Questions over federal funding driving Blue Cross request for ACA premium increase
Posted May 25
Durham, N.C. — Blue Cross Blue Shield of North Carolina on Thursday requested 22.9 percent premium increase on health plans offered on the HealthCare.gov marketplace, attributing much of the increase over uncertainty created by the health plan recently passed by the U.S. House.
The state's largest health insurer – and the only company to offer Affordable Care Act plans in all 100 North Carolina counties – said it still could scale back its participation in the marketplace next year, depending on how much of a rate increase state regulators approve.
"Our filing does not guarantee our participation in offering plans," Brian Tajlili, director of actuarial and pricing services for Blue Cross, said in a statement.
Blue Cross has lost more than $460 million on ACA plans over the last three years, primarily due to payouts for medical care and prescription drugs because the people who enrolled in the plans were older and sicker than expected. Although Tajlili said costs again played a role in the proposed rate increase for 2018, the biggest driver is the expected loss in federal reimbursement of its cost-sharing reductions, or CSR, to help low- and moderate-income enrollees with out-of-pocket expenses.
CSR funding must be authorized by Congress, and the American Health Care Act, which is awaiting U.S. Senate action, doesn't include any provisions for it. That means insurers, who still must offer the plans next year, have to spread out the unreimbursed costs among other ACA enrollees.
"In our view, with so many North Carolinians struggling to afford health care, the 2018 increase is still too steep, but higher premiums are necessary because key federal funding for health coverage appears to be going away," Blue Cross Chief Executive Brad Wilson wrote in a blogpost on the company's website.
"ACA plans with cost-sharing reductions are a lifeline for people who qualify for them. The lower costs can often mean the difference between seeking medical care or not," Wilson wrote. "If the federal funding disappears, who makes up for that? Policyholders. That’s because premiums have to go up to cover those costs. Otherwise, insurers would not be able to sustain that business over the long haul."
The federal government paid Blue Cross about $200 million in CSR reimbursements in 2016, he said.
With CSR, officials estimated that premiums would have gone up only 8.8 percent next year.
A tax on health insurers also accounted for part of the proposed increase, officials said. The ACA mandated the tax since 2014, but Congress temporarily suspended it two years ago, meaning that 2017 premiums were slightly lower, they said.
Last year, the state Department of Insurance granted Blue Cross a 24.3 percent rate increase for 2017 coverage.