet Burrell said at the time.
After the changes disclosed Friday by the Maryland Insurance Administration, CareFirst鈥檚 rate increase will be .
An initial review of the filings 鈥渟hows that CareFirst鈥檚 offerings are competitively priced and often among the most affordable options available,鈥 CareFirst said in a prepared statement. 鈥淩ate adjustments imposed by the MIA were modest, and we look forward to the launch of the exchange this fall.鈥
For Aetna, which also filed to sell plans through the Maryland exchange, regulators by 29 percent. Aetna disagreed with about 20 percentage points of that reduction, and the company 鈥渄eclined to amend its rate filing to reflect these further modifications,鈥 the insurance administration said.
It was not clear whether the company would go ahead with plans to participate in the marketplace.鈥淲e are reviewing the commissioner鈥檚 recommendations and determining the proper response to these changes,鈥 said an Aetna spokesman.
鈥淚t鈥檚 astonishing,鈥 Antos said. 鈥淚f they sell insurance on the exchange, they will have to take an additional 20 percent reduction that their actuaries do not think is justified鈥. Any insurance company can certainly take low rates [and lose money] for a year, maybe two. But eventually they鈥檙e going to have to make up for it 鈥 pull out or raise your rates.鈥
Others say insurer cost estimates were too high, citing slowing medical cost increases and recent consumer rebates made when insurers鈥 premiums produced profits higher than what the government allows.Maryland鈥檚 decision to keep thousands of chronically ill patients in a separate, temporary 鈥渉igh risk pool鈥 will also control exchange costs next year, Sharfstein said.
鈥淭his is really good news for Maryland consumers,鈥 said Vincent DeMarco, president of the Maryland Citizens鈥 Health Initiative, an advocacy group. Maryland Insurance Commissioner Therese Goldsmith, he said, 鈥渄id a really good job of reducing what the insurers asked for.鈥