RE: 2019 Medicare Supplement Rates for Modernized Plans

Transcription

1 July 31, 2018 The Honorable Ralph T. Hudgens Georgia Insurance Department Seventh Floor, West Tower Floyd Building 2 Martin Luther King, Jr. Drive Atlanta, Georgia RE: 2019 Medicare Supplement Rates for Modernized Plans Dear Commissioner Hudgens: I, Donald James, am an Actuary and Associate of the Society of Actuaries. I am a member of the American Academy of Actuaries and meet the Qualification Standards of the American Academy of Actuaries to render the actuarial opinion contained herein. The purpose of this rate filing is to demonstrate that the requested Medicare Supplement premium rates are in compliance with Georgia Insurance Regulations Chapter Section 14. This rate filing should not be used for other purposes. This rate filing aims to establish premiums for Blue Cross and Blue Shield of Georgia's Modernized Medicare Supplement policies. Blue Cross and Blue Shield of Georgia is requesting a rate hold on Plans A, High F, and G at ages 65 and above; a 6.5% increase on Plan F and a 6.0% increase on Plan N at ages 65 and above. This rate filing is not intended to be used for other purposes. Please note that Modernized Plans High Deductible F and G were closed to new enrollment effective January 1, As of 1/1/17, Modernized Plan G was reopened to new enrollment. Exhibit I shows the current experience and Exhibit II provides a summary of proposed January 1, 2019 rate adjustments for existing Modernized products. We expect the claim costs to increase on average at an annual rate of 0.0% for Healthy Plans A and G; 4.0% for Healthy Plan F, 6.0% for Healthy Plan N; and 2.0% for Healthy Plan High F. Please see Exhibit IIIa for the proposed rates by gender for issue ages 65 and up. Tobacco use rating was introduced January 1, 2014, applicable to new members only. Those new members who, at issue, answer Yes to the question Have you used any form of tobacco in the last 12 months? will have rates 12% higher than the corresponding nontobacco use rates. Tobacco rates for the marketed plans are shown in Exhibit IIIa.

2 Premium rates are developed on a pool basis. There is one rate table, by plan type, effective for all subscribers. Rates do not vary by policy year. Rates do vary by age; a subscriber s community rate or pool rate is based upon their age at enrollment in the standard plan. These rate adjustments will result in loss ratios in excess of the minimum loss ratio standard of 65%, defined in Section 14 of the Insurance regulations. The projected loss ratio for the rating period, January 1, 2019 to December 31, 2019, with the proposed rate increase on 1/1/2019, is projected to be 71.2% for Healthy plans. It is my opinion that the methods used to determine the requested rates are actuarially sound, based upon reasonable assumptions, and result in rates designed to comply with the regulatory requirements. The premiums are reasonable in relation to the benefits provided. If you have questions or need additional information, please give me a call at (502) Respectfully Submitted, Donald James, ASA, MAAA Director & Actuary II Blue Cross and Blue Shield of Georgia, Inc.

3 BLUE CROSS BLUE SHIELD OF GEORGIA MEDICARE SUPPLEMENT POLICY FORMS AND PRODUCTS: Product / Policy Form Number Standard Plan A / WPPLANAM(09)-GA Standard Plan F / WPPLANFM(09)-GA Standard Plan High F / WPPLANHiFM(09)-GA Standard Plan G / WPPLANGM(09)-GA Standard Plan N / WPPLANNM(09)-GA ACTUARIAL MEMORANDUM RATE REVISION 1. Purpose: The purpose of this rate filing is to demonstrate that the requested Medicare Supplement premium rates are in compliance with Georgia Insurance Regulations Chapter Section 14, and this filing should not be used for other purposes. BCBS of Georgia is choosing to set rates using the experience of the Modernized Plans incepted on 6/1/ Scope: Policy Forms: Modernized Standard Plan A, Standard Plan F, Standard Plan High F, Standard Plan G, Standard Plan N Rates for existing BCBS of Georgia members in 1992 Standardized Plans are not affected by this filing and will continue at the approved amounts. 3. Description of Benefits: These policy forms are Individual Medicare Supplement policy forms which pay benefits consistently with the Modernized Standardized Plan as described in the revised NAIC Medicare Supplement Insurance Model Regulation. Renewability: Guaranteed renewable. Issue Age Limits: These policies are issued to persons age 65 and over who are covered by Medicare Parts A & B. Disabled Plans covered by this filing were closed to new sales when rates for the New Disabled Plans were implemented on 1/1/2012. Underwriting: Applicants will be subject to medical underwriting, except during guarantee issue and open enrollment periods. 4. Reason for Rate Establishment: MIPPA (Medicare Improvement for Patients and Providers Act of 2008) has established new benefits and cost sharing for Medicare Supplement products effective June 1, The Act eliminated Standard Plan E & Plan J, previously included in BCBS Georgia's offerings, and resulted in the creation of a new standardized plan, Standard Plan N, to be included in BCBS Georgia's future offerings. See Exhibit V for a summary of the MIPPA benefits. 5. Application of Rates: The established rates will apply to all policies covered by this filing. They will be implemented on January 01, 2019 and be effective through December 31, 2019.

4 6. Projected Lifetime Loss Ratio: The projected lifetime loss ratio for each plan offering is expected to be 65% based on minimum loss ratio requirements established by the NAIC. 7. Minimum Loss Ratio: Per outlines established by the NAIC, the minimum loss ratio for Individual Medicare Supplement policy forms is 65%. 8. Supporting Documentation Plans A, F, High F, G, and N: Rates for NonDisabled Plans A, F, High F, G, and N have been determined based on BCBS of Georgia NonDisabled experience. 9. Discounts Members paying premium annually will receive a discount of $48. Members paying monthly by electronic funds transfer will receive a $2 discount. Multi-Insured Discount (5%) will apply to residents from the same occupancy. Starting January 1, 2016, BCBSGA will provide a $20 New To Medicare (NTM) monthly rate discount for new members who are new to Medicare. The discount duration is 12 months. BCBSGA may during the course of the year select to stop offering the NTM discount to new enrollees; however, in that event, any persons who had already enrolled and received the discount will keep receiving it through 12 months following their enrollment. 8. Other Attached Information: For your review, the following additional information is attached: a. Current Experience (Exhibit I) b. Rate Development Table (Exhibit II) c. Proposed Rate Summary (Exhibit III) d. Rate Adjustment History (Exhibit IV) e. Benefit comparison (Exhibit V) 9. Actuarial Certification: I, Donald James, am an Actuary for Anthem Blue Cross and Blue Shield, providing services under an agreement for. I am a member of the American Academy of Actuaries and meet its Qualification Standards to render this actuarial opinion. I hereby certify that, to the best of my knowledge and belief, the information contained in this filing complies with the laws of the state of Georgia and the rule of the Georgia Department of Insurance and that the premiums are reasonable in relation to the benefits provided. Donald James, ASA, MAAA Director & Actuary II July 31, 2018 Date

5 Rates Effective January 1, 2019 Attachments Exhibit I Exhibit II Exhibit III Exhibit IV Exhibit V Current Experience Rate Development January 1, 2019 Effective Date Proposed Rate Summary Rate Adjustment History Overview of Medicare Supplement Plans, MIPPA Revisions

6 Exhibit I Current Experience Experience Period Data Ending Contract Earned Premium Estimated Loss Ratio Modernized Healthy Contracts Months at Current Rates Incurred Claims at Current Rates PLAN A $64,296 $20, % PLAN F 27, ,346 $73,664,136 $53,051, % PLAN Hi F 1,966 24,256 $1,425,554 $714, % PLAN G 6,478 52,729 $7,110,538 $4,805, % PLAN N 5,773 65,773 $7,735,084 $6,136, % Subtotal 41, ,446 $89,999,608 $64,728, % Experience Period Data: July 01, 2017 June 30, 2018 (Paid through June 30, 2018)

7 Average Months Trend Factor Projected** Current Projected Projected Proposed Proposed Average Ending Contract Incurred Annual of for Avg. Incurred Average Loss Ratio at Loss Ratio at Percentage Average Rate Modernized Healthy Contracts months Claims Trend Trend the Period Claims Rates Proposed Rates Current Rates Increase Rates Increase PLAN A $ % $59.49 $ % 31.7% 0.0% $ $0.00 PLAN F 27, ,346 $ % $ $ % 75.6% 6.5% $ $14.15 PLAN Hi F 1,966 24,256 $ % $30.00 $ % 51.1% 0.0% $58.77 $0.00 PLAN G 6,478 52,729 $ % $90.20 $ % 66.9% 0.0% $ $0.00 PLAN N 5,773 65,773 $ % $ $ % 85.8% 6.0% $ $7.06 Subtotal 41, ,446 $ % $ $ % 75.4% 5.8% $ $10.91 Experience Period Data: July 01, 2017 June 30, 2018 (Paid through June 30, 2018) ** Includes a reduction for Rx Rebates ranging from $0.35 to $1.60 by plan. Exhibit II Rate Development January 1, 2019 Effective Date Projected Loss Ratio 1/1/ /31/2019, and Proposed Rate Increases

8 EXHIBIT IIIa 1 Rates Effective January 1, 2019, issue ages 65 and over, Female Issue Age Computed Rates Area 1 (Atlanta) Plan A Plan F High F Plan G Plan N 65 $174 $216 $57 $198 $ $181 $226 $59 $208 $ $194 $248 $65 $227 $ $228 $298 $75 $273 $ $249 $328 $83 $303 $166 Issue Computed Rates Age Area 2 (Non Atlanta) Plan A Plan F High F Plan G Plan N 65 $167 $207 $54 $190 $ $174 $216 $56 $200 $ $187 $237 $61 $218 $ $219 $286 $71 $263 $ $240 $314 $79 $292 $159 Tobacco Rates (New Members Only) Effective January 1, 2019 Issue Computed Tobacco Rates Age Area 1 (Atlanta) Plan A Plan F High F Plan G Plan N 65 $195 $242 $ $203 $253 $ $217 $278 no longer marketed $ $255 $334 $ $279 $367 $186 Issue Computed Tobacco Rates Age Area 2 (Non Atlanta) Plan A Plan F High F Plan G Plan N 65 $187 $232 $ $195 $242 $ $209 $265 no longer marketed $ $245 $320 $ $269 $352 $178 Note: No tobacco rates for Disabled members since Disabled policies are no longer marketed.

9 Rates Effective January 1, 2019, issue ages 65 and over, Female Issue Age Computed Rates Computed Tobacco Rates Area 1 (Atlanta) Area 2 (Non Atlanta) Area 1 (Atlanta) Area 2 (Non Atlanta) Plan G Plan G Plan G Plan G 65 $123 $118 $138 $ $129 $124 $144 $ $140 $135 $157 $ $169 $162 $189 $ $185 $178 $207 $199 Note: Plan G rates for new issues effective 1/1/2017 or later

10 EXHIBIT IIIa 2 Rates Effective January 1, 2019, issue ages 65 and over, Male Issue Age Computed Rates Area 1 (Atlanta) Plan A Plan F High F Plan G Plan N 65 $189 $234 $62 $217 $ $198 $246 $65 $226 $ $211 $271 $71 $247 $ $249 $324 $82 $298 $ $272 $358 $91 $331 $182 Computed Rates Issue Age Area 2 (Non Atlanta) Plan A Plan F High F Plan G Plan N 65 $182 $225 $59 $208 $ $190 $234 $61 $217 $ $203 $259 $67 $237 $ $239 $310 $77 $286 $ $262 $343 $86 $318 $175 Tobacco Rates (New Members Only) Effective January 1, 2019 Computed Tobacco Rates Issue Age Area 1 (Atlanta) Plan A Plan F High F Plan G Plan N 65 $212 $262 $ $222 $276 $ $236 $304 no longer marketed $ $279 $363 $ $305 $401 $204 Computed Tobacco Rates Issue Age Area 2 (Non Atlanta) Plan A Plan F High F Plan G Plan N 65 $204 $252 $ $213 $262 $ $227 $290 no longer marketed $ $268 $347 $ $293 $384 $196 Note: No tobacco rates for Disabled members since Disabled policies are no longer marketed.

11 Rates Effective January 1, 2019, issue ages 65 and over, Male Issue Age Computed Rates Computed Tobacco Rates Area 1 (Atlanta) Area 2 (Non Atlanta) Area 1 (Atlanta) Area 2 (Non Atlanta) Plan G Plan G Plan G Plan G 65 $134 $129 $150 $ $140 $135 $157 $ $153 $147 $171 $ $184 $177 $206 $ $202 $194 $226 $217 Note: Plan G rates for new issues effective 1/1/2017 or later

12 Exhibit IV Modernized Non-Disabled Plans Rate Adjustment History Rate Rate Rate Rate Rate Rate Rate Rate Rate (Inception) Adjustment Adjustment Adjustment Adjustment Adjustment Adjustment Adjustment Adjustment Adjustment Product 6/1/2010 1/1/2011 1/1/2012 1/1/2013 1/1/2014 1/1/2015 1/1/2016 1/1/2017 1/1/2018 1/1/2019 Modernized - Healthy PLAN A N/A 0.0% 13.3% 8.0% 8.0% 0.0% 0.0% 0.0% 0.0% 0.0% PLAN F N/A -13.0% 13.3% 8.0% 8.0% 0.0% 3.7% 5.6% 4.5% 6.5% PLAN Hi F N/A 0.0% 13.3% 8.0% 8.0% 0.0% 0.0% 0.0% 0.0% 0.0% PLAN G N/A -14.0% 13.3% 8.0% 8.0% 0.0% 9.9% 9.9% 0.0% 0.0% PLAN N N/A -12.0% 13.3% 8.0% 8.0% 0.0% 0.0% -15.0% 0.0% 6.0% Total N/A -12.4% 13.3% 8.0% 8.0% 0.0% 3.4% 3.7% 3.8% 5.8%

13 Exhibit V Overview of Medicare Supplement Plans, MIPPA Revisions A F* G N Basic benefits Basic benefits Basic benefits Basic benefits except up to $20 office visit Copay and up to $50 ER Copay Skilled Nursing Facility Coinsurance Part A Deductible Part B Deductible Part B Excess Charges (100%) Foreign Travel Emergency Skilled Nursing Facility Coinsurance Part A Deductible Part B Excess Charges (100%) Foreign Travel Emergency Skilled Nursing Facility Coinsurance Part A Deductible Foreign Travel Emergency * Plan F has a high deductible option, paying the same benefits as Standard Plan F after a calendar year deductible is met.