Most state residents will see their health insurance costs rise next year under proposed pricing plans from insurers offering health coverage under the Affordable Care Act.
The proposed rate increases were made public Monday for any insurance company that is requesting an increase of 10 percent or more, which applied to every carrier in North Carolina.
The rate changes proposed here will range from decreases of 4.3 percent for some customers to increases of 40.4 percent for others, according to the filings. The new prices will go into effect Jan. 1 under the federal health care law that requires most Americans to obtain health insurance if they already don’t have coverage through their employer or through a federal program like Medicare or Medicaid.
The filings also reveal that a fourth major insurer, Humana, will offer subsidized ACA policies next year, but will limit its offerings to the Charlotte and Winston-Salem areas.
Blue Cross and Blue Shield of North Carolina, which offers federally subsidized health care in all 100 North Carolina counties, is seeking an average 25.7 percent rate increase for customers covered under the ACA. The company’s proposed range of 5 percent to 32 percent depends on factors such as the customer’s age, where the customer lives and whether the customer smokes cigarettes.
Blue Cross’s proposed rate hike is double last year’s 13.5 percent average increase, an indication that health insurance costs continue to rise. As the state’s dominant health insurer, Blue Cross insured 397,253 customers under the ACA as of March 31, covering the majority of the 560,357 North Carolina residents enrolled under the law.
The company’s chief actuary, Patrick Getzen, said the ACA continues attracting people who had trouble getting insurance in the past: sicker, older customers who tend to run up medical costs. Getzen said 94.2 percent of Blue Cross’s ACA customers qualified for financial subsidies and nearly a fifth of them discontinued coverage after several months.
“Most of these customers purchased a plan, paid their initial premium, used costly health care services, then dropped their coverage,” Getzen said. “This is an unintended consequence of the way the law is written.”
The ACA was enacted in 2010 to expand coverage and also to stem runaway health care costs. The law has expanded coverage for the uninsured by providing financial subsidies to those in lower income brackets and by prohibiting insurers from turning away ill applicants or charging extra to cover serious illnesses, common practices until recently.
The proposed insurance rates await federal and state regulatory approval before they can go into effect in 2016, which will be the third year that Americans will be able to purchase health insurance under the ACA.
Adam Linker, a health policy analyst for the N.C. Justice Center in Raleigh, said even with rate increases, those who receive federal subsidies will not pay more.
Linker said that although Humana is starting out in just four counties – Davidson, Forsyth, Mecklenburg and Rowan – North Carolina is an appealing market to the health insurance industry.
“North Carolina’s huge enrollment is very attractive to insurers,” Linker said. “They know even if they get a piece of the market they’ll have a pretty significant enrollment.”
Humana currently insures just 1,085 North Carolina residents on individual policies, none under the Affordable Care Act, and is proposing an 11.3 percent rate hike for its individual policies. The company insures about 315,000 total in the state, mostly through its Medicare Advantage program.
UnitedHealthcare is proposing a 12.5 percent average rate increase, ranging from a decrease of 4.3 percent to an increase of 40.4 percent, for its 86,223 customers on individual policies. Under the ACA, United offers subsidized coverage in 77 counties in North Carolina. In all, United insures 1.1 million in the state.
Aetna, which operates as Coventry Health Care of the Carolinas, is proposing rate increases averaging 17.23 percent, 23.14 percent and 25.78 percent for its roughly 117,000 ACA customers in 39 counties. Aetna insures a total of 540,000 in the state under a variety of other policies.
Blue Cross, North Carolina’s largest health insurer, covers 3.9 million people statewide. The Chapel Hill company’s actual rate increases in 2016 will almost never equal 25.7 percent, which is an average of several dozen individual insurance plans throughout the state.
Blue Cross provided one example Monday of how its rate increase would play out in 2016. A 40-year-old nonsmoker in Raleigh enrolled in the Blue Value Silver plan with a $2,500 deductible would see his monthly premium increase from $315.01 this year to $391.23 next year, a monthly increase of 24.2 percent.
Getzen said Blue Cross’s rate increase proposal is based on 2014 data and noted the company might resubmit a higher rate request based on more recent data. He said the 2015 pool of customers is sicker and costlier than the 2014 pool, but noted that more younger and healthier residents could buy health insurance for 2016 as the penalty increases for failing to obtain coverage.
Blue Cross has nearly 190,000 customers on individual insurance policies that were not purchased on the federal marketplace and are not subject to the average 25.7 percent proposed rate increase. The proposed rate increases for these customers will be filed this summer, Getzen said.
Also not affected by Monday’s announcement are the vast majority of Blue Cross customers insured through their employers or through the company’s Medicare plans.