Insurers target NC's 'young invincibles' with subsidized health plans

jmurawski@newsobserver.comSeptember 5, 2013 

  • How to enroll

    Enrollment for subsidized insurance begins Oct. 1. The public can enroll through insurance company websites or through www.healthcare.gov.

    Subsidized insurance will be available to those who meet certain income limits and don’t have coverage through Medicare, Medicaid or through an employer. More than 1 million North Carolinians are expected to qualify for insurance subsidies.

    The policies in North Carolina will be offered by Blue Cross and Blue Shield and Coventry Health Care of the Carolinas. FirstCarolinaCare Insurance will offer subsidized policies in just six counties: Lee, Moore, Richmond, Hoke, Montgomery and Scotland.

    Enroll America, a nonprofit created to promote subsidized coverage, is holding an open house on the Affordable Care Act on Thursday. The local event will be held at Enroll America’s Raleigh office, 187 Wind Chime Court, Suite 203, from 5 p.m. to 7 p.m.

  • Subsidies and penalties

    The Affordable Care Act prohibits insurers from charging women higher rates than men, from charging older people more than three times more than younger people pay, and from rejecting customers with pre-existing conditions.

    The law also includes a fine of $95, or 1 percent of annual pay, whichever is greater, in the first year, for those who fail to get coverage. By 2016 the fine will be $695 or 2.5 percent of annual pay, whichever is greater. The fine will be taken out of tax refunds, and currently there is no other mechanism to enforce it.

    Federal subsidies will average more than $5,500 a year for families, depending on the number of people in the family and on household income.

    The subsidies for premiums will be available on a sliding scale to individuals and families with annual incomes between 100 percent and 400 percent of the federal poverty level. To qualify for subsidies, annual wages must range between $11,490 and $45,960 a year for an individual, and between $23,550 and $94,200 a year for a family of four.

    Additional subsidies for deductibles and co-pays will be available for individuals and families whose income is below 250 percent of the federal poverty level – $28,725 for an individual and $58,875 for a family of four.

Bike mechanic Jared Harber pedals as much as 150 miles a week, at no small peril to his safety. Just in the past year and a half, he has wiped out, flipped over and been sideswiped by cars.

Considering that he can’t afford health insurance, Harber is lucky he walked away from each spill.

“I’d like to think I’m a god, but it’s mostly affordability,” he said, explaining why he hasn’t had health insurance since changing jobs 18 months ago. The 30-year-old acknowledged he worries “at least once every few days” about being uninsured.

Harber – along with legions of bartenders, baristas, retail clerks, the self-employed and other uninsured workers – is about to find out whether the nation’s new health care law, the Patient Protection and Affordable Care Act, will deliver on its promise of affordability.

On Thursday, Blue Cross and Blue Shield, the state’s largest insurer, plans to release details for more than two dozen subsidized plans the company will soon offer in North Carolina under the new law. The law’s success hinges on the willingness of Harber and other young people – dubbed “young invincibles” in insurance industry parlance – to enroll in the subsidized plans.

The young are generally in good health and don’t use expensive health services. The federal health care strategy depends on healthy, young people offsetting the cost of covering older and chronically ill people who are widely expected to buy insurance since the new law will make it illegal to turn away applicants with pre-existing conditions.

“The challenge here is to get as many of the invincibles signed up,” said Bruce Allen, marketing director for Blue Cross and Blue Shield of North Carolina.

“You constantly need new healthy people in the pool to keep rates down,” he said. “If you don’t get those, rates go up if you’re only insuring the sick. You’ll hear it often referred to as the ‘death spiral.’ ”

Harber pulls down about $19,000 a year as co-owner of Oak City Cycling Project, a bike shop in Raleigh. A quick mental calculation reveals it’s been 2-1/2 years since he’s seen a doctor and twice as long since he last saw a dentist.

The Affordable Care Act, which passed in 2010, could bring down Harber’s insurance premium below $75 a month, according to an online estimate. Harber is sure he could work that into his budget – simply by eating out less and buying cheaper beer.

But paying for health insurance may take more than rejiggering his social calendar.

Blue Cross has warned that rates for some people would increase under subsidized plans, even when the subsidies are factored in.

The looming deadlines

More than 1.3 million state residents who lack health insurance are eligible for subsidized coverage, according to the U.S. Department of Health and Human Services. But it’s the young – those 18 to 34 – who have the highest uninsured rate, and 269,000 of them are eligible for subsidies, according to Young Invincibles, an advocacy organization. This age group is highly sought after by the insurance industry.

The new health care law requires people to buy insurance or face a financial penalty, the provisions that triggered widespread opposition that continues three years after the law was enacted. Some of the most controversial provisions are set to take effect in the coming months.

But young adults often go blank when told the mandate is about to go into effect. Many are largely unaware of the looming deadlines – Oct. 1 to begin enrolling and Jan. 1 for policies to go into effect – as well as the financial penalty for not signing up.

Still others resent being forced to buy insurance by the federal government, and some have threatened to boycott the program.

With enrollment set to begin in about three weeks, this generation will be the focus of an estimated $1 billion national marketing effort getting underway by the federal government, by advocacy groups and by insurance companies.

Getting them to listen

The campaign to win over young people will play out in their native habitats: social media, YouTube, community college campuses, music festivals and urban downtowns.

“We’re really looking where young people go,” said Sorien Schmidt, the North Carolina coordinator for Enroll America, a nonprofit outreach program. “We’re also talking to their mothers, and that’s a broader group.”

Conservative critics, in a bid to derail the new law, are mounting a counteroffensive to dissuade young people from buying subsidized coverage.

Opponents such as Freedom Works and Citizens’ Council for Health Freedom want to convince the public that the insurance law will limit choices of doctors and hospitals, and they predict it will increase insurance costs overall.

“We feel jobs will be lost as a consequence,” said Chris Marie Farr, North Carolina interim state director at Americans for Prosperity. “We certainly are not going to tell people to sign up for a law that’s so broken and just bad business for this country.”

Supporters will trumpet the subsidies, which will average $5,548 per family, according to the Kaiser Family Foundation. Because younger people tend to have lower incomes, they will generally qualify for greater subsidies.

“Subsidies are available for a lot of people who typically don’t qualify for public assistance,” Allen said. “This is a middle-class program.”

Blue Cross CEO Brad Wilson said health insurance will soon become “more affordable for most people in that age bracket,” eliminating the primary reason that young people forgo insurance coverage.

Already 95,000 people aged 25 and younger in North Carolina are insured as a result of the Affordable Care Act, which in 2010 extended the age through which young people could be covered under their parents’ policy, according to the federal health agency.

Additionally, the insurance law will include a “ catastrophic” plan with very low premiums for people under age 30. This plan will cover just three doctor visits, as well as vaccinations and screenings. But it could have a deductible as high as $6,350 for an individual and $12,700 for a family before coverage kicks in, said Pam Silberman, president of the N.C. Institute of Medicine.

Going without

Subsidized plans are expected to receive federal approval in mid-September, and many in North Carolina are likely to have at least several options. Blue Cross has proposed 26 plans statewide; Coventry Health Care of the Carolinas has submitted 25 plans in much of the state; and FirstCarolinaCare Insurance has proposed 16 plans, but in just six counties.

To date, the oft-cited guide for estimated premiums has been the Kaiser Family Foundation’s online subsidy calculator. It shows a potential premium and subsidy amount, based on age and tobacco use, but the estimate is not based on a specific insurance plan.

When presented with subsidy estimates for their age and income, several Triangle 20-somethings were hopeful that the actual cost of subsidized plans will be within their reach.

Denzel Jones, 23, last saw a doctor when he was in the 10th grade, but it’s been so long he’s not sure. When he had a killer toothache a while back and didn’t know where to turn, he showed up at a hospital emergency room, asking if they could pull the throbbing tooth and make the pain go away. The best the ER staff could do for him was to dispense some ibuprofen.

The Pet Supermarket sales associate in Raleigh earns less than $16,000 a year and says he lives without a car and without a cellphone. He didn’t even open the envelope from the hospital when the bill arrived.

“I don’t have room for another bill on my paycheck,” Jones said on break outside the pet store. “I have to eat, too.”

According to the Kaiser calculator, Jones could pay less than $50 a month in premiums, after a $2,513 annual subsidy, if his employer’s plan doesn’t meet certain minimum coverage rules.

Some plan to sign up

Tia Bethea, 27, makes about $18,700 a year as a barista at Starbucks in downtown Raleigh, and has been uninsured for six years. She has been obtaining her diabetes medication through a low-income health clinic.

The calculator shows that she could see a monthly premium of about $72, after an annual subsidy of $2,305, if her employer’s plan doesn’t meet federal minimums.

“Having that comfort and knowing that I’ll actually be taking care of myself a little bit better, that would be really helpful,” said Bethea, who shares a rental house with her mother.

Without a subsidy, buying an individual policy would cost several hundred dollars and eat up half her paycheck, she said. In recent years she has been hospitalized twice – once for wooziness and once for fainting – and says she has been unable to pay the hospital bills.

Bradley Upchurch, 27, could see a monthly premium of $209 after a $651 yearly subsidy. But his goal is to shop around for a subsidized policy that costs no more than $150 a month.

Upchurch, who is paid $30,000 a year to teach residents computer literacy as a contractor for the City of Raleigh, has been without insurance for three years.

“I start thinking about the future and it’s like, what the heck, I work full time,” he said. “Insurance is incredibly expensive.”

The last time he saw a doctor, in 2009, he was insured as an employee of the federal AmeriCorps community service program. Last year, when he was uninsured, he skipped his flu shot, got sick and got by without medical care.

“If I was to really get sick and stay in the hospital for a month, is it going to cost taxpayers more for me to have a subsidized plan, or not to have a plan?” Upchurch said. “It’s not so black and white.”

Murawski: 919-829-8932

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