The average 29-year-old man in Richmond may feel invincible, but he could feel sharp pain in his wallet as federal health care reform begins to level the playing field Jan. 1 for people seeking insurance.
Virginia regulators are poised to act on nine individual health plans and six small-group plans that propose to participate in a new insurance exchange in a market that has been transformed by the Affordable Care Act.
While the law's effect on insurance premiums is likely to vary widely among carriers and markets, the biggest boost will come in monthly rates for the "young invincibles," men in their 20s, who pay the least now.
"We're going to be seeing quite a bit of rate shock," said Tim Connell, chief actuary for Anthem Blue Cross Blue Shield, the state's largest insurer, in a presentation Tuesday to the State Corporation Commission.
The shock also is likely to be felt in the small-group market for businesses that employ, say, eight 29-year-old men, who may end up looking for individual insurance or paying a penalty to opt out of insuring themselves altogether.
"It may make them less likely to purchase coverage in 2014," said Craig Bauer, senior actuary at Aetna, which will compete with Anthem HealthKeepers for individual health insurance business in the Richmond area on the exchange.
The potential exodus of young, relatively healthy people from individual and small-group plans concerns insurers and regulators, who say their presence is essential in a risk pool that no longer will be allowed to exclude people with pre-existing conditions, or base rates on gender, health status, or, to a reduced degree, age.
"For this to work, you've got to get the healthy young people into the risk pool," said Anthem spokesman Scott Golden.
On the other hand, the presentation to the SCC made clear that the new insurance marketplace will be competitive, with multiple insurers competing in every market in Virginia.
"We consider the new exchange marketplace an opportunity," Golden said.
The marketplace is a new responsibility for the SCC and its Bureau of Insurance, which on July 1 received authority over all health insurance rates, inside and outside of the exchange; the ability to enforce the federal law's requirements; and the role of managing health plans that compete on the exchange.
The General Assembly adopted legislation this year to expand the SCC's authority and role, even though Republican legislative leaders and Gov. Bob McDonnell balked at the opportunity for Virginia to run its own exchange.
The Bureau of Insurance has been reviewing health plans for qualification to compete on the exchange, as well as the rates they propose to charge. The SCC will certify qualified plans by July 31 to the U.S. Department of Health and Human Services, which will make the final decision on whether they can participate.
Control over rates will remain in Richmond.
"We are driving that car," Insurance Commissioner Jacqueline K. Cunningham told the three-member SCC.
The car is a much different model than insurers or regulators have driven before. The Affordable Care Act and new Virginia laws have changed the way health plans and premiums are designed because the law requires certain benefits to be covered -- maternity, for example -- while preventing insurers from charging more for women and people with complicated health histories, and limiting how much more they can charge in premiums based on age.
Those changes are a big reason for the double-digit and, in some cases, triple-digit percentage rate increases that may show up in individual and small-group policies for young men. On the other hand, rates may fall, or rise much less steeply, for families and older Virginians seeking coverage in the marketplace.
"It's a new day," said David Shea, health actuary for the Bureau of Insurance, who said the health insurance business faces a market "reset" because of the far-reaching changes.
The Affordable Care Act also levies a number of new taxes and fees that will be reflected in premiums, while at the same time offering insurers some help with high-cost, high-risk customers they will serve under the new rules.
The result is a mixed bag of projected monthly premiums that are hard to compare among carriers, products and markets.
"As we all know here today, this is a work in process," said Michael M. Dudley, president and chief executive officer of Optima Health Plan, based in Norfolk.
"It will be a year or two or three before this really stabilizes and we know more reliably what to expect," Dudley said.
mmartz@timesdispatch.com
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