Many of the 200,000 Louisiana residents with “Obamacare” health care coverage face rate hikes in 2016, averaging from 6.4 to 29.5 percent. But some consumers complain their premiums will double while their out-of-pocket costs skyrocket.
“Not only are the rates going up, the plans have less doctors, and there are higher deductibles. The plans just aren’t as good as they were last year,” said B. Ronnell Nolan, president and chief executive officer of Health Agents for America. “I had a gentleman call me who said his doubled in price, and he was going to have to decide whether he could send his child to college or buy insurance.”
Nolan said health agents from across the nation are reporting rates that doubled and even tripled.
Consumers who qualify for federal financial help won’t necessarily see their share of premiums jump as much as the average increase, said Tricia Brooks, a senior fellow at the Center for Children and Families at the Georgetown University Health Policy Institute. That’s because a consumer’s share of the premiums is tied to their household income.
“If individuals choose the benchmark silver plan, they’re largely protected from those big increases in rates because they’re going to pay a flat percentage of their income,” Brooks said.
The benchmark plan is the second-lowest cost silver plan. Silver plans cover 70 percent of costs. In Louisiana, premiums for those plans will increase an average of 8.6 percent in 2016, according to the U.S. Department of Health and Human Services. By comparison nationally, benchmark plan rates will rise an average of 7.5 percent.
Premiums for private insurance that companies offer their workers are also expected to increase modestly. Accounting giant Pricewaterhouse Coopers’ Health Research Institute projects a 6.5 percent increase nationally. Others have estimated increases ranging from 5 percent to 8 percent.
Open enrollment for Affordable Care Act plans started Nov. 1. and ends Jan. 31.
Nolan said the subsidies can offset much of the rate increases for people who qualify; people who make more than 400 percent of federal poverty level — $47,080 for an individual — aren’t protected.
“Outside 400 percent are getting the higher rates, the reduced network and the bad plans,” Nolan said. “The ones inside are just getting the reduced network and the bad plans.”
Baton Rouge accountant Wayne Barineau is one of the consumers who’s already experiencing sticker shock.
Barineau, 64, said the rate increases are actually much greater than they appear on the surface because of other changes.
For 2015, Barineau and his wife bought a platinum plan offered by Blue Cross and Blue Shield of Louisiana, the state’s largest insurer. Under the HMO Louisiana Community Blue policy, the Barineaus paid no deductible for in-network care or prescriptions, while their out-of-pocket expenses were capped at $2,000.
But two weeks ago, Barineau received a letter from Blue Cross saying the company had scrapped the platinum plan. Instead, Blue Cross offered a gold plan with a combined $2,000 deductible for in-network care and a $1,000 deductible for prescriptions. Out-of-pocket costs would be capped at $10,000.
Barineau said his wife’s health means that they always reach their deductible. The $317 a month they will save on premiums won’t offset the increased out-of-pocket costs, he said.
“I mean, that’s a big deal when you’re talking out-of-pocket going from $3,000 to $10,000,” Barineau said.
Barineau said even with the much higher rates, he and his wife fare better under the Affordable Care Act than in the past. In 2013, before the federal exchange opened, the Barineaus were paying around $1,400 a month for coverage that offered fewer benefits.
Obamacare, he said, has virtually saved his family from financial disaster and enabled his wife to get care the Barineaus couldn’t afford otherwise.
Barineau reserved his criticism for Blue Cross. The insurer recently touted the success of its Quality Blue program, which focuses on managing care for chronically ill patients, boasting that it reduced costs by $25 per patient per month.
If that’s the case, Barineau said, why aren’t those savings being passed along?
Steve Picou, senior vice president at NOLAVibe.com, an eco-consulting firm, said his Blue Cross renewal notice shows his Blue Connect gold plan’s monthly premiums will jump 71 percent, from $171 to $292, while his subsidies remain the same.
Picou said his only claims this year were for an annual physical and blood work.
“Isn’t it incredible that they have the ability to just willy-nilly double premiums? It’s mind-boggling,” Picou said.
In his company blog, Blue Cross and Blue Shield of Louisiana health care economist Michael Bertaut says patients’ share of costs have increased because of adjustments by the federal government.
Bertaut cites two examples, both of which show deductibles increasing by more than 40 percent over the previous year.
Those kinds of changes mean consumers should look past premiums and consider deductibles, co-payments, coinsurance rates and other out-of-pocket costs before picking a plan, Bertaut said. Consumers should consider using a licensed agent to help them find a plan.
The Louisiana Department of Insurance doesn’t have the authority to block rate increases, or decreases, by health insurers. The department reviews the filings to make sure they are statistically justified. This year, for example, a department review resulted in Humana dropping its average rate increase for 2016 from a planned 14.8 percent to 6.4 percent.
Blue Cross’s filings with the Insurance Department show the maximum increase for the Blue Connect plan is 18.8 percent and 18.7 percent for Community Blue. The company is eliminating platinum levels for most plans.
An Insurance Department spokeswoman said consumers who see increases like Picou’s should file a complaint with the department’s Consumer Services division. Consumers can file a complaint online at www.ldi.la.gov, print out a form from the website or request a form by calling (800) 259-5300.
Blue Cross spokesman John Maginnis said the average increase for the company’s Affordable Care Act individual plans is around 15 percent, although there can be outliers.
Some people may have been covered by transitional plans, which didn’t provide the richer benefits required under the Affordable Care Act. Those plans are no longer allowed, so the switch to ACA-compliant coverage may boost those consumers’ costs.
The rate increases affect 175,000 individual members, who buy their own insurance through the online federal marketplace or directly from Blue Cross or an agent.
“For most plans in our individual market, we pay more for their health care, taxes and expenses than we get through their premium payments, and these plans are losing millions,” Maginnis said in a prepared statement.
Blue Cross does not offer specifics by line of business. The company offers individual policies through the main company and subsidiary HMO Louisiana. In filings with the state Insurance Department, Blue Cross reported net income of $23.9 million for the first half of 2015, which included a $5.2 million loss by HMO Louisiana. However, those numbers include the results of individual and also its group plans, which generate much higher margins.
Blue Cross earned $310.6 million in premiums for individual plans and paid out more than 91 percent of that for health services. Once administrative costs, taxes and other expenses are factored in, Blue Cross projects millions in losses on individual plans.
Maginnis emphasized that Blue Cross is strong financially and can easily absorb those losses, but the company can’t do so forever.
Insurance Department records show Blue Cross ended 2014 with a $1.1 billion surplus.
Maginnis said the primary driver of the 2016 rate increases is the Affordable Care Act.
Among other things, the Affordable Care Act doesn’t do enough to encourage healthy people to buy coverage, while allowing people to buy coverage outside the open enrollment period, Maginnis said.
Both issues mean that the consumers who do enroll are the ones who need health care, which drives up costs, he said. Allowing people to claim “special circumstances,” such as a job loss or marriage, without proof lets people buy health coverage on demand — after they’re diagnosed with an illness or learn they need surgery, he said.
Meanwhile, officials with the U.S. Department of Health and Human Services say rate increases, such as those experienced by Barineau and Picou, show the importance of shopping for coverage.
An HHS report shows Louisiana consumers who re-enrolled in the marketplace and bought the same level of coverage, but switched plans, saved $699 a year after tax credits. In total, returning marketplace consumers who switched in Louisiana saved $11.4 million in 2015, and HHS expects similar deals will be available for 2016.
“Our message to returning marketplace customers in Louisiana is simple: Shopping may save you money,” HHS Secretary Sylvia Burwell said in a news release.