Report: Health Insurance Rate Watch Project

Comments on Moda Health Plan's proposal to raise individual health insurance rates

Released by: OSPIRG Foundation

Executive Summary   

Moda Health Plan’s membership of more than 95,000 Oregonians with individual health insurance plans will see double-digit rate hikes of 12.5% on average, and as high as 13.7%, if the premium rate hike proposed by Moda goes forward.

Moda currently has the largest market share in Oregon’s Individual market. Moda’s increase is one of the largest proposed for next year in a context in which many of their competitors are proposing double-digit rate decreases for comparable coverage.

The main reasons given for this increase include the insurer’s projection that medical and prescription drug costs will increase by 5.5% in the upcoming year, that the worsening health status of its customers will drive up costs by 3.8%, and that scheduled reductions in federal and state programs to protect insurers from risk will increase costs by 7.2%.

After analysis of Moda’s initial filing and the supplemental information provided, we conclude that the insurer has not provided sufficient information to justify their proposed rate increase.

Key Findings:

  • Moda did not adjust its cost projections to reflect a reduction in “bad debt” from the Affordable Care Act’s expansion of coverage. With over 400,000 Oregonians newly signed up for coverage in 2014, rates of uncompensated care are beginning to decline. This benefit should be passed along to consumers in the form of lower rates.
  • Moda’s projection of a 7.2% increase due to changes in risk mitigation programs is relatively high and not adequately supported by the data provided in the filing. In the coming year, state and federal reinsurance programs meant to stabilize premiums and protect insurers from unusually expensive claims from sicker customers will begin winding down, and phase out entirely by 2016. While insurers may be required to pay more of the cost of their members’ care as these programs end, Moda’s projection of the impact is high relative to other insurers, with reasons unclear. It is also unclear to what degree Moda is working to reduce its exposure to these additional expenses through programs to help higher-cost patients, such as those with chronic diseases, manage their conditions more effectively at a lower cost.
  • Moda’s projection of a 3.8% increase due to the worsening health status of their customers is insufficiently supported. Next year, many market experts expect that the mix of customers enrolling in health coverage will be younger and healthier than those who signed up for 2014, which may bring down costs. Especially in a context in which some insurers are projecting decreases in costs due to this factor, Moda does not provide enough evidence to support their projection.
  • Moda is proposing a significant increase to the provision for expenses on a per member per month basis without sufficient justification. There is reason to believe those amounts should be rising only slowly, if not remaining level or decreasing.
  • When it comes to reducing costs and improving the quality of care, it is not clear that Moda is doing all it can. New health care quality, cost and utilization metrics submitted for informational purposes show that Moda’s emergency room costs and specialty care utilization are higher than many of its competitors. In addition, its performance on measures of mental health follow-up care and developmental screening are below statewide benchmarks. Further inquiry should be made into the causes of these metrics to ensure Moda is doing everything possible to cut waste and improve quality of care.

Before deciding to approve or deny this rate request, we urge the Insurance Division to scrutinize the issues raised here, require Moda to provide all documentation necessary to evaluate their proposal, and to implement a concrete, achievable plan to contain costs for Oregon individuals and families.

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