October 14, 2016 Leave a comment
Blue Cross/Blue Shield of North Carolina today announced its approved (by N.C. Department of Insurance) rates for 2017 Obamacare marketplace plans. The average premium increase is 24.3% per BCBS. However, the impact on most people buying insurance plans is much less because of the premium subsidies provided by the federal government (for those between 100% and 400% of poverty) increase with the premiums. Subsidies drop when premiums drop, as they have in some states.
BCBS NC actuary Brian Tajlili has a blog post on the announcement. The bottom line:
When you hear or read about an average rate increase of 24.3 percent, it’s important to remember two points:
- That figure is based on rates before adding the federal subsidy, which more than 90 percent of people buying on the exchange will qualify for.
- As premiums increase, so does the subsidy.
In fact, when you account for the subsidy, about 72 percent of our ACA customers who enroll through Healthcare.gov will pay less than or the same next year as they’re paying in 2016.
Several points about North Carolina’s Obamacare marketplace:
- Premiums will be lower in 2017 than CBO projected they would be back in 2010. However, the cost of premium subsidies to the federal government is rising a lot this year. Hopefully the market will stabilize in the future, but it will likely take policy action which will require both political parties to get to problem solving mode again someday.
- North Carolina has lost insurers, and BCBS NC is the only seller in around 90 of the state’s 100 counties. You can’t have competition without multiple sellers. Can we get some to come back?
- Persons with incomes above 400% of poverty get no premium subsidy, and have to pay the full premium. They will feel this increase. A key issue going forward is whether we should provide some subsidy to such persons, who are virtually the only people in the U.S. who get no federal subsidy for their health insurance. A tax credit that got more of this income group to buy on exchange plans would help the Obamacare insurance market. Could the state do this?
- Premiums in the Obamacare marketplace are higher than they would be if North Carolina had expanded Medicaid so some of the increase is self inflicted. North Carolina needs to revisit the Medicaid expansion decision and join it to reform.