BCBS NC ACA Rate Increases

Quick Thoughts–BCBS NC invited me to listen in on a media call this morning and I did so. I will circle back with links later.

Blue Cross/Blue Shield of North Carolina announced their rate increases for ACA plans today, and they are relatively high as compared to those in many some states. Average premium increases for N.C. ACA plans are 13.5% (13.4% in grandfathered plans and 19.2% for transitional plans). In Maryland and Washington DC, for example, they ranged from a 1% premium decline for Bronze plans to a 7% increase in gold plans. Premium increases (and initial premiums are higher in N.C. than in many states; see below for some discussion of why). The rate increases quoted are across all metal levels (Bronze, Silver, Gold, Platinum) and are not shown for each of the metal levels.

On the phone call with BCBS NC today, they stated that as of end of September, 2014, BCBS has ~258,000 signed up in ACA plans, 239,000 persons who are in grandfathered and transitional plans, and 57,000 who bought ACA compliant plans off exchange. Also notable, BCBS NC net gained around 25,000 persons from May, 2014 to September, 2014…so more people added during special enrollment due to things like lost job, new baby, etc. than ‘dropped out’ due to non payment of premiums.

Several points on all this.

  • The premiums noted are pre-subsidy, not what individuals will pay. In year 1, 91% of the people buying ACA plans got premium subsidies, so this announcement focuses on the full premium and not what consumers will pay.
  • The ACA story will increasingly be a state-level story. In N.C. we didn’t expand Medicaid. And when the President allowed grandfathered plans (those in place prior to the laws passage that have not changed) and transitional plans (those sold after the laws passage) to be extended last year, North Carolina decided to allow this to happen and BCBS NC decided to do this as well. This likely kept some healthier people out of the exchanges. However, the premium increases for BCBS NC were similarly high in these other groups (more below). There are a series of public and private choices that occurred in North Carolina that didn’t occur in other states.
  • BCBS NC has only shown premium increase by bucket (ACA, grandfathered, transitional) and not the exact size of the pool, or number covered (they said on the call 239,000 persons in grandfathered + transitional plans, but did’t break these down). The grandfathered plans can only shrink in members and will only get smaller. This will make those pools more unstable over time, and this pool will eventually blow up (and people will go to the exchange plans).
  • The most notable thing about North Carolina’s ACA exchange in year 1 was its decided lack of competition. BCBS NC was the only insurer to sell plans in all 100 counties (they will continue that this year), and Coventry sold plans in around 35 counties. Nationally, states with less insurance competition had higher year 1 premiums, and higher rates of increase. North Carolina has low competition, and relatively high premiums.
  • There is a third insurer entering North Carolina’s ACA exchange this year (United, who plans to sell in around 85 counties I think). More competition should lead to lower premiums. The experience over the next few years will tell the tale, and it would be good if more insurers continue to come to N.C.
  • Most interesting thing to me is that grandfathered plans have a 13.4% premium increase. These are plans written prior to the ACA passage in March, 2010. These plans almost certainly have less generous benefits than ACA plans, however, historically individual purchase pools don’t last longer than several years (most people didn’t remain in such plans for more than a year or so). Most buying such care tended historically to move to other sources of coverage, and so they only people left are sicker than average. New people cannot be added to this pool, so it will continue to get worse over time. This helps to demonstrate one of the problems with the pre-ACA individual purchase market.
  • The Medicaid expansion is likely to move ahead in some form in 2015, and when this coverage expansions comes about it will help reduce premiums (unclear by how much).
  • This is the second year of the ACA coming up, but the first year of re-enrollment. Big picture keys
    • how many will sign up year 2?
    • will more competition yield lower premiums over time?
    • will even more companies come into the ACA exchanges over time?
  • Biggest thing we still don’t know (or at least I don’t): what is the distribution by county of where these covered lives are in the ACA exchange plans, not only for BCBS NC, but generally?

Advice: you should check the exchange in your county across different plans and across companies to see what premium you will pay for given plans.

About Don Taylor
Professor of Public Policy (with appointments in Business, Nursing, Community and Family Medicine, and the Duke Clinical Research Institute), and Chair of the Academic Council at Duke University https://academiccouncil.duke.edu/ . I am one of the founding faculty of the Margolis Center for Health Policy. My research focuses on improving care for persons who are dying, and I am co-PI of a CMMI award in Community Based Palliative Care. I teach both undergrads and grad students at Duke. On twitter @donaldhtaylorjr

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