Wellmark Blue Cross and Blue Shield has filed its 2011 premium rates for Iowa individual market policyholders.
If approved by the Iowa Insurance Division, approximately 46,000 Iowa policyholders under age 65 will see an increase in their base premium rate of 10.8 percent, effective April 1, 2011. Approximately 3000 Basic and Standard policyholders will receive an increase of 11.3 percent. Approximately 2500 Blue Transitions policyholders will receive an increase of 15 percent. (* See notes below for additional details.)
This increase does not apply to Wellmark policyholders with Medicare products.
Health care costs expected to rise over next year
Health care costs (medical claims paid to hospitals, doctors, pharmacies and other health care providers) are expected to increase during the next rating period (April 1, 2011 – March 31, 2012). Factors include:
- People using more medical services: Chronic conditions like obesity and diabetes are driving increases in the amount of health care services members use.
- The number of joint replacements (e.g., hips and knees) has increased for members at younger ages.
- The cost of drugs to treat chronic conditions such as high blood pressure and diabetes has increased significantly.
- New technology costs more: Technological advances in health care have improved the quality of care but are almost always more expensive.
- The use of diagnostic tests such as x-rays, CT scans and MRIs is on the rise. An increasing number of people are obtaining MRIs, for example, which are 10 times the cost of an x-ray.
- ER use: The emergency room is one of the most costly places to receive care, and more than one third of all emergency room visits are for non-emergency related conditions.
Administrative expenses projected lower as a percentage of premiums
The portion of policyholders’ premium dollars used to pay administrative expenses will decrease during the 2011 rating period, reflecting operational efficiencies achieved within Wellmark over the last year. This includes an estimated 18 percent per square foot savings in operational costs in Wellmark’s new Des Moines headquarters when compared to remaining in the four buildings Wellmark occupied in 2010.
The percentage of Wellmark’s premium dollar spent on health care exceeded the requirements under the new health care reform legislation. Insurers must spend at least 80 percent of premiums on health care services in the individual market, beginning January 1, 2011. Wellmark has exceeded this requirement in the past. In 2009, for example, Wellmark spent 94 cents of each premium dollar on health care services in the Iowa individual market. With these rate increases, Wellmark has budgeted to spend more than 80 percent of each premium dollar on health care costs.
Wellmark continues to have among the lowest administrative expenses and premiums in the country, and is committed to improving quality and reducing the cost of the health care services its members receive. Current initiatives in this area include:
- Working with health care providers to find new and better ways to reward them for the quality of care they provide, rather than the quantity of care.
- Working with communities to encourage more active lifestyles, and making healthy choices easier to make.
- Working with members to help them be the most educated and informed health care consumers.
For information on health care costs and insurance premiums, visit www.wellmark.com/costs.
Wellmark, Inc. (www.wellmark.com ) does business as Wellmark Blue Cross and Blue Shield of Iowa. Wellmark and its subsidiaries and affiliated companies, including Wellmark Blue Cross and Blue Shield of South Dakota and Wellmark Health Plan of Iowa, Inc., insure or pay health benefit claims for more than 2 million members in Iowa and South Dakota. Wellmark Blue Cross and Blue Shield of Iowa, Wellmark Blue Cross and Blue Shield of South Dakota, and Wellmark Health Plan of Iowa, Inc. are independent licensees of the Blue Cross and Blue Shield Association.
The filing includes rate increases for the following pools of policyholders:
- Products Sold before April 1996: No increase
- Pool III: 10.8 percent
- Pool IV: 10.8 percent
- Pool V: 10.8 percent
- Blue Transitions: 15 percent*
- Basic and Standard: 11.3 percent*
- Blue Transitions was a guarantee-issue product for former Wellmark group members who converted to an individual policy without underwriting. Blue Transitions members typically experience higher health costs than other individual policyholders. The 15 percent increase was calculated after applying a $4.5 million dollar credit from Wellmark to the plan.
- By law, rates for Basic and Standard policies must be set comparable to the lowest-priced plan available for sale after adjusting for differences in benefits. More recently, these policies have been sold through the HIPIowa program.