Overview Medical Loss Ratio (MLR) Rate Review

Golden Rule Insurance Company Rate Review in Indiana

Golden Rule Insurance Company has asked for a rate increase* for the following products in Indiana: Gen 26 - Copay Select-PPO-Individual-73490IN016, Gen 26 - HSA-PPO-Individual-73490IN017, Gen 26 - Plan 100-PPO-Individual-73490IN018, Gen 26 - Plan 80-PPO-Individual-73490IN019 and Gen 26 - Saver 80-PPO-Individual-73490IN020.

Review Status: Not Unreasonable Rate Increase

If the increase happens:

The average rate increase will be 17.00%
The proposed rate increase is an average rate increase for all covered groups or individuals. The premiums may be higher or lower than this average based on factors such as age, family structure, and health experience of the covered groups and individuals.
The effective date of the rate increase is 05/01/2013. The actual date of your rate increase may vary based on the anniversary date of your policy and other factors.
This increase will affect 13713 people

More Information about this Rate Increase:

Why does my insurance company want to raise my premium?
What kinds of Medical Services are causing this rate increase?
How would my insurance company use my premium?
Last three rate increases for this product
Who is reviewing this rate increase?
Insurer's explanation of the rate increase
Results of the Rate Review

Why does my insurance company want to raise my premium?

Your insurer says that costs are going up:

Type of Cost:	Per Member Increase Per Month Increase**	Portion of Increase
Medical Services* - Cost of providing healthcare services to policyholders	$34.83	192.74%
Administrative Expenses - Marketing, claims processing, and other costs to the company	-$2.96	-16.39%
Underwriting Gain/Loss - Amount the company keeps after paying claims and administrative expenses	-$13.80	-76.36%

* 10.20% of the Medical Services cost increases are due to how many people use the services and how often they use them and 12.80% is due to the cost of services.

** These increases won't add up to the average rate increase if everyone doesn't get the rate increase at the same time.

What kinds of Medical Services are causing this rate increase?

Medical Service	Per Member Per Month Increase	Portion of Increase
Hospital Inpatient - Care in a Hospital	$7.65	21.95%
Outpatient - Care in a hospital or other facility that doesn't require an overnight stay	$10.01	28.74%
Professional Services - Payments to doctors and other healthcare professionals	$12.23	35.11%
Prescription Drugs - Medicines you need a prescription to buy	$1.63	4.68%
Ancillary Services - Medical supplies, ambulance fees, etc.	$3.31	9.52%
Capitation - A fixed per person payment the insurer pays to a provider to cover a person's medical costs	$0.00	0.00%
Cost Sharing - Changes in deductibles, copayments, benefits, etc.	$0.00	0.00%
Current Medical Cost Adjustment - The difference between what your insurer thought it was going to pay for medical services and what it actually paid during the current year	$0.00	0.00%
Total Medical Service Cost Changes	$34.83	100.00%

How would my insurance company use my premium?

Type of Cost	How Premium Dollars Will be Spent if the Requested Rate is used
Type of Cost	Per Member Per Month	Portion of Rate
Medical Services - Cost of providing healthcare services to policyholders	$139.73	80.65%
Administrative Expenses - Marketing, claims processing, and other costs to the company	$32.58	18.80%
Underwriting Gain/Loss - Amount the company keeps after paying claims and administrative expenses	$0.95	0.55%
Total Request Rate	$173.26	100.00%

Last three rate increases for this product:

Year	Requested	Got
2012	9.90%	9.90%
2011	0.00%	0.00%
2010	0.00%	0.00%

Who is reviewing this rate increase?

The rate increase request is being reviewed by the State.

State laws either:

Allow the insurance regulator to review rate filings, but do not allow the regulator to stop a rate from being used, or
Allow the insurance regulator to both review rate filings and stop an unreasonable rate from being used.

If a state's laws do not allow the insurance regulator to perform effective rate reviews, the federal government* will review any rate increases at or above 10% in the individual or small group market.

*If the federal government is reviewing, click here to see the filing.

Insurer's explanation of the rate increase

Golden Rule Insurance Company has prepared the following written explanation of this rate increase.

HIOS Part II Reporting Memorandum

Scope and Range of the Rate Increase

The anticipated rate increase for the Indiana individual major medical business for this product is 17.0% effective on or after an anniversary date of May 1, 2013.  All Indiana business for this product will receive the same increase.  It is projected that there will be 13,713 covered lives with non-grandfathered status impacted by the May 1, 2013 increase.

Financial Experience of the Product

     Experience	    Earned	            Incurred	   Loss 
     Period		   Premium            Claims	   Ratio
 Jan-11 to Oct-11	  $6,024,086       $2,854,842	    47%
 Nov-11 to Oct-12	  $22,442,252     $14,283,627	    64%

The policies in the experience base for this filing were written from December 2010 through January 2013.   With the rate increase, the predicted loss ratio for the rating period, 5/1/2013-12/31/2013, is 85.0%.  Including adjustments for taxes, the equivalent MLR is approximately 87.0%.

Changes in Medical Service Costs

There are many different health care cost trends that contribute to increases in the overall U.S. health care spending each year.  These trend factors affect health insurance premiums, which can mean a premium rate increase to cover costs.  Some of the key health care cost trends that have affected this year's rate actions include:

Increasing Cost of Medical Services  Annual increases in reimbursement rates to health care providers  such as hospitals, doctors and pharmaceutical companies.

Increased Utilization  The number of office visits and other services continues to grow.  In addition, total health care spending will vary by the intensity of care and/or use of different types of health services. Patients who are sicker generally have a higher intensity of health care utilization. The price of care can be affected by the use of expensive procedures such as surgery vs. simply monitoring or providing medications.

Higher Costs from Deductible Leveraging  Health care costs continue to rise every year, while deductibles and copayments remain the same.  As a result, a greater percentage of health care costs need to be covered by health insurance premiums each year. 

Cost shifting from the public to the private sector  Reimbursements from the Center for Medicare and Medicaid Services (CMS) to hospitals are no longer covering all of the cost of care.  The cost difference is being shifted to private health plans. Additionally, Medicare and Medicaid rates to hospitals are expected to decline due to the impact of the Patient Protection and Affordable Care Act on Medicare and the effect of the recession on Medicaid.  A rate increase paid by Medicaid to hospitals is often below the actual cost increase hospitals will experience.

Impact of New Technology - Improvements to medical technology and clinical practice require use of more expensive services - leading to increased health care spending and utilization.

Underwriting Wear Off  The variation by policy duration in individual medical insurance claims, where claims are higher at later policy durations as more time has elapsed since initial underwriting.

Changes in Benefits

There have been no premium changes due to benefit changes in this filing.  

Administrative Costs

Golden Rule Insurance Company works to directly control administrative expenses by adopting better processes and technology, and through the development of programs and innovations that make health care more affordable. We have led the marketplace by introducing key innovations that make health care services more accessible and affordable for customers, improve the quality and coordination of health care services, and help individuals and their physicians make more informed health care decisions.

Additionally, Golden Rule indirectly controls medical cost payments by using appropriate payment structures with providers and facilities. Golden Rule's goal is to control costs, maximize efficiency, and work closely with physicians and providers to obtain the best value and coverage.  

In addition, increases in State and/or Federal government imposed taxation and fees are another significant factor that impacts health care spending.

A review of the current Golden Rule premium rate indicates that the rate is not sufficient to cover the projected benefit and administrative costs. The rate increase is anticipated to be sufficient to cover the projected benefit and administrative costs over the period beginning May 1, 2013 through December 31, 2013.

Results of the Rate Review

The State has reviewed this rate increase and has provided the following information about its findings:

This file is in compliance with Indiana's health insurance laws and regulations.  It also meets Actuarial Standards of Practice.  As a result, the file has been approved.   We have reviewed the assumptions used by the company to develop the proposed rate increase and the validity of the data.  The underlying experience and assumptions are reasonable in relation to the rate increase requested.  We have also reviewed the health insurance company's past projections and actual experience.  The rates are not excessive or unfairly discriminatory.  The projected medical loss ratio, which includes PPACA allowable adjustments for the company's entire market segment, satisfies the Federal medical loss ratio of 80%.  

If you would like to submit comments about this file, please reference the following link:

  http://www.in.gov/IDOI/RateWatch/HealthFilings.aspx.

Comment on this rate increase

You may submit your comments about this rate increase to Indiana on its web site at http://www.in.gov/IDOI/RateWatch/HealthFilings.aspx.