Rate Justification for Maine Individual Plans

Harvard Pilgrim Health Care
Rate Justification for Maine Individual Plans
Rate Change Effective January 1, 2020

Qualified Health Plan (QHP) issuers are required to post justifications for any QHP rate increases to their websites.  Below, please find the justification for the rate increase effective January 1, 2020 for the Harvard Pilgrim Health Care Maine Individual QHP plans.

Drivers of the Rate Increase

There are several key drivers of the 2020 rate increase:

  • The size of the Individual market is expected to continue to decline due to the uncertainty around provisions of the Affordable Care Act (ACA), specifically the enforcement of the individual mandate’s impact on purchasing decisions. It is anticipated that continued non-enforcement of the individual mandate will result in younger, healthier members being the first to leave the market which will result in a more expensive risk pool in 2020.
  • The medical trend which is comprised of inpatient, outpatient, and physician services, as well as pharmacy costs. The expected medical cost trend includes increases in the cost of the services provided by hospitals and physician groups and increases in the utilization of these services by our members.
  • The new reinsurance program, Maine Guaranteed Access Reinsurance Association program (MGARA), which was implemented by the state of Maine on January 1, 2019, is expected to lower the claims costs for 2019 and beyond by reimbursing insurance carriers for the excess claims of certain high-risk members, and therefore contributes to a lower rate increase.    

Harvard Pilgrim carefully monitors administrative expenses year to year.  Administrative costs for Harvard Pilgrim have not increased significantly and therefore do not factor into the overall rate increase for 2020.  Under the ACA, at least 80% of premium must be used for medical expenses (otherwise, a rebate is paid to subscribers).  After the 2020 rate increase, Harvard Pilgrim expects to comply with this requirement.

Harvard Pilgrim’s Strategy to Keep Premiums Affordable

Harvard Pilgrim is committed to improving value and quality across the health care system.  Some of the ways we are working to meet our goals include:

  • Establishing collaborative arrangements with health care providers that control costs and enhance health outcomes;
  • Negotiating pharmacy contracts aligning payments with outcomes;
  • Managing rare diseases through our nurse care managers;
  • Updating our payment policies to deter inappropriate payment for services on selected medical infusible drug claims; and
  • Maintaining focus on reducing fraud, waste, and abuse.

Continuing to find ways to lower health care costs while providing enhanced value to our customers through our products and services is a keystone to Harvard Pilgrim’s long-term strategy.