Health insurance premiums under the Affordable Care Act will increase as much as 50 percent for some plans in January under newly approved rates released Friday by the N.C. Department of Insurance.
Blue Cross and Blue Shield, the state’s largest insurer, was approved for a 32.5 percent average increase, nearly the full 34.6 percent the insurer had requested. Blue Cross’s increases for individual plans offered in North Carolina will range from 5 percent to 42 percent for the 397,253 Blue Cross customers signed up on ACA plans.
Blue Cross began mailing rate notices to its customers this week in advance of the federal health exchange opening for ACA enrollment on Sunday.
The Affordable Care Act’s third year in North Carolina will result in significantly higher rate hikes for 2016 than customers saw in January 2015, when Blue Cross went up 13.5 percent and Aetna 2.9 percent. Strictly in terms of percentage, North Carolina’s increases are among the highest in the nation.
“This is higher than I anticipated early on,” said Adam Linker, health care policy analyst for the N.C. Justice Center in Raleigh. “They are probably raising rates more than they need to be.”
UnitedHealthcare was approved for a 20.4 percent rate increase, ranging from 2.5 percent to 50.3 percent. The change affects 86,223 UnitedHealthcare customers enrolled in ACA plans in the state.
Coventry Health Care of the Carolinas, owned by Aetna, will raise ACA rates 23.6 percent on average for about 117,000 customers.
Health insurers told the Department of Insurance that they were facing steep costs as hospitals hiked their charges, and older, sicker customers signed up for subsidized insurance to pay for expensive treatments. In all, about 460,000 people in North Carolina are enrolled in individual plans under the ACA.
“What we’re hearing from the insurance companies and seeing in the numbers is their expenses are way worse than they expected,” said Kerry Hall, a spokeswoman for the Department of Insurance. “We also need to make sure that insurance companies are solvent and they’re here offering plans. It’s important that the rates are enough so they can keep on doing business here.”
Humana, which had planned to offer ACA plans in four counties, withdrew its application.
The ACA, passed in 2010, requires most Americans to obtain health insurance and bars insurers from practices such as turning away people with pre-existing conditions or charging exorbitant rates to the sick and elderly.
The law also imposes a penalty for failing to obtain health insurance.
In 2016, the penalty will be much higher than in the ACA’s first two years: $695 for individuals, up to $2,085 for families, or 2.5 percent of household income. The penalty will be taken out of tax refunds and can be rolled over into future years if the taxpayer doesn’t qualify for a refund that year.
Most Americans aren’t directly affected because they get their coverage through an employer or a federal program like Medicaid or Medicare.
Costs for customers will vary by the plan they select, by their age and by the rating area in which they live. People who jump age bands, moving into higher cost plans based on age brackets, could see additional cost increases.
“Some premiums will also increase by less or even go down,” Aetna said in its filing with the N.C. Department of Insurance. “Others will increase by more than the average.”
But low-income residents whose ACA coverage is heavily subsidized will be shielded from the rate increases.
“The Affordable Care Act has an affordability problem once you get above the $24,000-$25,000-a-year salary level for an individual,” said Jonathan Oberlander, a professor of social medicine at UNC Chapel Hill. “This is still a relatively new market and insurers are still trying to figure it out and sort through the unknowns.”
Health care experts say that customers who automatically roll over this year’s plan into next year could see hefty increases that can be avoided by shopping around for cheaper plans with higher deductibles.
Janet Joyner of Raleigh said she has no choice but to drop her current Blue Cross plan next year, which is going up by 42 percent, from about $558 to $790 a month. Joyner, 58, works as an office administrator and makes too much money to qualify for a subsidy to offset her insurance costs.
Joyner said she’s healthy and used only about $500 in health care services last year, but paid Blue Cross nearly $6,700 in monthly premiums. Her current plan would cost nearly $9,500 in premiums for the full year, plus a $3,500 deductible that Joyner would have to pay before coverage kicked in.
“It’s like 2 1/2 car payments for me,” she said. “I’d be paying $9,500 a year for my annual physical and lower prescriptions.”
According to Blue Cross, a more typical scenario would involve a 40-year-old non-smoker living in Raleigh on a Blue Value Silver plan with a $2,500 deductible. That hypothetical customer’s monthly premium will increase 33 percent, from $315 today to $418 in 2016, if the customer stayed with the same plan.
Joyner said she will look for coverage that’s similarly priced to what she’s paying this year. She said she can’t absorb any more cost increases.
“They are pricing out the ones of us working and doing the right thing by purchasing private health insurance,” she said. “A lot of us will join the ranks of the uninsured because we cannot afford our premiums.”