Tagged Premiums

Anthem Eases Up On Premium Hikes After State Scrutiny

Insurance giant Anthem Blue Cross agreed to reduce two planned premium increases for 2018 after California regulators questioned the company’s rationale for raising rates by as much as it had initially proposed.

The scaled-back rate hikes, in the individual and small-employer markets, will reduce premiums by $114 million, state officials said.

The California Department of Managed Health Care challenged Anthem’s estimates for future medical costs, in particular its prediction of a 30 percent jump in pharmacy expenses for the individual market — nearly double the estimates of two other big insurers and out of line with industry trends nationally.

As a result of the department’s intervention, the nation’s second-largest health insurer shaved 3 percentage points off its 2018 rate increase for individuals and families, still leaving a hike of 37.3 percent. That increase is the second-highest — after Molina Healthcare — among the 11 insurers that sell in the Covered California exchange. Anthem also cut its rate hike on small businesses by more than half, to 2.5 percent.

The smaller premium hikes are expected to save individuals about $21 million and small-business customers an estimated $93 million.

California’s two insurance regulators, the Department of Managed Health Care and an elected insurance commissioner, can pressure companies to reduce their rates, but neither has the authority to block rate hikes.

Shelley Rouillard, director of the managed care agency, said her department carefully scrutinizes rate filings to ensure “consumers are receiving value for their premium dollar. … Rate review is an important consumer protection and holds plans accountable to justify their rate increases.”

Anthem said in a statement that it works with regulators routinely “to revisit our assumptions and rates as more data becomes available … We are pleased that the emerging data allowed us to provide some rate relief to California individuals and small businesses versus what was originally filed.”

Regulators said that during their review of Anthem’s small-group rates, the company updated its projection for medical spending, which resulted in a lower premium increase than originally proposed.

For the individual market, regulators at the managed care department dug deeper into Anthem’s forecast for prescription drug use and spending. “This is a much higher pharmacy trend than we have seen with other carriers and we will need sufficient documentation to consider it reasonable,” they wrote to Anthem.

In response to the state’s questions, Anthem lowered its estimate of the rise in pharmacy costs by 7 percentage points, to 23 percent. That led, in part, to the reduced rate increase.

Like all California insurers, Anthem had been asked by state officials to submit two rate filings for the individual market. The lower set of rates assumed that the Trump administration would continue to pay so-called cost-sharing subsidies that help low-income consumers with out-of-pocket costs. The higher rate increases, which state officials adopted on Wednesday, assume President Donald Trump might make good on his threats to end those payments.

Anthem had sought a 35.4 percent increase under the lower rate scenario and a 40.6 percent hike with a surcharge tacked on to reflect the possible loss of subsidies. That higher rate proposal was the one Anthem reduced by 3 percentage points.

The state’s examination of Anthem echoed concerns raised by the advocacy group Consumers Union in a letter to regulators on Sept. 7. The group questioned why Anthem’s projections were so much higher than its competitors’ and asked the state to demand additional documentation from the company.

Dena Mendelsohn, a staff attorney for Consumers Union in San Francisco, said she welcomed any reduction of the rate increase. “We’re glad to see the pharmacy trend was brought down during the rate review process. That is exactly why we need such a rigorous rate review process,” she said.

However, the 37.3 percent average rate increase from Anthem still “poses a real concern for consumers,” especially those who do not qualify for federal tax credits that help pay for premiums, Mendelsohn said.

Some of the follow-up information Anthem submitted to regulators about its drug costs is under seal. The insurer claimed it contained confidential trade secrets that are protected from disclosure under state law.

The Department of Managed Health Care said it was looking into whether that information can be released publicly.

Another insurer, L.A. Care Health Plan, also faced questions from the managed care department. In response, the health plan dropped its proposed rate increase in the individual market by nearly 9 percentage points, to 21.7 percent. That would generate savings of $9 million, according to the state.

L.A. Care told regulators it was able to lower its rates after getting new information about the amount of federal cost-sharing subsidies it receives.

Health Net, whose rates for some plans were reviewed by the California Department of Insurance rather than the managed care agency, cut a proposed premium increase of 23 percent for individual policies nearly in half, to 12.1 percent. That yielded an estimated savings of $15.1 million, according to the insurance department.

Overall, Molina Healthcare has the highest rate increase for 2018 among insurers selling on the Covered California exchange, at 44.7 percent. Valley Health Plan comes in lowest at 9.8 percent.

Blue Shield of California, the largest insurer in the state exchange by enrollment, fell in between at 22.8 percent. HMO giant Kaiser Permanente will charge 11.6 percent more, on average, next year. (Kaiser Health News is not affiliated with Kaiser Permanente.)

This story was produced by Kaiser Health News, which publishes California Healthline, an editorially independent service of the California Health Care Foundation.

Categories: California Healthline, Cost and Quality, Health Industry, Insurance

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Anthem Eases Up On Premium Hikes After State Scrutiny

Insurance giant Anthem Blue Cross agreed to reduce two planned premium increases for 2018 after California regulators questioned the company’s rationale for raising rates by as much as it had initially proposed.

The scaled-back rate hikes, in the individual and small-employer markets, will reduce premiums by $114 million, state officials said.

The California Department of Managed Health Care challenged Anthem’s estimates for future medical costs, in particular its prediction of a 30 percent jump in pharmacy expenses for the individual market — nearly double the estimates of two other big insurers and out of line with industry trends nationally.

As a result of the department’s intervention, the nation’s second-largest health insurer shaved 3 percentage points off its 2018 rate increase for individuals and families, still leaving a hike of 37.3 percent. That increase is the second-highest — after Molina Healthcare — among the 11 insurers that sell in the Covered California exchange. Anthem also cut its rate hike on small businesses by more than half, to 2.5 percent.

The smaller premium hikes are expected to save individuals about $21 million and small-business customers an estimated $93 million.

California’s two insurance regulators, the Department of Managed Health Care and an elected insurance commissioner, can pressure companies to reduce their rates, but neither has the authority to block rate hikes.

Shelley Rouillard, director of the managed care agency, said her department carefully scrutinizes rate filings to ensure “consumers are receiving value for their premium dollar. … Rate review is an important consumer protection and holds plans accountable to justify their rate increases.”

Anthem didn’t immediately respond to a request for comment.

Regulators said that during their review of Anthem’s small-group rates, the company updated its projection for medical spending, which resulted in a lower premium increase than originally proposed.

For the individual market, regulators at the managed care department dug deeper into Anthem’s forecast for prescription drug use and spending. “This is a much higher pharmacy trend than we have seen with other carriers and we will need sufficient documentation to consider it reasonable,” they wrote to Anthem.

In response to the state’s questions, Anthem lowered its estimate of the rise in pharmacy costs by 7 percentage points, to 23 percent. That led, in part, to the reduced rate increase.

Like all California insurers, Anthem had been asked by state officials to submit two rate filings for the individual market. The lower set of rates assumed that the Trump administration would continue to pay so-called cost-sharing subsidies that help low-income consumers with out-of-pocket costs. The higher rate increases, which state officials adopted on Wednesday, assume President Donald Trump might make good on his threats to end those payments.

Anthem had sought a 35.4 percent increase under the lower rate scenario and a 40.6 percent hike with a surcharge tacked on to reflect the possible loss of subsidies. That higher rate proposal was the one Anthem reduced by 3 percentage points.

The state’s examination of Anthem echoed concerns raised by the advocacy group Consumers Union in a letter to regulators on Sept. 7. The group questioned why Anthem’s projections were so much higher than its competitors’ and asked the state to demand additional documentation from the company.

Dena Mendelsohn, a staff attorney for Consumers Union in San Francisco, said she welcomed any reduction of the rate increase. “We’re glad to see the pharmacy trend was brought down during the rate review process. That is exactly why we need such a rigorous rate review process,” she said.

However, the 37.3 percent average rate increase from Anthem still “poses a real concern for consumers,” especially those who do not qualify for federal tax credits that help pay for premiums, Mendelsohn said.

Some of the follow-up information Anthem submitted to regulators about its drug costs is under seal. The insurer claimed it contained confidential trade secrets that are protected from disclosure under state law.

The Department of Managed Health Care said it was looking into whether that information can be released publicly.

Another insurer, L.A. Care Health Plan, also faced questions from the managed care department. In response, the health plan dropped its proposed rate increase in the individual market by nearly 9 percentage points, to 21.7 percent. That would generate savings of $9 million, according to the state.

L.A. Care told regulators it was able to lower its rates after getting new information about the amount of federal cost-sharing subsidies it receives.

Health Net, whose rates for some plans were reviewed by the California Department of Insurance rather than the managed care agency, cut a proposed premium increase of 23 percent for individual policies nearly in half, to 12.1 percent. That yielded an estimated savings of $15.1 million, according to the insurance department.

Overall, Molina Healthcare has the highest rate increase for 2018 among insurers selling on the Covered California exchange, at 44.7 percent. Valley Health Plan comes in lowest at 9.8 percent.

Blue Shield of California, the largest insurer in the state exchange by enrollment, fell in between at 22.8 percent. HMO giant Kaiser Permanente will charge 11.6 percent more, on average, next year. (Kaiser Health News is not affiliated with Kaiser Permanente.)

This story was produced by Kaiser Health News, which publishes California Healthline, an editorially independent service of the California Health Care Foundation.

Categories: California Healthline, Cost and Quality, Health Industry, Insurance

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Facebook Live: Things To Know About Trump’s Directive On Health Insurance

The executive order that President Donald Trump signed Thursday touches on a range of GOP policy approaches — such as association health plans and short-term health insurance policies, among other things. This live chat features KHN senior correspondent Julie Appleby answering questions about how implementing these ideas could alter the current health insurance marketplace.

For more in-depth conversations with KHN reporters, check out our Facebook video archive.

Categories: Insurance, Multimedia, Repeal And Replace Watch, The Health Law

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Facebook Live: Things To Know About Trump’s Directive On Health Insurance

The executive order that President Donald Trump signed Thursday touches on a range of GOP policy approaches — such as association health plans and short-term health insurance policies, among other things. This live chat features KHN senior correspondent Julie Appleby answering questions about how implementing these ideas could alter the current health insurance marketplace.

For more in-depth conversations with KHN reporters, check out our Facebook video archive.

Categories: Insurance, Multimedia, Repeal And Replace Watch, The Health Law

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Trump’s Order Advances GOP Go-To Ideas To Broaden Insurance Choices, Curb Costs

Note: This story was last updated at 12:28 p.m. ET to reflect additional information from administration officials and other comments.

The Trump administration Thursday advanced a wide-ranging executive order aimed at expanding lower-cost insurance options, allowing employers to give workers money to buy their own coverage and slowing consolidation in the insurance and hospital industries.

Critics said that, if implemented, the changes could result in more bare-bones coverage and pull healthier people out of the already struggling insurance markets, leading to higher premiums for those who remain in more-regulated coverage.

President Donald Trump’s action, which will not take effect in time to affect the upcoming open enrollment for coverage in 2018, signals a shift in the administration’s strategy, which relied on Congress to repeal the Affordable Care Act. Trump is now using the force of his executive rule-making authority to implement long-favored GOP policy alternatives.

“With Congress the way it is, I decided to take it upon myself,” Trump said in remarks at the White House earlier in the week. Senate Republicans failed within recent months to pass legislation to overhaul the ACA.

The executive order directs many agencies, including the Department of Labor, to consider proposing rules or new guidance to loosen current restrictions on what are called “association health plans” and on selling low-cost, short-term insurance.

Such rules could potentially exempt such plans for a number of the requirements of the Affordable Care Act.

This order will “help millions of Americans who have been harmed by Obamacare,” said Andrew Bremberg,  director of the Domestic Policy Council, who briefed the press.

The directive also instructs agencies to consider new regulations or guidance to:

  • Permit the practice of providing a tax-free employer contributions through health reimbursement accounts that workers could use to buy individual market plans. The Obama administration had barred that practice. This adjustment might result in more employers dropping job-based coverage and simply giving workers money to buy their own plans.
  • Report on steps federal and state governments could take to “increase choice and reduce consolidation” in the health care market. A senior administration official said Trump is concerned about the growing number of regions served by only one or two insurers or hospital systems.

Facebook Live Explainer: Things To Know About Trump’s Directive On Health Insurance

The Pros And The Cons

Associations are generally membership groups based on a profession or business. Proponents say allowing consumers to buy insurance through these organizations gives them more clout with insurers than they’d have buying their own plan on the individual market — and results in lower premiums.

But the real savings in premiums is likely to come because the policies could offer fewer benefits than more regulated ACA plans, and the associations would have more leeway to set premiums based on the health of the group.

Trump’s order is likely to please some groups, including the National Federation of Independent Business. This organization has long supported association health plans, which it says allow small businesses to buy coverage across state lines.

Not all small businesses back association health plans, though, or the idea that they need help banding together to buy coverage.

“The truth is, that’s how they get insurance today and it’s called the small group market. Every state has one,” said David Chase, spokesman for Small Business Majority, a group that supports the ACA.

“What association plans would do is actually pull people out of those small group pools and start a bunch of new pools. That doesn’t band people together,” he added.

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Critics also warn that such plans, with pared-down coverage and lower premiums, could siphon off the healthiest consumers. Older, sicker people would be left to seek health insurance through more regulated plans available through state and federal insurance marketplaces. That could cause premiums to rise more rapidly for those groups.

The combination of allowing less-regulated association plans, making it easier for employers to send workers to buy their own coverage and making short term plans more broadly available “is a concerted effort to undermine the individual market” by drawing out the healthiest consumers, said Kevin Lucia, a research professor at Georgetown’s Health Policy Institute.

Still, some employers now sitting on the sidelines might end up adding workers to that pool, countered Chris Condeluci, a Washington, D.C., attorney who previously worked for Sen. Chuck Grassley (R-Iowa) and served as counsel to the U.S. Senate Finance Committee during the drafting of the ACA.

“Some will want to give workers a chunk of change to make sure they get coverage, but not be in the game of sponsoring a [group] plan themselves,” said Condeluci.

Administration officials said Thursday that they had not studied the effect of the changes on the marketplace but might do so in the future.

Some consumer advocates also warn that association plans and short-term policies are generally less generous with benefits — and could leave some unwary consumers stuck with large medical bills. Such plans might not cover maternity care, for example, or prescription drugs.

Additionally, short-term plans can exclude paying for any preexisting medical conditions, either upfront or upon renewal, something the ACA bars for all other types of insurance.

Legal challenges to the executive order could result from these issues.

For one thing, policy experts question whether the Trump administration can allow associations broad leeway to sign up individuals, rather than following the Obama administration’s strict definition of “rare instances” in which an association would qualify as an employer offering group coverage.

Trump administration officials said that issue would be studied as part of the consideration around setting new rules, but that the law may allow self-employed individuals to join associations.

Associations want to be designated as a large group because a complex mix of laws cover employment-based insurance coverage, and rules can differ from those governing small-group or individual coverage.

Large-group plans need not cover all 10 of the ACA’s “essential health benefits,” which include things like hospitalization, drug coverage, maternity care and substance abuse treatment.

They would have to follow other rules, however, such as the ban on setting annual or lifetime limits and the rule allowing parents to keep their children on the policy until age 26.

But insurers could vary premiums for large groups based on medical claims history of the overall group, so younger, healthier groups would likely get lower premiums.

In the individual market, insurers cannot base a premium on a policyholder’s health.

A Speckled Past

Association health plans are not new. They’ve been around for decades, and Republicans have traditionally eyed them as a means to make it easier for small businesses and individuals to band together to buy insurance.

In the past, though, some had solvency problems and went bankrupt, leaving consumers on the hook with unpaid medical bills.

In several states, regulators investigated whether the plans were advertising that they had comprehensive coverage when, in fact, they provided little or no coverage for such things as chemotherapy or doctor office visits.

The ACA answered some of those concerns by setting minimum standards for coverage on most insurance policies, including association plans, which prevent them from skimping on such things as doctor visits or prescription drugs.

Their numbers fell after the sweeping law went into effect.

Meanwhile, the Trump proposal also would allow people to buy short-term plans that last up to 364 days, overturning an Obama administration rule limiting short-term policies to 90 days.

Advocates of the change have always argued that this limit simply meant people had to renew more often — and then face their deductibles all over again.

But How Will Associations Plans Fare?

Joe Antos, at the conservative American Enterprise Institute, questions how popular such plans would be with both consumers and insurers.

“The people on the left who say this will doom the exchange marketplace are, as usual, exaggerating the likely effects of this,” said Antos.

That’s because many of the approximately 9 million people who currently buy coverage through federal or state insurance marketplaces get a premium subsidy to help them purchase. They are unlikely to switch from that, he said.

The main group that it would appeal to are the additional 10 million or so who buy coverage because they don’t get it through their jobs, and don’t get a subsidy.

Key will be just what the plans cover — and what they exclude.

“They’ll only be attracted if these association plans actually provide them coverage they want at a price that is better than the exchange plans,” said Antos.

Categories: Insurance, Repeal And Replace Watch, The Health Law

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Trump’s Order Advances GOP Go-To Ideas To Broaden Insurance Choice, Hold Down Costs

President Donald Trump planned Thursday to move forward in changing U.S. health care by signing an executive order aimed at expanding low-cost insurance options, which critics say will leave some with skimpy coverage and hurt already-struggling insurance markets.

This step would signal a shift in the administration’s strategy, which relied on Congress to repeal the Affordable Care Act. Trump is now using the force of his executive rule-making authority to implement long-favored GOP policy alternatives.

“With Congress the way it is, I decided to take it upon myself,” Trump said in remarks at the White House earlier in the week. Senate Republicans failed within recent months to bring up legislation to overhaul the ACA.

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In Thursday’s directive, Trump is expected to loosen rules around policies sold through “associations,” which can be for instance, professional-affiliation groups.

While details are sparse, it could effectively exempt more insurance plans from a number of ACA requirements.

The order also will likely instruct regulators to allow insurers greater leeway in selling low-cost, short-term insurance that can exclude coverage of policyholders’ preexisting medical conditions.

“A big percentage of people will be able to get health care,” Trump said, “and it will not cost our country anything, but they’ll have great, great health insurance again.”

The Pros And The Cons

Proponents say allowing small businesses and possibly self-employed people to buy insurance through associations gives them more clout with insurers than buying their own plan on the individual market — and results in lower premiums.

But the real savings in premiums is likely to come because the policies could offer fewer benefits than more regulated ACA plans, and the associations would have more leeway to set premiums based on the health of the group.

Trump’s order is likely to please some groups, including the National Federation of Independent Business. This organization has long supported association health plans, which they say allows small businesses to buy coverage across state lines.

Critics warn that such plans, with pared-down coverage and lower premiums, could siphon off the healthiest consumers. Older, sicker people would be left to seek health insurance through more regulated plans available through state and federal insurance marketplaces. That could cause premiums to rise more rapidly for those groups.

Some consumer advocates also warn that association plans and short-term policies are generally less generous with benefits – and could leave some unwary consumers stuck with large medical bills. Such plans might not cover maternity care, for example, or prescription drugs.

Additionally, short-term plans can exclude paying for any preexisting medical conditions, either upfront or upon renewal, something the ACA bars for all other types of insurance.

Legal challenges to the executive order could result from these issues.

For one thing, policy experts question whether the Trump administration can allow associations broad leeway to sign up individuals, rather than following the Obama administration’s strict definition of “rare instances” in which an association would qualify as an employer offering group coverage.

That distinction is important because a complex mix of laws cover employment-based insurance coverage, and rules can differ from those governing small-group or individual coverage.

It could be challenging “for them to extend [this coverage] to individuals who are not associated with an employer group,” said Kevin Lucia, a research professor at Georgetown’s Health Policy Institute.

Associations prefer to be viewed as employers offering large-group coverage because then their polices need not cover all 10 of the ACA’s “essential health benefits,” which include things like hospitalization, drug coverage, maternity care and substance abuse treatment.

Insurers can also vary premiums for large groups based on medical claims history of the overall group, so younger, healthier groups would likely get lower premiums.

In the individual market, insurers cannot base a premium on a policyholder’s health.

A Speckled Past

Association health plans are not new. They’ve been around for decades, and Republicans have traditionally eyed them as a means to make it easier for small businesses and individuals to band together to buy insurance.

In the past, though, some had solvency problems and went bankrupt, leaving consumers on the hook with unpaid medical bills.

In several states, regulators investigated whether the plans were advertising that they had comprehensive coverage when, in fact, they provided little or no coverage for such things as chemotherapy or doctor office visits.

The ACA answered some of those concerns by setting minimum standards for coverage on most insurance policies, including association plans, which prevents them from skimping on such things as doctor visits or prescription drugs.

Their numbers fell after the sweeping law went into effect.

Meanwhile, the Trump proposal also would allow people to buy short-term plans that last up to 364 days, overturning an Obama administration rule limiting short-term policies to 90 days.

Advocates of the change have always argued that this limit just meant people had to renew more often — and then face their deductibles all over again.

But How Will Associations Plans Fare?

Joe Antos, at the conservative American Enterprise Institute, questions how popular such plans would be with both consumers and insurers.

“The people on the left who say this will doom the exchange marketplace are, as usual, exaggerating the likely effects of this,” said Antos.

That’s because many of the approximately 9 million people who currently buy coverage through federal or state insurance marketplaces get a premium subsidy to help them purchase. They are unlikely to switch from that, he said.

The main group that it would appeal to are the additional 10 million or so who buy coverage because they don’t get it through their jobs, and don’t get a subsidy.

Key will be just what the plans cover — and what they exclude.

“They’ll only be attracted if these association plans actually provide them coverage they want at a price that is better than the exchange plans,” said Antos.

Critics of ACA rules requiring policies to cover maternity care or mental health conditions have always cited these dictates as a reason for high premiums. Antos noted, though, that those costs pale when compared with the expense of what most people want, such as coverage for hospitalization.

“That’s really expensive,” said Antos. “But no one wants coverage that excludes hospitalization.”

So, insurers — if they even want to back association coverage — may end up offering coverage “that will look a lot like the exchange plans,” Antos said.

Categories: Insurance, Repeal And Replace Watch, The Health Law

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Overlooked By ACA: Many People Paying Full Price For Insurance ‘Getting Slammed’

Paul Melquist of St. Paul, Minn., has a message for the people who wrote the Affordable Care Act: “Quit wrecking my health care.”

Teri Goodrich, of Raleigh, N.C., has the same complaint. “We’re getting slammed. We didn’t budget for this,” she said.

Millions of people have gained health insurance because of the federal health law. Millions more have seen their existing coverage improved.

But one small slice of the population — including Melquist and Goodrich — are unquestionably worse off. They are healthy people who buy their own coverage but earn too much to qualify for help paying their premiums. And the premium hikes that are being announced as enrollment looms for next year — in some states, increases topping 50 percent — will make their situations more miserable.

Exactly how big is this group? According to Mark Farrah Associates, a health care analysis firm, as of 2017 there were 17.6 million people in the individual market, 5.4 million of whom bought policies outside the health exchanges, where premium help is not available. Combine that with the percentage of people who bought insurance on the exchanges but earned too much (more than four times the federal poverty level, or about $48,000 for an individual) to get premium subsidies, and the estimate is 7.5 million, or 43 percent of the total individual market purchasers, according to insurance industry consultant Robert Laszewski.

And who are these people?

“They’re early retirees,” said Laszewski. “They’re people working part time who have substantial outside income. They’re people who are self-employed of any age, people who are small employers.”

Melquist is one of those early retirees. He and his wife are both 59. He worked in the defense industry and retired at the end of 2016.

He said he always planned to retire at age 55, but ended up working longer in part because he knew health insurance costs were rising. When he did retire and sought to purchase coverage for himself and his wife, “I was shocked to find out how bad it actually was.”

Paul and Nancy Melquist of St. Paul, Minn., both 59, retired last year and were nervous about insurance costs, but he says they were “shocked to find out how bad it actually was.” (Family photo)

For a bronze-level plan with a health savings account, Melquist said, “we pay $15,000 a year” in premiums “and the first $6,550 [for health care expenses] for each of us comes out of our pocket. So basically you could be looking at $30,000 out-of-pocket before anything gets covered.”

Insurance is important, Melquist said, particularly if a catastrophic health issue were to hit either of them. In the meantime, he can still pay the bills. But he’s frustrated. “I’m not eating dog food, but I’m also not able to do stuff for my grandchildren,” he said, like help with college costs. “It’s not that my life is falling apart, but the [Affordable Care Act] has ruined a lot of things I’d like to have done.”

The good news, if there is any, for Melquist is that premiums in Minnesota are going up by only small amounts for 2018, and in some cases going down, due to a reinsurance program passed by the state legislature that will help cover the costs for some of the state’s sickest patients in the individual market. That helps keep premiums from spiking even more.

But that won’t be the case in Raleigh, where Goodrich and her husband, John Kistle, work as private consultants in the energy industry.

Goodrich, 59, and Kistle, 57, bought insurance through the ACA exchange in their state for three years. When premiums reached $1,600 per month with deductibles of $7,500 each, however, “it was just unbelievable. We decided just not to get insurance,” Goodrich said.

Eventually, they bought short-term plans that cover only catastrophic illness or injury. That insurance is not considered adequate under the ACA, so the couple could be liable for a tax penalty as well.

Teri Goodrich and her husband, John Kistle, of Raleigh, N.C., gave up their expensive marketplace health insurance and bought short-term plans that cover only catastrophic illness or injury, even though that might leave them open to penalties under the federal health law. (Family photo)

Goodrich, who volunteers to help people with their taxes in her spare time, said she has run the numbers and thinks that insurance is so expensive where she lives that the couple will be exempt from the penalty. That’s because the cheapest insurance would cost the couple more than 8.16 percent of their income. Under the health law’s provisions, the penalty does not apply above that because insurance is considered unaffordable.

“We try to be good citizens and do the right thing,” she said. “Next year, we’re trying to figure out how to make less than $64,000 so we can get subsidies.” That amount is equal to 400 percent of the federal poverty line for two people, the cutoff for premium assistance because Congress assumed those who earned more could afford to buy affordable coverage.

Sabrina Corlette, a research professor at Georgetown University who specializes in health insurance, agreed that this is a population “that faced big hikes” in premiums when the health law took effect.

But, she said, in many cases people in the individual market were previously paying artificially low premiums. Some of those old policies had substandard coverage. For others, however, the higher prices are the result of one of the fundamental changes enacted by the health law. “These are folks who were benefiting from a system that was affordable solely because insurers were able to keep sick people out,” Corlette said, adding that they are now being asked “to pay more of the true cost of health care.”

This is a population that is also more likely to vote Republican, said Laszewski, “which is one of the grand ironies now.”

Republicans in Congress and President Donald Trump have not been able to “repeal and replace” the health law. But some of their efforts are undermining it — primarily the administration’s threat to stop paying billions of dollars to insurers in subsidies help some lower-income people pay their out-of-pocket costs. The uncertainty surrounding those subsidies has led insurers to boost premiums next year by an estimated 20 percent. Those who get premium help from the government won’t have to pay more. But those who are paying the full freight will.

Also driving up premiums for next year, said Corlette, are the administration’s threats not to enforce the individual requirement for insurance and its decision to cancel most advertising and outreach for the year’s open-enrollment period that begins Nov. 1. Both of those provisions bring more healthy people into the insurance pool to help spread costs.

“One could argue that the 2014 premium increases were painful, but it was about getting us to a system that was more fundamentally fair and just,” Corlette said. “Now, it’s completely unnecessary price increases for unsubsidized folks that could so easily be avoided by a rational political system.”

Categories: Health Care Costs, Insurance, The Health Law

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Overlooked By ACA: Many People Paying Full Price For Insurance ‘Getting Slammed’

Paul Melquist of St. Paul, Minn., has a message for the people who wrote the Affordable Care Act: “Quit wrecking my health care.”

Teri Goodrich, of Raleigh, N.C., has the same complaint. “We’re getting slammed. We didn’t budget for this,” she said.

Millions of people have gained health insurance because of the federal health law. Millions more have seen their existing coverage improved.

But one small slice of the population — including Melquist and Goodrich — are unquestionably worse off. They are healthy people who buy their own coverage but earn too much to qualify for help paying their premiums. And the premium hikes that are being announced as enrollment looms for next year — in some states, increases topping 50 percent — will make their situations more miserable.

Exactly how big is this group? According to Mark Farrah Associates, a health care analysis firm, as of 2017 there were 17.6 million people in the individual market, 5.4 million of whom bought policies outside the health exchanges, where premium help is not available. Combine that with the percentage of people who bought insurance on the exchanges but earned too much (more than four times the federal poverty level, or about $48,000 for an individual) to get premium subsidies, and the estimate is 7.5 million, or 43 percent of the total individual market purchasers, according to insurance industry consultant Robert Laszewski.

And who are these people?

“They’re early retirees,” said Laszewski. “They’re people working part time who have substantial outside income. They’re people who are self-employed of any age, people who are small employers.”

Melquist is one of those early retirees. He and his wife are both 59. He worked in the defense industry and retired at the end of 2016.

He said he always planned to retire at age 55, but ended up working longer in part because he knew health insurance costs were rising. When he did retire and sought to purchase coverage for himself and his wife, “I was shocked to find out how bad it actually was.”

Paul and Nancy Melquist of St. Paul, Minn., both 59, retired last year and were nervous about insurance costs, but he says they were “shocked to find out how bad it actually was.” (Family photo)

For a bronze-level plan with a health savings account, Melquist said, “we pay $15,000 a year” in premiums “and the first $6,550 [for health care expenses] for each of us comes out of our pocket. So basically you could be looking at $30,000 out-of-pocket before anything gets covered.”

Insurance is important, Melquist said, particularly if a catastrophic health issue were to hit either of them. In the meantime, he can still pay the bills. But he’s frustrated. “I’m not eating dog food, but I’m also not able to do stuff for my grandchildren,” he said, like help with college costs. “It’s not that my life is falling apart, but the [Affordable Care Act] has ruined a lot of things I’d like to have done.”

The good news, if there is any, for Melquist is that premiums in Minnesota are going up by only small amounts for 2018, and in some cases going down, due to a reinsurance program passed by the state legislature that will help cover the costs for some of the state’s sickest patients in the individual market. That helps keep premiums from spiking even more.

But that won’t be the case in Raleigh, where Goodrich and her husband, John Kistle, work as private consultants in the energy industry.

Goodrich, 59, and Kistle, 57, bought insurance through the ACA exchange in their state for three years. When premiums reached $1,600 per month with deductibles of $7,500 each, however, “it was just unbelievable. We decided just not to get insurance,” Goodrich said.

Eventually, they bought short-term plans that cover only catastrophic illness or injury. That insurance is not considered adequate under the ACA, so the couple could be liable for a tax penalty as well.

Teri Goodrich and her husband, John Kistle, of Raleigh, N.C., gave up their expensive marketplace health insurance and bought short-term plans that cover only catastrophic illness or injury, even though that might leave them open to penalties under the federal health law. (Family photo)

Goodrich, who volunteers to help people with their taxes in her spare time, said she has run the numbers and thinks that insurance is so expensive where she lives that the couple will be exempt from the penalty. That’s because the cheapest insurance would cost the couple more than 8.16 percent of their income. Under the health law’s provisions, the penalty does not apply above that because insurance is considered unaffordable.

“We try to be good citizens and do the right thing,” she said. “Next year, we’re trying to figure out how to make less than $64,000 so we can get subsidies.” That amount is equal to 400 percent of the federal poverty line for two people, the cutoff for premium assistance because Congress assumed those who earned more could afford to buy affordable coverage.

Sabrina Corlette, a research professor at Georgetown University who specializes in health insurance, agreed that this is a population “that faced big hikes” in premiums when the health law took effect.

But, she said, in many cases people in the individual market were previously paying artificially low premiums. Some of those old policies had substandard coverage. For others, however, the higher prices are the result of one of the fundamental changes enacted by the health law. “These are folks who were benefiting from a system that was affordable solely because insurers were able to keep sick people out,” Corlette said, adding that they are now being asked “to pay more of the true cost of health care.”

This is a population that is also more likely to vote Republican, said Laszewski, “which is one of the grand ironies now.”

Republicans in Congress and President Donald Trump have not been able to “repeal and replace” the health law. But some of their efforts are undermining it — primarily the administration’s threat to stop paying billions of dollars to insurers in subsidies help some lower-income people pay their out-of-pocket costs. The uncertainty surrounding those subsidies has led insurers to boost premiums next year by an estimated 20 percent. Those who get premium help from the government won’t have to pay more. But those who are paying the full freight will.

Also driving up premiums for next year, said Corlette, are the administration’s threats not to enforce the individual requirement for insurance and its decision to cancel most advertising and outreach for the year’s open-enrollment period that begins Nov. 1. Both of those provisions bring more healthy people into the insurance pool to help spread costs.

“One could argue that the 2014 premium increases were painful, but it was about getting us to a system that was more fundamentally fair and just,” Corlette said. “Now, it’s completely unnecessary price increases for unsubsidized folks that could so easily be avoided by a rational political system.”

Categories: Health Care Costs, Insurance, The Health Law

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