IOWA CITY (AP) — Months after customers blasted the company for years of skyrocketing rates, Iowa's dominant health insurer said Tuesday that it will limit premium increases in 2014 to less than 6 percent for individual and small-business policyholders.
Wellmark Blue Cross and Blue Shield said in a statement that it will not raise premiums to cover any increases in general medical or administrative costs in 2014. Instead, the Des Moines-based mutual company said, it will raise rates only to offset the new fees required of insurance carriers under the federal Affordable Care Act.
The decision will affect 330,000 members in Iowa and South Dakota who buy health insurance directly from Wellmark or who get their insurance through businesses with fewer than 50 employees. Wellmark, which insures roughly 1.8 million customers in Iowa and 300,000 in South Dakota, did not specify how larger group policies would be affected.
The plan comes after an increase of 12 to 13 percent went into effect for 146,000 Wellmark individual and business customers on April 1.
Hundreds of Wellmark customers had spoken out against the company online or at a January public hearing.
Critics said they were tired of Wellmark's annual rate increases, which were 9.4 percent in 2012, 8.5 percent in 2011 and 18 percent in 2010. They decried the impact on families' budgets and questioned Wellmark's administrative costs.
But Iowa's insurance commissioner approved the rate increases, citing increasingly expensive health care costs.
Wellmark executives said a number of factors allowed them to hold down rates next year, including an assumption that the pool of individual and small-business customers may be healthier and have less-expensive benefits. The executives said their efforts to tie provider payments to outcomes and promote healthy lifestyles may also be paying off.
Separately, Wellmark said Tuesday that it would offer individual and small-business group members the option of keeping their current health insurance plans through Dec. 31, 2014, rather than be required to switch to new, more expensive plans that have the benefits required under the Affordable Care Act.
Wellmark said customers will still have the ability to switch to ACA-compliant plans Jan. 1, depending on which option suits them best. Some of the notable differences include mental health and maternity benefits that are not currently covered but will cost more.
“We are rewarding our valued members with today's announcements,” Wellmark Chairman and CEO John Forsyth said in a statement. “As a mutual company, Wellmark is owned by its policyholders and these decisions are designed to provide them with maximum flexibility and choice while minimizing their increase in cost. The extension provides additional time to become more informed about what the changes in the market mean without losing the current coverage they know and trust.”
The chief executive officer of one new Wellmark rival, Des Moines-based CoOportunity Health, suggested that Wellmark's moves could be designed to undermine the implementation of Iowa's new health insurance exchange. Starting Oct. 1, customers will be able to shop for coverage through Iowa's exchange and qualify for subsidies and benefits required under the federal health care law.
Wellmark's decisions could discourage some customers from looking for new plans while sending a potentially less healthy applicant pool to the exchange than anticipated, which could drive up costs for insurers who participate, CEO David Lyons said.
Wellmark rejected the suggestion that it was trying to undermine the program, saying that it was still evaluating its options and that it would announce in early July whether it will participate in Iowa's exchange.
Lyons said Wellmark's decision to lower its rate increases was a dramatic example of the new competition that the health law has unleashed.
“I think anything that generates additional value for consumers is good,” he said. “I just hope it doesn't create an environment where the competitive pressures that are creating this opportunity today won't be around to ensure it continues in the future.”
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