Rate Justifications for Health Connector Products
Products offered through the Commonwealth Health Insurance Connector Authority
Scope and range of the rate increase
The average requested first quarter 2019 rate increase for both the TAHMO and THPP suite of products is 2.2%. The actual rate change realized by a group or individual may vary depending on age composition, geographic location, benefit plan design, size, and SIC. This filing impacts 20,769 members currently enrolled in one of the TAHMO products, and 136,719 members currently enrolled in one of the THPP products, with a renewal date in the first quarter 2019.
Financial experience of the product
As demonstrated in the 2017 Medical Loss Ratio (“MLR”) Rebate Calculation Form, both Tufts Associated Health Maintenance Organization, Inc. Company, and Tufts Health Public Plans, Inc. Company met the legal requirements of a loss ratio in excess of 88.0% by providing premium rebates.
The loss ratio in this filing is anticipated to be above the 88.0% minimum.
Changes in medical service costs
The rate increase is primarily driven by the continual increase in medical service costs and partially offset by favorable historical claim experience. The key medical cost factors included in the rate filing are as follows:
- Higher provider reimbursement levels from increases in fee schedules
- Higher pharmaceutical costs from increases in the cost of brand name drugs
Changes in benefits
A consideration in the rate filing process is the changes in benefit plan design by product. The changes are typically made to keep a product affordable, meaning a lower premium a member will pay. Benefit plan design changes were made for the first quarter 2019, including the Standard plan designs mandated by the Massachusetts Health Connector.
Changes in administrative expenses, taxes, and fees
Administrative expenses, including ACA related administrative expenses, taxes, and fees have decreased as a percent of premium.
In this rate filing, Tufts Health Plan (Tufts Associated Health Maintenance Organization, Inc. and Tufts Insurance Company) is requesting a contribution to surplus of 1.25% of premium, and Tufts Health Plan (Tufts Health Public Plans) is requesting a contribution to surplus of 1.90% of premium.