Harvard Pilgrim Health Care has reduced its average rate increase request for individual Affordable Care Act insurance plans from the previously announced 39.7 percent to 29.2 percent.

The provider said during a rate hearing Tuesday before the state Bureau of Insurance that it has recalculated its request for 2018 using previously unavailable data from the first quarter of 2017, which showed more positive activity regarding revenue and expenses.

Harvard Pilgrim still is seeking the largest annual rate increase of Maine’s three ACA insurers. Maine Community Health Options is requesting a 19.7 percent increase, and Anthem Blue Cross and Blue Shield is asking for a 21.2 percent increase.

In testimony before a seven-member panel led by state Superintendent of Insurance Eric Cioppa, Harvard Pilgrim Maine Vice President Edward Kane said the provider acquired a relatively expensive group of Maine policyholders in 2016, partly because competitor Community Health suspended new memberships that year.

During that period, Kane said in pre-filed written testimony, those who signed up through special enrollment with Harvard Pilgrim “tended toward higher claims costs and more frequent lapses in coverage than those enrolled during the annual open enrollment period.”

However, Community Health has resumed taking on new members, so special enrollment members have been more evenly distributed among the three carriers in 2017, he said. Harvard Pilgrim representatives explained that people can sign up partway through the year via special enrollment if they’ve experienced a life-changing event such as job loss or a divorce. Such members might undergo an expensive medical procedure while they have coverage, and then decide not to renew during the open enrollment period the following winter.

That failure-to-renew risk is greater since the Internal Revenue Service has begun accepting tax returns that do not include proof of health insurance, Kane said. Such proof had been required under the ACA.

“This action, taken in response to the president’s executive order directing federal agencies to provide potential relief from aspects of the ACA, leaves consumers with the perception that the individual mandate penalty will not be enforced,” Kane said. “Consequently, we have already seen evidence of a shrinking individual market.”

In general, lack of enforcement of the ACA’s individual mandate penalty is expected to lead to fewer young and healthy Maine residents participating in the ACA, which would increase ACA insurance costs for the remaining enrollees, he said.

UNCERTAINTY AFFECTS RATES

Maine Assistant Attorney General Tina Moylan, who represented consumers during the hearing, asked Harvard Pilgrim representatives several probing questions about the assumptions they used to arrive at their 29.2 percent increase request, as did members of the panel.

One question was how Harvard Pilgrim knows that not enforcing the mandate would lead to a smaller and sicker pool of insured in Maine. The insurer’s actuaries acknowledged that they don’t have specific data on why former ACA members have dropped their coverage.

The panel also asked Harvard Pilgrim for more information about an “alternative” rate request provided to the Bureau of Insurance that indicates which rates it would seek to change if the Republican-controlled Congress eliminates cost-sharing subsidies that help lower-income policyholders cover costs. The bureau asked all three ACA providers to submit alternative requests.

Harvard Pilgrim’s alternative request is for an average rate increase of 39 percent above 2017 rates if the subsidies are eliminated, similar to Community Health’s anticipated 40 percent rate increase for its silver plans if the subsidies end. Anthem has told the bureau that it would withdraw from the Maine ACA marketplace entirely if the subsidies are eliminated.

Finally, the panel asked whether Harvard Pilgrim intends to remain in Maine’s ACA marketplace after 2018.

“Right now the company has not made a decision as to staying in the market after next year,” Kane said. “It is not decided.”

THE VIEWS OF POLICYHOLDERS

At the hearing, Harvard Pilgrim policyholder Kimberly Flood of Brunswick asked the panel to grant the insurer’s rate request. Superintendent Cioppa must make his decision by the federal deadline of Aug. 16.

“They have never denied me anything,” said Flood, a recent cancer survivor. “This is a special company. I think we’ve got to work with them to keep them in the state.”

But Harvard Pilgrim policyholder Nancy Linkin of Camden, who is receiving treatment for breast cancer, said the fear of a significant premium increase has made it difficult to sleep at night.

“I rescheduled my chemo treatment and came here to tell my story,” Linkin said. “I am absolutely terrified.”

J. Craig Anderson can be contacted at 791-6390 or at:

[email protected]

Twitter: jcraiganderson

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