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The main goal of the Affordable Care Act was to provide health insurance to more people. That has indeed happened in North Carolina, judging by a 13% decline in the state’s uninsured population between 2013 and 2014.

Along the way to implementing the ACA in North Carolina, we’ve learned — and continue to learn — a lot about what’s working and what still needs greater attention. Certainly, the issue of rising health care costs will continue to be a primary focus. This year BCBSNC has disclosed the health care cost trends we’re seeing and have shown how these costs affect health insurance rates.

Now that the Annual Enrollment Period is around the corner (it starts Nov. 1), consumers interested in purchasing ACA coverage on the exchange need information to make good decisions. I want to explain briefly how rising health care costs are affecting what you pay for individual coverage and share a few things to consider before shopping for a plan.

 

The Biggest Impact: Costs

The health care industry generally had two expectations of ACA customers. The first was that in year two (2015) of the ACA, additional healthier customers would enroll. The second was that the early spike in health care costs because of pent-up demand from previously uninsured customers would start to ease in year two. BCBSNC’s analysis of its own data has shown that neither of these proved to be true for our ACA customers.

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BCBSNC claims data for 2014 and the first half of this year revealed some key trends that are driving up health care costs:

More chronic illness and a higher-than-expected demand for expensive health care services among ACA customers. Health care spending among ACA customers increased each month, up 30% in January through June of this year compared to the first six months of 2014.

A 27% increase in the number of emergency department visits in January through June of this year compared to the same period of 2014. Many of these were for conditions that could have been better treated in a different, less expensive care setting, like urgent care.

Soaring prescription drug costs among our ACA customers. Drug spending increased 33% in the first half of this year compared to January through June of 2014. This makes prescription drugs the fastest-growing component of medical spending in our ACA business.

ACA customers dropping coverage or stopping premium payments. Most of those who dropped their coverage first used expensive medical services. The others who cancelled their plans were among the healthiest customers, those who had not filed any claims. Without the right balance of healthy and sick customers, we would not be able to continue covering the cost of care at current premium rates.

Balancing Sustainability and Value

Because of these factors, average monthly spending for our ACA customers’ medical expenses plus associated operating costs is currently greater than the average monthly premium that we charge. (For 2014, more than 87 cents of every dollar went to medical claims and programs to improve quality of care.) And the same is true even after accounting for additional payments that insurers are eligible to receive under risk and premium stabilization programs administered by the federal government.

Simply put, no business can be sustainable when dollars out exceed dollars in. Our rate changes for 2016 were necessary because we have a responsibility to make sure that the plans we offer are sustainable for our customers over the long run.

Our rates must reflect the real costs associated with the amount and types of health care services our customers are actually using so we can continue paying for their health care. That’s also why we had to revise our original ACA rate filing from earlier this year. As we were finalizing our initial filing due last May, we saw that the trend in claims was continuing to climb. Our revised filing took into account several more months of claims data, through June.

 

Choosing Your 2016 Plan

More people today are actively engaged in their health care decisions — including choosing a health plan. BCBSNC is committed to providing health insurance choices in North Carolina in all 100 counties for 2016. Customers in some areas will have the option to choose a lower-cost, limited network plan with their preferred health system of choice through Blue Local℠ and Blue Value℠.

Before choosing, remember to evaluate the total package of the plan in selecting the best plan for your situation, including monthly premiums, copayments and deductible levels, prescription drug formularies and the health care providers and facilities in the network. The health cost estimator and the provider search function on our website are additional resources to help you gather information about what we offer and how to manage your health care. You don’t have to be a BCBSNC customer to use them.

Open enrollment begins Nov. 1 and runs through Jan. 31, 2016. Dec. 15 is the deadline for enrolling in coverage beginning Jan. 1, 2016.

[Top image: Shutterstock]

Barbara Morales Burke

About Barbara Morales Burke

Barbara is vice president of health policy and chief compliance officer at Blue Cross and Blue Shield of North Carolina. A 25-year veteran of health insurance and regulatory affairs, she works on policy issues and regulations across their lifecycle, from their proposal to implementation to ongoing compliance.

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