Across North Carolina, thousands of people have been shocked in recent weeks to find out their health insurance plans will be canceled at the end of the year – and premiums for comparable coverage could increase sharply.
One of them is George Schwab of Charlotte, who pays $228 a month for his family’s $10,000 deductible plan from Blue Cross and Blue Shield of North Carolina.
In a Sept. 23 letter, Blue Cross notified him that his current plan doesn’t meet benefit requirements outlined in the Affordable Care Act and suggested a comparable plan for $1,208 a month – $980 more than he now pays.
“I’m 62 and retired,” Schwab said. “This creates a tremendous financial burden for our family.
“The President told the American people numerous times that… ‘If you like your coverage, you can keep it,’” Schwab said. “How can we keep it if it has been eliminated? How can we keep it if the premium has been increased 430 percent in one year?”
Schwab and others who purchase insurance individually, and not through employer-sponsored group plans, are finding that the Affordable Care Act may be unaffordable for their families.
The new law, which rolled out to consumers this week with the opening of the online insurance marketplace, requires most Americans to buy insurance or pay a fine. It also sets minimum standards for health benefits and prohibits insurers from excluding or charging higher premiums for people who have pre-existing medical conditions.
“There’s good and bad in the law,” said Chris Blount, a Blue Cross agent wth Piedmont Benefits Group in Charlotte. “I think it’s bad that we can’t have as many choices as we’ve had before. But it’s not like you’re having to pay more and getting less. You’re having to pay more, and you’re getting more.”
Under the new law, all insurance plans must cover 10 “essential health benefits,” including maternity care and pediatric dental and vision care. Plans must also provide certain preventive services, such as mammograms and colonoscopies for free.
Today, people who buy individual policies often choose plans without maternity coverage, for example, to reduce premiums. That choice is gone, too.
“Now maternity is loaded into everybody’s plan,” Blount said.
That means men will generally be paying more than they did before. But women, who can no longer be charged more just for being female, will probably pay less.
Using Blue Cross rates, Blount calculated two examples: The premium for a “middle of the road” plan for a 25-year-old healthy male will increase from $124 per month to $240. But the premium for a 25-year-old female will drop from $378 to $240 per month.
People like Schwab may face “huge increases … because they’re having to buy lower deductibles,” Blount said. But they will benefit from having better coverage and lower out-of-pocket costs, he said.
But Blount agreed with Schwab that the president shouldn’t have made promises he couldn’t keep. Consumers are able to keep the insurance they have if their policies were written before, and not changed since, the law went into effect in March 2010.
“That’s one thing that really bothers me about all of this,” Blount said. “He didn’t just say it once. He said it a lot.”
Hit by big increases
Blue Cross spokesman Lew Borman said Friday that large premium increases will affect about one-third of the approximately 400,000 North Carolina customers who buy Blue Cross insurance in the individual market. Some of their policies were canceled because they didn’t meet the new federal standards, he said.
The other two-thirds of individual customers have policies that are “grandfathered” and will have smaller premium increases similar to recent years.
Those who got notices about large increases should go to the insurance exchange and compare plans, Borman said. In North Carolina, Blue Cross and Coventry Health Care of the Carolinas are offering a total of 51 plans from the least expensive “bronze” model to the most expensive “platinum” plans.
“We have 26 plans on the exchange and an equal number or more off the exchange,” Borman said. “They just need to take a look and do some research about what kind of plan is appropriate.”
Adam Linker, a policy analyst at the North Carolina Health Access Coalition, said the Blue Cross letters are scaring people unnecessarily.
“What people need to do is ignore the price that’s on those letters,” Linker said. “That’s just Blue Cross trying to guess at what may be a comparable plan.
“People just need to go shop for insurance in the marketplace and find plans that are probably more comprehensive than what they had and are much less expensive than Blue Cross is saying their new price would be.”
Those who buy insurance through the exchange may also qualify for federal subsidies that can make the premiums more affordable, Linker said. The subsidies are tax credits that are available to individuals who make between $11,490 and $45,960 per year. Families of four who make between $23,550 and $94,200 can qualify for subsidies.
Steve Graybill, a senior benefits consultant in Mercer’s Charlotte office, said the “new world of health care reform” is disrupting some people’s lives more than others’, depending on where they live. For example, in Massachusetts and New York, where state insurance requirements were similar to the new federal benefit requirements, changes in premiums are less drastic.
Another reason premiums are higher in North Carolina, Graybill said, is the lack of competition among health care providers. For example, Carolinas HealthCare System and Novant Health – the two major providers in Charlotte – have large networks of hospitals and doctors that cross state lines. They are able to use their size to leverage better reimbursement contracts with insurance companies.
“Ninety percent of the care (in North Carolina) is controlled by seven health care systems,” Graybill said.
Michael Hood, 46, who lives near Winston-Salem, is another of the Blue Cross customers who is suffering sticker shock after receiving a recent renewal letter.
He and his wife, who is expecting their third child, now pay $324 per month for a plan with a $10,000 family deductible. The comparable plan suggested by Blue Cross for next year would cost $895.27 per month with an $11,000 family deductible. Their annual payment would rise from $14,000 to $24,000.
Self-employed as part owner of a medical device distributorship, Hood said he and his wife “try to live a healthy lifestyle and keep our medical costs down.” They chose the high-deductible plan to keep their premium low.
Hood said his income is about $85,000 a year, which would mean he might be able to qualify for a subsidy. He said he checked the online marketplace, which has been operating only sporadically this week, and didn’t think it looked like his family would be eligible.
One of the pluses of any new plan is that it will cover maternity care, which his current plan doesn’t. But “is that really worth paying $1,000 a month more for?”
“I’m angry that legislation has been passed that is forcing me to purchase something that otherwise I would not have to purchase,” Hood said.
“The president told us Obamacare would make health insurance affordable and reduce costs. It is now impossible for our family to afford private health insurance.”