Obama Administration officials promised Wednesday that most people covered under the Affordable Care Act will pay no more than $75 a month for health insurance next year, even if insurance premiums increased by 25 percent.
The officials from the U.S. Department of Health and Human Services delivered their promise amid growing concern across the country that health insurance companies are planning double-digit increases or withdrawing altogether from the ACA insurance exchanges.
An independent health care expert suggested that federal health officials were putting a positive spin on a deteriorating situation.
“The story in North Carolina is particularly worrisome,” said Cynthia Cox, an insurance analyst with the independent Kaiser Family Foundation. “There will be less choice in North Carolina next year.”
ACA officials, in a conference call with news organizations, assured that the Affordable Care Act is a good deal, noting that federal subsidies will guarantee affordable rates for most people enrolled in ACA plans.
“Headline rate increases do not reflect what consumers actually pay,” said Katie Martin, the agency’s Acting Assistant Secretary for Planning and Evaluation.
In the conference call, ACA officials said that under a hypothetical 25 percent rate hike, 82 percent of ACA enrollees in North Carolina would pay less than $75 a month, and 85 percent would pay under $100 a month. They said it didn’t matter how many health insurers were in the picture, based on the federal formula used to calculate premium subsidies.
“Our finding holds irrespective of the number of issuers,” Martin said.
In North Carolina, two health insurers – Aetna and UnitedHealthcare – have said they will cease offering ACA plans next year, leaving Blue Cross and Blue Shield of North Carolina as the sole statewide insurer offering subsidized coverage. If enrollments hold steady, the change will mean that Blue Cross’s ACA business will swell from about 300,000 customers to as many as 600,000 customers in North Carolina.
But Blue Cross has also said it might pull back from some counties, or withdraw from the ACA market here altogether, depending on the outcome of its rate proposal before the N.C. Department of Insurance. Blue Cross is seeking an 18.8 percent rate increase on average, and says it has lost $405 million on its ACA plans in the past two years. The insurer has said it underpriced its ACA products in North Carolina because it underestimated the volumes of sick people who would enroll.
The state insurance department won’t announce the approved rates until Oct. 28; Blue Cross could elect to announce the approved rates earlier.
Only one other insurer, Cigna, plans to offer ACA plans here next year, but Cigna said it will only operate in the Raleigh market.
In North Carolina, about 60,000 people enrolled in the ACA exchange do not receive any subsidies because their household income exceeds the federal limit for financial assistance. Some of these customers are paying more than $1,000 a month in premiums for health coverage.
Blue Cross and other insurers have sought to keep down premiums by shifting expenses to consumers through out-of-pocket costs. Some individual policies now have deductibles of $5,000 or more – the amount the customer has to pay before the insurer takes over.
Additionally, insurers keep down costs by creating “narrow networks” of select hospitals and doctors whose services are covered by insurance.
“When we’re talking about shopping around, that presumes there are multiple options,” Cox said. “It’s less about shopping around than being pushed into whatever plan remains.”