By Mark Tosczak
Blue Cross and Blue Shield of North Carolina said that overall premiums in its 2019 Affordable Care Act plans would be reduced by 4.1 percent — the first time in the company’s history that it’s reduced rates for individual insurance plans.
“Lower premiums mean that more people will come and shop the marketplace,” said Mark van Arnam, director of the N.C. Navigator Consortium, a group which helps individuals choose ACA exchange plans and deal with the tax issues and paperwork that health insurance brings. “We’re also excited because it means the Affordable Care Act is working.”
Though overall rates will be lower, the company said that in some counties people still might see rate increases, though those would be less than 10 percent.
“The majority of the decrease is due to decreases in medical costs,” said Blue Cross CEO Patrick Conway. Reduced medical costs are expected to save $120 million next year.
“Medical costs drive 85 percent of the premium costs,” Conway said. “So the key is, how do you control medical costs?”
One answer? Drive a tougher bargain with doctors and hospitals. For as many as 50,000 people who buy ACA plans, that might mean choosing new doctors next year.
Seeking ‘better terms’
For the Blue Value Plan in 10 Triangle counties, physicians in UNC Health Alliance, which includes UNC and some independent doctors, will be the only in-network physicians. Blue Cross will discontinue its Blue Local plan, which features DukeHealth and WakeMed providers, which now covers about 50,000 people in 12 counties.
“We did say to large provider groups, ‘You know, we really want the lowest rate that you’re willing to give, plus the ability to work in these risk-based arrangements together, where we’re jointly accountable for quality and total cost of care,’” Conway told North Carolina Health News. “And in that case, in the Triangle, you know, UNC provided us the better terms.”
Blue Cross continues to work with Duke, Conway said, in other parts of its business. And if patients need to stay with their doctors, such as a cancer patient being treated by a Duke oncologist, the company would review individual cases and make exceptions where appropriate.
The “risk-based arrangements” are similar to programs Medicare has rolled out in recent years, where providers agree to work to better manage the cost of care and health outcomes in exchange for the ability to profit from improvements they make for groups of patients. Conway was a senior administrator at the Centers for Medicare and Medicaid, the federal agency that runs Medicare, for several years before joining Blue Cross in late 2017.
More competition in the Triangle
While Blue Cross is the state’s dominant insurer, and the only company providing ACA plans in all 100 counties, it does have competition in the Triangle. Cigna has filed rate applications for individual ACA plans and off-exchange plans in Chatham, Orange, Wake, Johnston and Nash counties.
A new company also is entering state: Ambetter, a subsidiary of St. Louis-based Centene Corp., has filed for state permission to sell ACA plans here for the first time. A Centene spokesperson said in an emailed statement,“We look forward to offering competitively-priced options for quality health care.”
Final premiums for individual plans won’t be released until October, Blue Cross said in its news release, citing competition.
The company’s release also notes that rates will vary depending on location, age and the plan type; subsidies for premiums depend on income and are available to people who earn up to 400 percent of federal poverty level — $48,560 for an individual.
Some 475,000 North Carolinians get their insurance from Blue Cross ACA plans, with most of them — around 90 percent — being eligible for subsidies that reduce their premiums. Cuts to premiums not only reduce what people pay out of pocket but will also reduce the amount of subsidies the federal government pays to Blue Cross.
A significant portion of the 2019 rates cuts was due to federal tax cuts, including a one-time cut to an ACA Health Insurer tax that will be back in 2020 unless Congress extends it. Reductions also come from federal income tax savings in the 2017 Tax Cuts and Jobs Act, which provided Blue Cross with corporate tax cuts. Without those cuts, rates would have been 3.5 percent higher in 2019.
Better or worse
Among the other 19 states where 2019 rates have been announced so far, just four states — Connecticut, Minnesota, Pennsylvania and Tennessee — have announced rate cuts, based on data on the price of benchmark plans collected by the Henry J. Kaiser Family Foundation. Another state, Michigan, has no change in those rates and the other 14 states had increases.
And despite the overall cuts to Blue Cross NC’s 2019 rates, other federal actions are actually keeping premiums higher than they would be otherwise. The individual mandate, which requires people to buy health insurance or face a penalty, will be eliminated next year; Blue Cross estimates that if the mandate were still in place, rates would be 4 percent lower.
And if the October 2017 elimination of cost-sharing reduction payments to insurers were reversed, premiums would be another 14 percent lower, company officials said.
“If we had more certainty from Washington rates would be 15 percent, or more, lower,” Conway said.
Blue Cross first started offering individual ACA plans in 2014 and lost about $485 million during the first three years. Last year, though, the company earned a $118 million profit on the plans.
There could be other obstacles for potential ACA plan enrollees during this year’s open enrollment period, which begins Nov. 1.
Last year, the N.C. Navigator Consortium received $3.5 million in federal funding to pay navigators, who meet with people individually and help them pick out the best health insurance plan from those offered on the ACA exchange. This year that funding has been slashed to $500,000.
“We’re currently thinking through how we make that work,” Van Arnam said Tuesday afternoon, as he worked on writing grant applications in the hopes of filling at least part of the funding gap. “There is going to be less capacity than there has been in years past.”
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Premiums may be lower (though I just know our county will go UP), but no mention is made of deductible and copay amounts. Our deductible has steadily increased, from $500 in 2014-15 to $7500 in network $25,000 out of network (our homecare services and physicians/hospital are in different BCBS networks)
Compounding the problem has been the forced removal of dependents to individual plans, not eligible for the NCHIPP program. ACA subsidies apply to individuals making $48,000/yr, but not to families struggling to provide for gaps in Medicaid coverage, who care for adult children with catastrophic injuries at home.
While many predicted disaster with the ending of the unallocated Cost Share Reduction payments, some of us could see the Insurers would just increase the Silver Plan premiums which are the only plans eligible for the CSR program and also are used (2nd lowest Silver Plan) to set the Premium Tax Credit Amount. The funding was just shifted from the CSR account to the Premium Tax Credit account.