Blue Cross and Blue Shield, the state’s biggest health insurer, said Wednesday that rates under the Affordable Care Act next year will increase by 13.5 percent on average, providing the first glimpse of how insurance coverage will play out next year under the federal health care law.
Blue Cross customers will start receiving their renewal letters next week and will find out how much the rate increases affect the policies they currently have.
“Very few people will actually see that number, but it’s an aggregate,” Patrick Getzen, a Blue Cross vice president, told journalists in a conference call.
Getzen, who is the Chapel Hill-based insurer’s chief actuary, did not reveal the price range that customers would experience. Blue Cross insures 258,000 customers in the state through the federal marketplace under the nation’s health care law, Getzen said.
Details of Blue Cross’ individual insurance plans won’t be publicly available until Nov. 15, the beginning of the enrollment period that runs through mid-February. The plans are priced by such factors as age, whether a customer smokes, and by geography.
Pricing details are available in other states, however, and Blue Cross’ rising costs in North Carolina do not fit the pattern of some health care markets around the country. In this state, insurance companies and the N.C. Department of Insurance, which regulates and approves insurance rates, do not make rate public here until the enrollment period begins.
“The average increase seems high compared to what we've seen in other states but that's probably due to a lack of competition,” said Adam Linker, policy analyst at the N.C. Justice Center.
According to an analysis by the Kaiser Family Foundation, insurance rates are going down in some markets. For example, the monthly rate for a 40-year-old nonsmoker will decrease 0.8 percent on average in the largest cities in 15 states and the District of Columbia where rate filings are public.
The foundation’s study, issued last month, said monthly premiums for one type of “silver” plan will range from a decline of 15.6 percent in Denver, Colo., to an increase of 8.7 percent in Nashville, Tenn.
The study also found that most of the cities analyzed will have at least five insurers next year, and three will have 10 insurers or more. North Carolina will only have three insurers offering marketplace policies next year, and only Blue Cross will operate in all 100 counties.
In 2015, UnitedHealthcare will offer subsidized policies in North Carolina through the federal marketplace in addition to Blue Cross and Coventry Health Care of the Carolinas.
For most people affected by the Blue Cross rate hikes, the increases would be capped by federal subsidies, which would offset most of the monthly premiums for the poorest qualifying customers. This year, for example, 91 percent of enrollments in North Carolina under the federal health care law qualified for government subsidies.
“People with subsidies are insulated from the rate increases and people need to shop around because there is new competition in the market,” Linker said.
Additionally, people at lower income levels also qualify for federal subsidies on co-pays, deductibles and other expenses.
Blue Cross offers several dozen health plans statewide through the federal marketplace, but they are priced differently in North Carolina’s 16 insurance rating regions. The Triangle market has among the lowest health insurance rates in the state.
Blue Cross provided just one example of how rates would go up next year. For a 45-year old nonsmoker, the monthly rate would go up 15.6 percent – from $364.39 to $421.32 – on one of the most popular individual plans Blue Cross sold in Raleigh through the federal marketplace.
The company blamed the rising rates on the higher cost of expanding insurance to people who previously couldn’t afford coverage or had been denied coverage.
“Our new customers are older and less healthy than we anticipated,” Blue Cross said online. “That means we have a large pool of older, less healthy customers, and rates will increase partly to help cover the high health care usage of these customers.”
The Affordable Care Act requires most Americans to have health insurance, but the majority of citizens are insured through their employers or through federal health programs, such as Medicare or Medicaid. The law prohibits pricing plans based on gender or rejecting applicants because of pre-existing medical conditions, and includes a penalty for those who fail to buy insurance.
The penalty in 2015 will be the higher of two calculations: 2 percent of household income, or $325 per adult and $162.50 per child (with a family maximum of $975).
People who buy individual insurance policies directly from the insurer are most directly affected by the health care law. Blue Cross has about 554,000 such customers in North Carolina, less than half of whom have coverage through the Affordable Care Act marketplace.
Getzen said that 239,000 people are on individual health plans purchased before the Affordable Care Act was enacted in March 2010. Their rates will also increase by an average of 13.4 percent or 19.2 percent, depending on whether they are “grandfathered” or “transition” plans.
An additional 57,000 Blue Cross individual policy customers didn’t qualify for federal subsidies and didn’t go through the federal marketplace to purchase insurance, Getzen said.
These customers will also start receiving rate notifications next week.