Not too long after the Department of Health and Human Services (DHHS) released its sixth and final monthly report on how many people went shopping for an Obamacare-compliant plan in the individual market, Blue Cross and Blue Shield of North Carolina (BCBSNC) provided a first glimpse of its very own enrollment mix. I’d like to thank Blue Cross and Blue Shield for assessing its exchange pool based on its true enrollees — those 232,000 policyholders who have paid their first month’s premiums through May 1. Job well done.
Last Friday, Barbara Morales Burke, Blue Cross and Blue Shield of North Carolina’s VP of Health Policy, presented some critical information that reaffirms projections made by health policy experts since before the health insurance exchanges opened for business in October 2013.
"Blue Cross (Affordable Care Act) customers are older, have more chronic conditions than we anticipated than when we set rates for 2014 last year," she said. "So when we set rates this year for 2015 ACA plans, those rates will need to be higher to reflect anticipated healthcare needs and usage of new ACA customers."
Since insurers can no longer inquire about health status on policy applications, how does BCBSNC know that their enrollees, even in the younger age bands, are more costly? In addition to analyzing submitted claims, the company also offers a voluntary online health survey where individual exchange enrollees can self-report their health needs and health care usage.
The chart below illustrates that Obamacare policyholders in North Carolina are indeed using more health care services and prescription medications for more severe and chronic illnesses.
Meanwhile, this chart compares the carrier’s anticipated enrollment and actual enrollment for
the duration of the federal health law’s initial six month sign-up period.
Another indication that the mix skews toward high-risk individuals is that the majority of non-group plans purchased are silver plans; this level of coverage is a step up from bronze plans. Silver plans come with higher premiums than bronze plans, but deductibles and other shared costs are lower (and reduced even more if one qualifies for an additional out-of-pocket discount at the taxpayer’s expense). Such plans suit those who expect to consume more health services. Of the insurer’s 232,000 enrollees, 80% have signed up for silver plans.
Rates will also increase due to the Obama Administration’s request that insurers allow individual policyholders to keep old plans if they like them for another year. BCBSNC is allowing 240,000 eligible policyholders to keep their "grandmothered" plans (different from grandfathered plans because they either did not exist or have changed since the federal health law passed on March 23, 2010). It’s no surprise that a majority — most of whom are younger and less risky — has taken up this offer.
There’s something else worth thinking about that may have been forgotten when trying to keep up with the federal health law’s extensive list of changes. The administration has knocked on insurance companies’ doors yet again to request that such transition policies be extended for an additional TWO years. BCBSNC has yet to announce whether they will grant these policyholders a two-year extension. If the company does, the market will just have to move along in an unstable fashion as late as 2017.
At the end of the day, Obamacare should be measured based on access, affordability, and reduction of the number of uninsured. Although the number of BCBSNC sign-ups who were previously uninsured remains an unknown, Morales did mention that 70% of exchange enrollees were not BCBS policyholders in 2013. Of course, that figure could mean lots of different things other than those who were uninsured signing up for the first time or individuals having difficulty maintaining coverage due to pre-existing health conditions; it could also come from those who now work part-time and no longer rely on employer-sponsored insurance, were dumped off their group coverage due to Obamacare’s costly insurance mandates, or are transitioning between jobs.
The latest McKinsey report gives some insight into just how many exchange enrollees did not have prior health coverage. Based on its latest online survey, a paltry one-quarter of those signing up were originally uninsured. This conclusion is based on a sample of almost 3,000 people surveyed in April 2014 who were eligible for a federally qualified health plan in the individual market both on and off Obamacare’s state and federal health exchanges. Despite the briefing’s small sample size and a methodology that cannot be directly compared to the exchange population, its main objective was to analyze consumer behavior when shopping for coverage in the individual market as well as awareness of the federal health law’s subsidized health plans and penalties.
Stay tuned for later this month when insurers must submit 2015 rates. The widely anticipated increase in premiums could very well slow the pace of enrollment in future years. More problems will arise once individuals find out that they are either underinsured or cannot afford a high deductible health plan coupled with an expensive monthly premium — even those eligible for financial assistance.
Things will only get more interesting.
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