Health Net requests 15% rate increase for California small group plans

Health Net has filed new small group health insurance premium rates for 2017 with the California Department of Insurance. In the filed rates, Health Net is proposing an average expected annual increase of 15% to their PPO and EPO plans. Some of the Platinum plans will have over a 20% increase for renewals that occur at the first of the year (2017Q1/2016Q1). Plans offered off-exchange, purchased directly from Health Net, will have a smaller percentage increase in their rates than the same plans purchased through Covered California for Small Business.

The proposed rate increases will apply to 86,541 individuals in California. The highest concentration of Health Net small group plan members are in the Bay Area and Southern California. In response to a California Department of Insurance question about compensation, question 16 of HAO20160167SubsequentSubmissionJune212016.pdf, the highest paid employee receives $1,277,307.64 in Basic Compensation with an additional compensation of $10,225,700.56.

Health Net Small Business Group PPO Filing effective January 1, 2017

From the rate filing with the California Department of insurance –

Actuarial Memorandum and Certification

Introduction

Submitted for your review are Health Net’s proposed premium rates for fifteen Small Group plans effective January 1, 2017. Six plans are to be offered on the California Exchange and nine plans are to be offered off-Exchange. Two plans, Health Net PPO Gold Value and Health Net PPO Silver Value, are added for January 1, 2017 effective date. All rates are guaranteed for a 12- month period.

A secondary set of rates is included, reflecting an adjustment of $5.64 per member, per month for infertility coverage.

The Single Risk Pool for this filing is comprised of ACA business already written as well as Transitional Small Business Groups.

Proposed Rate Increase(s)

This rate filing is for Small Groups with effective dates in Q1 2017. The rates are guaranteed for these groups for 12 months.

The Single Risk Pool is comprised of our Non-Grandfathered Small Group CDI business. The projected claims experience was developed using the twelve month period that begins January 1, 2015 and ends December 31, 2015 for the entire single risk pool. The premium was developed by taking the entire single risk pool and rating them as if all groups had a January 1, 2017 rerate month. In addition, the rate increase includes the migration of Transitional members.

If our rate request is approved, the average expected annual increase is 15.0% for our PPO and EPO plans. This increase does not include the impact of demographic shifts. Increases will vary by (1) region as we changed our area factors for renewing business effective 7/1/2016 and after and (2) plan factor changes due to new plan designs, the 2017 AV calculator, and an updated estimate of induced demand factor by metal tier. Note that 15.0% is the average annual rate increase from Q1 2016 to Q1 2017. The average expected rate change versus the rate six months ago, which was the filing effective July l, 2016, is 2.8%.

Our requested rate increase anticipates an after-tax profit of 0%. We are aiming at 3% after-tax profit in the long term.

Health Net Rate Filing Documents