Health exchange premiums to rise 48 percent

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Blue Cross Blue Shield of Wyoming, the state’s only insurer under the Affordable Care Act, plans to raise its premiums 48 percent next year for customers who buy their health care insurance through the federal exchange.

The increase, which was announced this past week, is a response to lingering uncertainty about how Congress and President Donald Trump will repeal, reform or replace the ACA in the coming year, said Blue Cross Blue Shield spokeswoman Wendy Curran.

“This kind of increase would be devastating to the people who rely on the exchange,” said state Rep. Dr. Timothy Hallinan, R-Gillette. “I think enrollment would go down as a result of such an increase because people would drop their insurance and take a chance with not having it. The premiums are already high, and this kind of increase could be unaffordable.”

Campbell County Health also sees such a dramatic premium increase as making health care less affordable for Wyoming residents. If people have higher premiums, it is possible they will be able to pay less of their health care bills. In turn, Campbell County Health would see an increase in its bad debt and charity care, said CEO Andy Fitzgerald.

Blue Cross Blue Shield plans to raise its premiums because it does not know whether the federal government will continue to reimburse insurance companies for the cost-sharing reductions it provides to customers, Curran said.

Under the ACA, insurers must pay in advance to reduce the out-of-pocket health care costs for low-income patients, and the federal government later reimburses insurance companies for these costs. Since Trump took office, the government has paid cost-sharing reductions on a monthly basis without making a future commitment, worrying insurers that the government will stop subsidizing low-income customers.

In the past week, Trump has also made statements that he will stop paying cost-share reductions.

If the government stopped these reimbursements, Blue Cross Blue Shield would still be legally required to offset health care costs for low-income customers, Curran said. To make up for the money it would no longer receive from the government, Blue Cross Blue Shield would have to raise its premiums.

In 2017, 56 percent of Wyoming residents who bought insurance through the health care exchange qualified for cost-saving reductions.

There also is uncertainty about the number of healthy people who will enroll in the exchange next year, Curran said. Currently, the ACA individual mandate requires people to buy insurance or to pay a fine. This is the government’s way of encouraging healthy people to enroll in the exchanges, offsetting the costs of more expensive customers like those who are chronically ill.

However, the IRS announced earlier this year that it would accept tax forms without proof of health care coverage. People still have to pay the individual mandate fines, but the IRS will no longer delay tax returns when people don’t provide insurance information.

All plans for repeal, replacement or reform of the ACA that went before Congress in the last few months included provisions for elimination or non-enforcement of the individual mandate.

By loosening the rule, healthy people might be less inclined to purchase insurance, which in turn, would increase premiums for those who remain on the exchange, Curran said.

Minor contributions to the premium increase are the rising cost of prescription drugs and a 3 percent premium tax, which was not enforced in 2017 but will be in effect in 2018, she said. In 2017, Blue Cross Blue Shield paid out more in claims to exchange customers than it took in from premiums.

“This can be explained by Wyoming’s high health care costs as a rural state and by people buying insurance who didn’t have it before,” Curran said. “These people might not have had insurance for a while, so there was a pent-up demand, and they many have used more services initially.”

Some of the 2018 premium increase can be attributed to trying to close this gap between premiums and claims, she said.

The proposed 2018 premium increase is the highest annual hike Blue Cross Blue Shield has had under the ACA. In 2017, Blue Cross Blue Shield premiums increased about 10 percent from 2016, Curran said.

However, she emphasized that just because premiums may increase 48 percent, most customers will not pay the full increase. About 70 percent of the 24,826 Wyoming residents who received insurance through the exchange in 2017 qualify for subsidies to pay part of their premiums, Curran said. These subsidies will increase to reflect the rise in premiums.

“This means the majority of customers will not feel the full effect of the premium increase,” she said.

Blue Cross Blue Shield cannot officially set its 2018 premiums until the government approves the proposed increase, which will likely happen by the end of September, Curran said.

Wyoming isn’t the only state seeing a significant increase in insurance premiums for 2018. Across the United States, insurance companies are responding to national health care uncertainty by raising premiums or leaving the exchange.

The extent of the premium increases and the insurers leaving the exchanges are not yet known because insurers are filing proposed premiums for 2018.

“I wish we had more answers we need from Washington,” Curran said. “That would make it a lot easier for us and the people in Wyoming.”