Rates under the new Affordable Care Act vary widely across the state.
By Rose Hoban
As the enrollment period for health insurance being offered under the Affordable Care Act opens, the rates for plans purchased through the health insurance marketplaces in North Carolina are finally emerging.
Rates for the plans vary widely across the state, and in many areas are higher than the national average, in part because few insurers have jumped into the market in North Carolina.
A 28-year-old making $25,000 per year will pay, on average, $145 a month after subsidies, but the actual costs for the unsubsidized premiums vary widely across the state (see charts below).
You can check out a subsidy calculator on our Affordable Care Act Resources page
For example, for a family of four making $50,000, the average premium is $282 a month after federal tax subsidies, but costs before subsidies range from $691 per month in Allegheny County to $745 per month in Buncombe County. The state is divided into 16 rating areas.
Federal subsidies will be paid directly to insurance companies, lowering costs for consumers on their monthly bills.
Blue Cross and Blue Shield of North Carolina continues to dominate the state’s health insurance market. BCBS is the only carrier offering plans in all 100 counties and is the only carrier in 61 counties. In the other 39 counties, Coventry Care of North Carolina is also offering plans.
A third insurer, First Carolina Health Care, had been planning to offer insurance in Moore, Montgomery, Hoke, Scotland, Richmond and Lee counties, but pulled out of the exchange in early September, leaving all but Lee and Hoke counties with only one insurance company to choose from.
Mark Holmes, an associate professor of health policy and management at the UNC Gillings School of Global Public Health, said a reason for higher rates in some counties over others is a combination of the availability of providers, cost of care and the usual prices charged for that care in those areas.
“There’s a lot of variation in prices; at the hospital level, that accounts for some differences, he said. “How providers practice and how medical care is delivered in different parts of the state can also be a determining factor.”
Holmes noted the shortage of choices of carriers in North Carolina and how that’s affecting prices.
*catastrophic coverage plans available only to those under 30 years old
“An economist would argue that the areas that have few or one plan are less competitive and the prices are higher there,” he said. “But you can argue it the other way: that insurers know where health care is expensive and that’s why the plans decided to stay out of those areas.”
Rural areas have fewer choices
Most of the counties with only one choice are in rural areas where there are fewer doctors and hospitals. But some of them, such as New Hanover, which includes the city of Wilmington, are relatively urban.
Holmes said that, in general, prices for North Carolina are less than what was expected, even if they’re slightly higher in some places than the national average.
Administrators at the Centers for Medicare and Medicaid Services expressed agreement that the lack of competition in some states such as North Carolina are making prices slightly higher.
“Generally, we’re seeing that where there’s more competition, that does have an effect on keeping rates lower, but it’s not the only thing,” said Gerry Cohen, the deputy administrator and director of the Center for Consumer Information and Insurance Oversight at CMS.
He predicted that in the second and third years of implementation, North Carolina will see more insurance companies entering the market.
“The biggest incentive is going to be the success of the program,” Cohen said. “This is a marketplace; this is private commercial companies making a decision [whether] they want to be a part or not. Some have decided to step back and take a look and see how it goes, and some have jumped in with both feet, so to speak.”
But Don Taylor, a health economist at Duke University’s Sanford School of Public Policy, said that it could be “mind-numbingly hard” for a new insurer to enter the North Carolina market at the statewide level.
They would have to get contracts for specialty physician services, hospital care, nursing homes, mental health and much more in all 100 counties, Taylor said.
Facing deadlines
Federal officials said that although there’s a lot of attention on Oct 1 as the first day the health insurance marketplaces are available to the public, they don’t expect an initial flood.
“We anticipate that our experience will mirror that of other large-scale implementation efforts,” said Julie Bataille, CMS’s director of communications, harkening back to the rollout of the Medicaid Part D drug benefit in early 2005.
“People do not come in all at once; they come in when there’s a sense of urgency or a deadline,” she said. “So we are anticipating that people will come in in December who are looking for coverage in January, and then again near the end of the open-enrollment period in March.”
Cohen said there will inevitably be tweaks to the computer system once the rollout begins, but that those updates will be relatively “invisible” to consumers.
Those tweaks have resulted in delays too. Federal officials announced Thursday a several-week delay for the rollout of the Spanish language website CuidadoDeSalud.gov and a one-month delay for the exchanges designed especially for small businesses.
Cohen downplayed the effects of the delays and said it was better to get the sites right before launching them. He compared the coming fixes to apps on his iPhone.
“I get notified every single day about updates and improvements to the apps,” Cohen said. “Most of the time, I can’t even see any change in what they’ve done, and it doesn’t mean that the app didn’t work. It did work, but it’s just being improved.”
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Individuals who don’t get their health insurance through their work and who buy coverage in the NC health marketplace set up by the Affordable Care Act will pay – on average – slightly more for that coverage than the national average. Unfortunately, there’s little analysis about why this is the case.
One major reason for the slightly higher prices is directly attributable to the NC General Assembly and Governor Pat McCrory’s decision this year to decline for North Carolina any role in running the new NC health marketplace under the ACA. Because of that decision, the NC Department of Insurance – the regulator most familiar to health insurers operating in our state – has no role in the operation of our health marketplace. As a result, insurers are much warier about joining the marketplace and offering plans. At this point, NC has only two insurers offering plans in the NC federal marketplace: NC Blue Cross and Coventry Health Plans.
NC certainly has limited choices for Exchange options. However, for off-Exchange plans, there is a bigger market. Consumers that do not qualify for subsidies should consider these types of policies. Experienced brokers and their websites offer specifics. But…once again…only for non-subsidy applicants.