Optima Health Customers Face Financial Hole Despite Rebates
CHARLOTTESVILLE, Va. (WVIR) - Optima Health recently sent out rebates to more than 50,000 customers, but a Charlottesville advocacy group says those checks are likely not even close to making up for high premiums from 2018.
In 2018, Optima was the only health insurance company in central Virginia under the Affordable Care Act. The group Charlottesville for Reasonable Health Insurance says rates increased because Optima had a monopoly in the market and did not appropriately estimate costs for the state's population.
"They were some of the highest rates in the country at that time and you had a carrier that was re-entering a market that had little experience," said Ken Schrad, spokesman for the Virginia Bureau of Insurance.
The group says it contacted the Bureau of Insurance months ago because it believed Optima included "morbidity" as one of the factors to determine the price of premiums. Morbidity accounts for the population's health and is not allowed to be factored into pricing.
"We brought concerns to [the BOI] very early on in the process that Optima's methodology for setting rates was erroneous," said Sara Stovall of Charlottesville for Reasonable Health Insurance. "It's an ACA law that says you can't jack up people's prices in a certain area. The whole idea of the ACA is a single risk pool, you spread that risk out over the state."
Over the summer, the bureau did an analysis of Optima's methodology and asked it to make changes for its 2019 and 2020 plans.
"The bureau has learned over time that certain processes that the company used to establish its rates needed to be looked at more closely by the bureau, more questions needed to be answered," Schrad said.
Virginia is expected to have the largest rebate payout in the country, according to an analysis from the Kaiser Family Foundation. According to Stovall, of the roughly $14,000 per person that was paid in premiums in the Charlottesville area, roughly $9,000 of that was an overcharge and the average rebate will be about $2,600.
"The rebates in this situation are the bare minimum that Optima could do in accordance with the law and what's really important for everyone to keep in mind about them is that they don't come close to making up for the overcharges," Stovall said.
Brad Diggans and his family of four live in Crozet and he says his family is taking a big hit from Optima Health. When tax time came in April, Diggans said he was hit with a $32,000 bill for his premiums with Optima.
"At $40,000 for insurance, that basically could hire somebody on for my company," said Diggans, who owns his own business. "I don't feel like the situation has been made right and I don't know what's going to continue to stop them from doing this in the future."
According to the Bureau of Insurance, Optima's average individual market rate for its health plans has dropped from nearly $900 a month in 2018 to just under $600 a month for 2020. A spokesperson for Optima Health says its rates for 2018 were in accordance with the law.
“As a local Virginia-based organization, Optima is committed to creating more affordable health plan options for Virginians," said an Optima spokesperson. "Optima followed all state and federal guidelines in determining 2018 rates, and we continue to focus on lowering the cost of care."
An Optima spokesperson said the rebate check amounts will vary from consumer to consumer based on strict guidance by the Centers for Medicare and Medicaid Services. According to the spokesperson, Optima presented 2020 rates to the BOI that represent an 11.3% decrease from 2019 levels and its 2020 rates will be the lowest in the state.
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