Health insurance rates are going up an average 10% in the individual marketplace in Louisiana in 2020, reversing a drop in premium costs that policyholders experienced this year.
On average, rates are going down 4% in 2020 among states served by the federal healthcare.gov website. About a dozen states run their own sign-up websites, but most like Louisiana rely on the healthcare.gov market, the web portal created by the Obama-era Affordable Care Act. Annual enrollment in the program starts Nov. 1 for 2020 coverage. The program offers income-based, taxpayer-subsidized private health insurance plans for people who aren't covered on the job.
Frank Opelka, Louisiana's deputy commissioner for life, health and annuity, said one reason the state is bucking the national trend is that most states had an increase between 2018 and 2019 when Louisiana saw a 6.4% drop.
Opelka also noted that some states adopted reinsurance programs targeted to reduce the individual market premiums; Louisiana did not.
Legislation to establish a reinsurance program in Louisiana failed in 2018 after criticism from business owners that it would add another tax in the form of a fee businesses would pay toward a larger pool of money.
“We saw our correction a year before most states, so this year we’re seeing rate growth consistent with medical cost trend plus the reintroduction of the federal health insurance tax,” Opelka said.
Those account for the 8% and 2% increase, respectively, that policyholders will see for 2020, he said.
More than two dozen states will see average premiums drop, and of those six will see a decline in the double digits. Only Indiana and New Jersey expect to increase rates by more than Louisiana, with 11% and 13%, respectively.
In Louisiana, the market is dominated by Blue Cross and Blue Shield of Louisiana, which has 88,000 health care policyholders in the individual health care market. In 2020, Blue Cross and Blue Shield plans to increase insurance premiums.
Former President Barack Obama's namesake law will be 10 years old in 2020.
"We showed our commitment early by being among the first to join the exchange and have remained while other national health plans left this market," Blue Cross said in a statement.
Blue Cross had decreased 2019 rates for most of its policyholders in the individual market. The company said several factors are contributing to 2020's increase, including claims costs, the health insurance tax and higher drug prices.
The health tax was previously suspended, but the estimated cost of the tax for 2020 is $90 million for Blue Cross and Blue Shield of Louisiana, the company said.
There are some competitors on the exchange. Earlier this year, Christus Health Plan Louisiana entered the individual exchange for 2020 coverage. But its policies are limited to Shreveport, Lake Charles and Alexandria areas, where it has a hospital network. Vantage Health is also on the exchange, but it was acquired by Blue Cross and Blue Shield.
Opelka said small factors in the premium increase in Louisiana could be "some limited increase in population risk as well as the ACA individual market continues to shrink."
The insurance premium averages projected this week by the Centers for Medicare and Medicaid Services are based on coverage cost changes for a 27-year-old nonsmoker who buys a standard plan on the individual exchange. This low-cost midrange plan for the individual would cost about $374 a month next year on average. By comparison, it would cost $410 for the same individual in Louisiana.
The law's income-based subsidies can drop that to around $50 or so.
However, people who don't qualify for income-based assistance must pay full price, and that's before any deductibles and copays. Unsubsidized customers may just decide to go uninsured, particularly if they're healthy.
Louisiana has seen an overall 42% increase in premiums between 2016 and 2020 for the hypothetical 27-year-old's plan.
Monthly premiums for a family of four will be about $1,600 a month in 2020 across Louisiana, up from $1,449 in 2019.
Lack of competition could be an issue in Louisiana.
"Other states are seeing more insurance companies join their marketplace," said B. Ronnell Nolan, president and CEO of the Health Agents for America.
The CMS noted that an additional 20 insurers will participate for 2020, expanding consumer choice in many states. Nearly 70 percent of customers will have three or more insurers from which to pick a plan.
There may be another effort to create a reinsurance program again next legislative session, Nolan said.
"It's something that could bring our rates down," Nolan said. "Right now it looks like the rates are going to continue to increase unless there is some kind of competition or if there was a reduction in tax."
Delaware, North Dakota and Montana were all approved for a five-year waiver by CMS until 2024 to operate reinsurance programs in an effort to reduce average premiums. In Delaware, its $26.9 million reinsurance program contributed to a 20% decline in premiums for that hypothetical 27-year-old’s plan between 2019 and 2020.
In Louisiana, there was more competition for Medicaid contracts, which included companies that had previously dropped out of the individual market exchange. Some states are considering legislation that would disallow companies' cherry picking by only selling into Medicaid but not the individual exchange.
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