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Individual Rates Will Rise to Offset ACA Costs

By Brian Tajlili | May 31, 2016 | Healthy Lifestyle, Industry Perspectives, Insurance Education

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If you buy your own individual health insurance through the Affordable Care Act, we have news on what to expect next year. In 2017, your insurance premiums will be going up, but not as much as in previous years.

Today, we’re announcing that our filing with state and federal regulators calls for an average 18.8 percent increase for Blue Cross and Blue Shield of North Carolina ACA customers next year. As you may remember, we had an approved rate increase of 32.5 percent for 2016. BCBSNC also plans at this time to offer ACA coverage in all 100 counties in 2017, but we’ll make a final decision on our ACA participation later this year.

We do understand that a rate increase of “only” 18 percent is hardly welcome news for our customers with individual ACA plans. You deserve an explanation of why we’re asking for another increase and how we come up with our proposed rates, especially as you look ahead to how much you’ll need to spend next year on health coverage for yourself and your family. I’ll attempt to provide that background here.


What’s Driving Costs – and Your Premium – Higher

The first major factor in the rates you’ll see for next year’s coverage is the cost of providing medical care for our ACA customers here in North Carolina. Knowing the medical services that our ACA customers use allows us to project future costs and what rates to charge.

Our ACA customers continue to incur medical costs at a very high rate. Perhaps the most telling statistic is that 5 percent of our ACA customers cost us $1.3 billion in claims — costs that amount to more than 70 percent of our total ACA revenue last year.

Several other trends stand out that have directly increased the cost of coverage:

  • ACA customers use the emergency department more than other customers.
  • In 2015, costs for covering behavioral health and chemical dependency among ACA customers increased nearly 36 percent over 2014.
  • Endocrinology costs among our ACA customers — a category that includes diabetes — increased almost 20 percent last year. Drug costs in this category alone shot up almost 75 percent.


Plan for 2017

Over the past two years, BCBSNC has lost $405 million on our individual ACA plans. These results aren’t sustainable over the long run. Other insurers across the nation are experiencing similar circumstances with ACA costs, and some have decided not to offer individual ACA plans in 2017.

We intend to offer coverage in each of the state’s 100 counties. Our mission as a company is to serve North Carolina, and we’re working hard to meet that goal. However, if ACA plan losses persist, we might have no choice but to scale back our coverage areas.

One change starting next year is that we’ll no longer offer ACA plans with the highest cost and benefit levels — the so-called Platinum plans. Only 3 percent of our ACA customers opted for a Platinum plan in 2016.


Our Commitment

We at BCBSNC are working to make ACA coverage sustainable. The law is still relatively new, and we’re understanding how to provide our customers with the coverage they need at as low a price as possible. We continue to discuss ways to improve the ACA with the federal government, such as limiting eligibility for special enrollment periods outside of open enrollment and doing more to enforce the requirement that everyone have coverage.

One number that reflects our commitment is 87 percent. That’s the amount we, as a company, are spending to cover medical care for our members — well above the 80 percent threshold spelled out in the ACA. In fact, we exceeded the federal requirement by more than $160 million for individual ACA customers in 2014.

This year North Carolina had the fourth-highest number of individuals covered by ACA plans in the nation, representing a success story in making sure more people have access to health coverage. But that increased access comes with a cost. That cost — reflected in our rate increase proposal for next year — is something we at BCBSNC, and all of us in the health care industry, must address so that North Carolinians can obtain and pay for the health coverage they need.