Blue Cross Blue Shield of North Carolina wants to decrease its rates by 4.1 percent on health insurance plans it offers through the Affordable Care Act.
This is the first time that North Carolina’s largest health insurer has requested a rate decrease on the individual plans it offers on the federal marketplace since Obamacare, as the ACA is called, went into effect in 2014. It’s also the first time the Durham nonrofit has requested a rate reduction for any individual plans in more than 25 years.
Some customers could see several hundred dollars in savings annually, but the rate change will not affect all customers equally because Blue Cross’s rate reduction request is a statewide average. Customers in some counties will see a rate increase, although no county will see an average increase larger than 10 percent, Blue Cross said.
The insurer did not provide details on how the 2019 ACA rates will affect specific counties or individual customers. Blue Cross CEO Patrick Conway said some would “get more than a 10 percent decrease,” but noted that after years of cost increases many state residents are unable to afford health insurance.
“This is a historic rate decrease,” Conway said. “I have traveled across North Carolina and I’ve met families that are literally deciding whether to buy health insurance or whether to feed, clothe, house and educate their children. We don’t want people to have to make that choice.”
Duke Health and WakeMed cut
The decrease could be bad news for about 50,000 Blue Cross customers. The insurer was able to cut rates by eliminating Duke University Health System and WakeMed Health & Hospitals from its provider network for ACA customers in the Triangle. That means that if they want to be insured by Blue Cross, some 50,000 Blue Cross customers in 12 Triangle counties will have to find new doctors in UNC Health Alliance, a network set up in 2015 that includes more than 4,000 doctors, specialists and other health care providers in 48 counties.
Conway said that patients undergoing cancer treatment, pregnant women and others in special circumstances would be able to continue to receive treatment from Duke and WakeMed doctors and pay lower in-network costs.
WakeMed said that removing its facilities and doctors from Blue Cross’s ACA network is a major blow. The company said it made an aggressive bid to remain in the Blue Cross network, called Blue Local. WakeMed was willing to accept substantial discounts for services that were deeper than the insurer’s 4.1 percent decrease, said Rick Carrico, WakeMed’s executive vice president and CFO, in an emailed statement.
“As the only health system based right here in Wake County, and as home to the county’s only children’s hospital and Level I trauma center, the WakeMed family is incredibly disappointed in Blue Cross NC’s decision to discontinue Blue Local, and we know our patients and their families will be, too,” Carrico said. “Our leadership team is working closely with another national insurance carrier that offers health exchange products across the country to provide a competitive ACA exchange option that includes WakeMed and Duke. We hope to share details about this plan very soon.”
Duke officials also said that its patients will be put in a difficult position.
“It’s very difficult to disrupt a patient-doctor relationship, particularly for patients who have chronic medical conditions or a serious illness,” said Thomas Owens, senior vice-president of Duke University Health System and president of Duke University Hospital. “We’re working on an option that we hope will provide the majority of those patients with an option to keep their Duke providers.”
Owens said Duke will have details on a new network with a competing insurers soon and will be contacting patients by direct mail and electronically to alert them that they can keep their Duke doctors by switching from Blue Cross to a new insurer.
Blue Cross CEO Conway said the insurer will continue to include Duke and WakeMed doctors in its health insurance plans offered by employers and large organizations, which constitute the majority of Blue Cross’s business.
ACA shows signs of stability
The N.C. Department of Insurance is expected to approve ACA rates by September. The open enrollment period for 2019 coverage begins Nov. 1 and ends Dec. 15, and coverage goes into effect. Jan. 1.
The company announced its rate request on Tuesday and said the ACA market — which tends to attract older and sicker people with higher-than average medical costs — is showing signs of stability, despite Republican efforts to dismantle the law. Overall, Blue Cross is seeking a $120 million decrease in its ACA revenue collected from monthly premiums paid by customers in 2019.
The rate request would be at least 15 percent lower if not for actions by the Trump administration and Congress to undermine and destabilize the ACA by eliminating provisions included in the original law, according to Blue Cross.
The proposed rate reduction gave ACA advocates something to cheer about after years of unpopular price increases that caused economic hardships, especially for people who didn’t qualify for federal subsidies and saw their health insurance costs double and even triple in a span of several years.
“Rate decreases are fantastic news, because these decreases will make ACA plans more attractive and available to more consumers,” said Mark Van Arnam, who runs the N.C. Navigator Consortium in Raleigh. “This will likely lead to new shoppers entering the Marketplace.”
It took Blue Cross three years to figure out how to make the ACA work, largely through consecutive annual rate increases of 14.1 percent, 24.3 percent, 32.5 percent and 13.5 percent since the ACA went into effect. Conway said that Blue Cross was able to cut rates this time because providers like UNC agreed to accept lower payments for medical services and share some of the financial risk of insuring people.
A run-up in ACA pricing around the country has resulted in overpriced health insurance that now has to be scaled back, said Cynthia Cox, who specializes in private health insurance at the independent Kaiser Family Foundation. She said many ACA insurers are proposing single-digit price increases for next year and at least a third so far are seeking rate cuts because the ACA’s “medical loss ratio” rule requires insurers to spend 80 percent of their proceeds on medical care and refund any surplus.
Blue Crossdoes not expect to fall below the ACA spending threshold this year, so it will not have to refund customers.
Blue Cross netted its first profit on ACA plans in 2017 after three years of consecutive financial losses totaling more than $450 million. The company now insures more than 475,000 North Carolinians through the ACA, a small percentage of the 3.8 million people the company insures in North Carolina on a variety of other health care plans that are not subject to the rate decrease request announced Tuesday.
The proposed rate cut also affects 47,000 Blue Cross customers on individual health insurance bought directly from the company, as opposed to the federal marketplace, but which have the same plans, benefits and prices.
Cigna, Centene offering ACA plans, too
Blue Cross will remain the state’s only health insurer offering plans in all 100 counties on the ACA marketplace. Cigna sells ACA plans in five counties — Wake, Durham, Orange, Chatham, Nash — and will remain in those areas in 2019, but Cigna does not disclose how many people it insures in North Carolina under the ACA.
Cigna also has not announced the rates it’s requesting for next year, but Ted Hamby, North Carolina’s deputy insurance commissioner, said the company’s average ACA rate increase was under 15 percent. The filings aren’t considered public information in North Carolina, but Blue Cross voluntarily announces its request every year.
Additionally, Centene is entering the North Carolina market this year and offering its Ambetter plans in Durham and Wake counties. The Missouri-based company also has filed its ACA rate proposal with the Department of Insurance, but has not announced its proposed rates. Centene is a publicly-traded Fortune 100 corporation that covers more than 1.5 million on ACA plans in 16 states and is expanding into new states in 2019.
The ACA enters its sixth year having weathered 70 Congressional repeal attempts and erosion by Trump Administration actions, including a decision to end the ACA’s requirement that most Americans have health insurance or face a fine. Next year the ACA will face competition from cheaper options, such as short-term plans and association health plans, which are not required to cover pre-existing conditions and are allowed to charge much higher rates to older and sicker applicants.
As is, 90 percent of Blue Cross’s ACA customers qualify for a federal subsidy that will be available next year as well. This subsidy is available for households whose incomes fall between 100 percent and 400 percent of the federal poverty level.
Blue Cross also said it will continue offering “transitional” plans in 2019 and they won’t be subject to the ACA rate request. These individual plans were bought between March 2010, when the ACA was enacted, and October 2013, when the regulations went into effect. Transitional plans are skimpier because they do not meet ACA coverage requirements but they are allowed by federal law to fulfill former President Barack Obama’s vow that people will be able to keep their health insurance if they prefer it to ACA options. and cannot be sold to new customers. Blue Cross said it covers 41,500 people in North Carolina on transitional plans, which can’t be sold to new customers.