Health insurance providers in Arkansas have revised their proposed premium increases for individual plans on the healthcare.gov marketplace, lowering the weighted average hike from 34.5% to 22.1% for the upcoming year. The announcement came from Governor Sarah Huckabee Sanders' office after state regulators rejected the initial, higher rate requests.
The new proposals, which still represent the largest potential increase in at least five years, affect more than 308,000 Arkansans covered by Centene Corp. and Arkansas Blue Cross and Blue Shield. The Arkansas Insurance Department has yet to give final approval to the revised rates, which are scheduled to take effect on January 1.
Key Takeaways
- Proposed health insurance premium increases in Arkansas were lowered from a 34.5% weighted average to 22.1% after state intervention.
- The rate changes affect over 308,000 people with plans from Centene Corp. and Arkansas Blue Cross and Blue Shield.
- Governor Sarah Huckabee Sanders stated the negotiation was part of an effort to lower costs for residents.
- Insurers cited the future expiration of federal premium tax credits as a key factor in their initial rate calculations.
State Rejects Initial Proposals
Governor Sarah Huckabee Sanders announced on Friday that her administration successfully negotiated down the proposed rate increases submitted by insurance companies. The initial proposals, published in early August, were rejected by the Arkansas Insurance Department for being excessive.
"As part of my administration's broader strategy to expand access and lower costs, we were able to negotiate down planned increases, easing the burden on both beneficiaries and taxpayers," Sanders stated in a news release.
"More work remains, but this is a good starting point and shows that when we stand up to insurance companies, we can win tangible benefits for the people of our state."
The governor's office noted that this action marks the first time the state has formally rejected a proposed insurance rate increase for being excessive. However, historical precedent exists from 2016 when a former insurance commissioner also prompted companies to lower their requested hikes after deeming them unjustified.
Revised Rates for Major Insurers
The negotiated rate changes vary significantly across different plans offered by the state's two main individual market insurers, Centene and Arkansas Blue Cross and Blue Shield.
Understanding Weighted Averages
A weighted average considers the number of people enrolled in each plan. A plan with 100,000 members has a greater impact on the average than a plan with 10,000 members. This provides a more accurate picture of the overall cost increase for the state's population.
Centene Corp. Adjustments
Centene, a major provider in the state, submitted significant revisions to its initial requests. The changes impact three main groups of plans:
- A plan group covering approximately 47,000 customers saw its proposed increase drop from 54.2% to 27.5%.
- Another group with about 36,000 members had its rate hike lowered from 42.5% to 26.1%.
- Conversely, a third group of Centene plans experienced a rate increase, moving from a proposed 25.4% to a revised 29.8%, the highest of all plans mentioned.
Arkansas Blue Cross and Blue Shield Reductions
Arkansas Blue Cross and Blue Shield, which covers the largest number of individuals, also lowered its proposed increases across the board.
The company's largest plan, serving an estimated 95,000 residents, reduced its proposed annual raise from 25.8% to 16.9%. Two other Blue Cross plans, covering about 25,000 and 33,000 people respectively, also saw their proposed hikes reduced to 16.9% (from 25.8%) and 12.4% (from 20.9%).
Enrollment Surge in Arkansas
According to official data, enrollment in Arkansas's healthcare.gov plans more than doubled following the introduction of enhanced federal subsidies. The number of enrollees grew from 66,094 in 2021 to 166,639 as of August 2023.
Factors Driving Premium Increases
In their initial filings, both insurance companies pointed to a specific federal policy as a primary driver for their requested rate hikes: the eventual expiration of enhanced premium tax credits.
These subsidies, established under the American Rescue Plan Act and later extended through 2025 by the Inflation Reduction Act, have made marketplace plans more affordable for millions of Americans. Insurers are now planning for the financial landscape after these credits expire.
In its filing, Centene explained its reasoning. "To account for (the enhanced premium tax credit) expiration prior to the 2026 benefit year, we have assumed rates will increase due to anticipated reductions in enrollment," the company wrote. The insurer anticipates that as out-of-pocket premium costs rise, healthier individuals who are more sensitive to price changes will likely drop their coverage.
This potential exodus of healthier members would worsen the overall health risk of the remaining pool of insured individuals, a factor known as adverse selection, which drives up costs for everyone who remains.
Next Steps for Consumers
The revised rates are still pending final approval from the Arkansas Insurance Department. A spokesperson for the governor confirmed the department has not yet signed off on the new figures. The changes are scheduled to take effect on January 1, 2024.
This development comes amid a leadership change at the department. Former commissioner Alan McClain stepped down on September 1, with Jimmy Harris, the department's former compliance director, named as the interim replacement.
Arkansans seeking to enroll in or change their individual health insurance plans for the upcoming year should prepare for the open enrollment period, which begins on November 1. During this time, consumers can compare plans and premiums on the healthcare.gov website and select the coverage that best fits their needs and budget.
