Barry Blinson of Wake Forest has crashed through a hole in the Affordable Care Act’s safety net. He and his wife, both in their early 60s, depend on individual health insurance, but the couple’s household income is too high to qualify for federal subsidies that were created to offset rising premiums.
Blinson, who owns a car lot and car repair shop, has watched the couple’s health insurance bill balloon from the $450 a month they paid three years ago – before ACA took effect – to $1,250 this year. The Blinsons’ insurance bill would jump to $1,750 a month in January, he said, if the couple were to continue with Blue Cross and Blue Shield, even though they don’t have serious medical expenses.
“These numbers are crazy – they’re more than a house payment,” Blinson said. “I’ve got to be paying for insurance for four or five other people. And I ain’t got a thank-you letter from any of them.”
I’ve got to be paying for insurance for four or five other people. And I ain’t got a thank-you letter from any of them.
Barry Blinson of Wake Forest
The way the federal health care law was written, most people are shielded from the ACA’s annual price increases because federal subsidies generally keep up with rising premiums. In North Carolina, 91.5 percent of the 545,354 people enrolled in the ACA as of last March qualified for a federal subsidy – one of the highest subsidization rates in the country – so that most ACA enrollees are paying less than $75 a month, according to federal estimates.
But it’s not just a small minority that doesn’t qualify for subsidies and has to pay full freight. The actual number could be closer to half of all individual insurance users, state and national insurance statistics show.
About 20.5 million Americans had individual health insurance in the first quarter of 2016, but only about 11.1 million were covered through the ACA marketplace. Within the marketplace, about 85 percent qualified for subsidies nationwide, said Katherine Hempstead, a senior adviser at the Robert Wood Johnson Foundation in New Jersey, who has analyzed health insurance data compiled by the National Association of Insurance Commissioners.
“The unsubsidized customer is directly confronting the high cost of health care,” Hempstead said. “They’re staring at the belly of the beast.”
Blue Cross, the state’s largest health insurer, is likely the best gauge of the real numbers in North Carolina. Last month, the company insured 210,088 people in the state through Healthcare.gov, the ACA enrollment portal, and most of these customers qualify for federal subsidies.
But according to the Durham insurer’s enrollment numbers provided to The News & Observer, the company also covered 178,703 people with individual insurance that wasn’t purchased through the federal exchange.
Some of these people didn’t purchase their insurance through the exchange because they made too much money to qualify for subsidies, and since there’s no financial benefit from using the exchange, they bypassed the government’s application process.
The Blinsons are in that group. They are among the 52,718 Blue Cross customers in October who bought coverage through an insurance agent or directly from the insurer. Because these individual plans are identical to ACA exchange plans, this group of customers is subject to the same 24.3 percent average rate increase for 2017 that applied to Blue Cross’s ACA market.
Other Blue Cross customers who didn’t take the ACA route are locked in on pre-ACA plans. For example, 62,285 Blue Cross individual customers are classified as “transitional,” a temporary category created in 2013 to let people stay on existing plans bought between 2010 and 2013. Blue Cross transitional plans in North Carolina will see an average 11.9 percent rate increase for 2017, but the following year they are set to expire and those customers will be pooled with the other ACA customers.
Then there’s 63,700 Blue Cross customers in the state who are “grandfathered” and can indefinitely keep their insurance purchased before March 2010, as long as they don’t make any changes to their policy. Their rate increase for 2017: zero.
2 ways to get coverage
Of course the ACA may not survive in any recognizable form after president-elect Donald Trump moves into the White House in January. Most observers expect the ACA to remain intact through 2017, but what happens in 2018 and beyond is yet to be determined by the incoming Republican president and Congress.
For the Blinsons, 2017 will be the jumping-off point. The Wake Forest couple have decided to sign up for Liberty HealthShare, a religious program that will cost them about $380 a month, with a $1,000 deductible. Such programs, called sharing ministries, are not the same as health insurance but are allowed under the Affordable Care Act.
Others whose incomes put them out of subsidy range are assessing strategies for 2017. ACA subsidies are available to people whose household incomes are between 100 percent and 400 percent of the federal poverty level.
Chris Wilsey, a Raleigh business management consultant, says his monthly premiums have quadrupled in the past four years. By his calculation, if he makes above $97,200 a year (the cutoff for 400 percent of the federal poverty level for a family of four), he and his family will not qualify for an ACA subsidy. But if he can keep his income just under that cutoff, he said, can qualify for a monthly subsidy of $1,017.
“I fall over a cliff with an extra dollar of annual income,” Wilsey said. “It’s really ironic for me that the best way for me to deal with these rising prices is to make less.”
Wilsey said he will try to keep his household income under the ceiling by by working less. As as result, Wilsey’s 2017 health insurance cost – monthly premiums and annual deductible for a family of four – will drop from about $32,000 to about $20,000, he said.
“I’m trying to manage this the best way I can,” he said.
Off-exchange insurance options dwindling in N.C.
In some states, health insurance that is not purchased thru the Affordable Care Act exchange is more affordable than ACA marketplace plans, even though all the plans are ACA-compliant, offering federally mandated benefits and cover pre-existing conditions.
In North Carolina, however, plans sold off the ACA exchange are not markedly cheaper.
What’s more, the number of off-exchange insurers here is the lowest in years, according to the N.C. Department of Health Insurance. The agency lists just four individual insurers, in addition to Blue Cross, that are licensed to sell individual insurance in 2017.
Individual coverage purchased off-exchange, even if identical to an ACA marketplace plan, does not qualify for federal subsidies.
Blue Cross will be the only insurer offering ACA plans in all 100 counties in the state. Those plans can be purchased through Healthcare.gov. Off the exchange plans can be purchased through an insurance agent or directly from the company.
However, other insurers are not marketing their off-exchange individual plans in North Carolina, so that customers may have trouble finding information. One of the insurers licensed to sell individual policies in the state, National Foundation Life Insurance Co., does not list pricing and benefits details online and did not respond to phone and email inquiries last week.
One reason that insurers offer off-exchange individual insurance is to maintain their federal eligibility to reenter a state’s ACA market. Insurers that offer no products off the ACA exchange have to wait five years to get back into the federal market to sell subsidized health insurance.
Cigna Health and Life Insurance Co. is offering a statewide plan with a $6,400 individual deductible, and monthly premiums in the state’s 16 rating areas. Aetna offers individual plans in about half the state’s 100 counties, with a $5,700 individual deductible in the Triangle.
Cigna will charge $609 a month for a 50-year-old non-smoker in Wake County, whereas Aetna will charge a 50-year-old nonsmoker in Wake County $561.31. Blue Cross offers multiple options in Wake County, ranging from $571.77 a month to $876.50 month for a 50-year-old non-smoker.
Off-exchange plans make sense only for people with enough income to pay the unsubsidized fees. The plans are known for attracting people with serious medical expenses.
“If you’re thinking off-exchange, who’s going to be willing to pay those prices?” said Mark Hall, a law professor and health insurance expert at Wake Forest University. “Well, maybe people who really need to use it.”
Religious Care Sharing Ministries
These organizations sell an insurance-like product that is not called health insurance because it is not regulated or guaranteed.
Members agree to support each others’ medical expenses and contribute “shares” into a pool for members’ expenses.
The ACA carries a penalty for failing to obtain health insurance, but membership in a care sharing ministry qualifies for an exemption from the penalty.
Membership typically requires signing an agreement to abide by religious principles restricting narcotics, tobacco, alcohol and sexual behavior.