BCBSNC premiums likely to rise
By Melinda Harrell
Published in News on March 15, 2017 10:09 AM
House Republicans released a controversial bill to replace the Affordable Care Act last week, drawing harsh criticisms from both sides of the aisle.
Questions about the bill's potential impact on premiums and its overall cost are leaving many to wonder what will happen to their insurance premiums and coverage in North Carolina.
The state's largest insurance provider, Blue Cross Blue Shield of North Carolina, will keep the people in the state wondering.
Representatives for the company provided little detail about how the replacement plan, should it pass, might affect coverage and premiums.
When asked if premiums would change under the replacement plan, BCBSNC declined to answer.
When asked if the replacement plan would benefit the company, BCBSNC declined to answer.
When asked whether raising the premiums of the older population -- rates could increase up to five times the amount of those offered to younger customers -- would be beneficial to the overall premium rates, BCBSNC declined to answer.
Instead, the company provided a statement.
"Blue Cross is committed to working with local and national leaders to help us evolve to a better health care system. It's important for future legislation to ensure a smooth transition without jeopardizing access to health insurance and care. Any proposal must provide solutions to address the rising cost of health care, which has led to rising premiums for so many North Carolinians."
The nonpartisan Congressional Budget Office report released Monday indicates that premiums nationwide are projected to increase further in 2018 and in 2019 should replacement proposal become effective.
The report estimates that premiums for single policyholders in the nongroup market would be 15 to 20 percent greater than under current law.
The CBO report put the reason for the increase on the dissolution of the individual mandate, which would remove the individual tax burden but would also eliminate the incentive for the healthier population to enroll for insurance coverage.
However, the replacement plan would still require insurance companies to provide coverage to any applicant, including people with preexisting conditions, which could affect the overall premium amounts, according to the CBO report.
In the CBO report, by 2020 the premiums should become stable and be around 10 percent lower than under current law.
The brighter spot in the CBO report is the reduction in the national deficit by $337 billion over a nearly 10-year period.
With little indication of the plan BCBSNC has for the future under the proposed health care overhaul, past trends indicate that premiums will likely continue to increase for policyholders.
Before the ACA was enacted, the BlueAdvantage policies offered by BCBSNC increased by an average 3.99 percent in 2007, according to the North Carolina Insurance Commission.
Rates continued to increase over the next several years, jumping an average of 18.44 percent in 2008, and increasing an average of 8.50 percent in 2009 and rising again by 12.24 percent average in 2010.
After the ACA, premiums continued to rise. In 2015, BCBSNCrequested from the N.C. Insurance Commission that premiums increase by an average of 13.5 percent for ACA policies, by and average of 13.4 percent for policies purchased before the ACA that were grandfathered in, and the transitional policy average increased by 19.2 percent.
This year, BCBSNC rates spiked at an average of 18.8 percent.
BCBSNC reported earlier this month a net income of 2.4 percent which equates to $185 million profit.
In a statement announcing the profit, BCBSNC Chief Financial Officer Mitch Perry said the "environment remained volatile this past year in our industry."
"While we saw fewer losses with ACA plans, these customers continued to need expensive medical services. Gains in other lines of business offset these losses. It's still uncertain how changes in Washington will affect our customers in 2018. Despite these challenges, the company remains well-capitalized and financially strong."
In a statement released by BCBSNC in May of 2016, the company said "the cost of health care services and how often they are used" directly correlates with the increase in premiums.
"Blue Cross Blue Shield of North Carolina (BCBSNC) customers who enrolled in the Affordable Care Act (ACA) continue to be older and less healthy and use a high volume of expensive health care services," BCBSNC said in the same release.
With the replacement bill, BCBSNC would have the leeway to charge the older customers five times the amount of younger, healthier customers.
The older, lower middle-class population is expected to be hit hard should the replacement legislation pass. As it is currently written, the bill cuts the subsidies for BCBSNC policies to a flat, tax credit by between $2,000 and $4,000 a year based on age.
Under the ACA, the subsidies are based on income and and offered to those making between 100 percent to 250 percent of the federal poverty line.
The tax credit would do little for BCBSNC customers nearing the retirement age, with the most popular plans -- BlueAdvantage -- costing around $1,100 a month in premiums and carrying with it an in-network deductible of around $7,000.
The policy with the smallest deductible available -- the BlueAdvantage Gold 1500 policy -- would cost around $1,700 per month with a $1,500 in-network deductible.