One of the Affordable Care Act’s (ACA) key provisions is the implementation of health insurance exchanges — online marketplaces where individuals can shop for federally qualified health plans offered by participating insurance companies. Through the exchanges, the Obama administration intends to offer affordable, quality health care coverage and prohibits insurers from denying patients with preexisting conditions. Consumers eligible to purchase an individual health policy through North Carolina’s exchange do not receive health benefits through their employer and are not eligible for Medicare or Medicaid.
- The Affordable Care Act’s health insurance exchanges offer four “metallic” levels of health plans: bronze, silver, gold, and platinum. Low-premium bronze plans cover 60 percent of expenses but require consumers to be responsible for higher out-of pocket expenses, including co-pays, co-insurance, and deductibles. Platinum plans come with the most expensive premiums but cover 90 percent of expenses.
- Consumers with annual household incomes between 100 and 400 percent of the federal poverty level (FPL) may qualify for subsidies to offset some of the cost of insurance premiums. For a single-member household, the dollar amount ranges from $11,770 to $47,080. However, subsidy amounts greatly tail off beyond 250 percent of FPL (approximately $29,425 for an individual).
- Community-rating under the ACA mandates that a high-risk individual cannot be charged more than three times the amount of a low-risk individual’s premium. This results in the elderly and sick benefiting at the expense of the young and healthy, because these low-risk individuals will pay higher premiums to subsidize the health care costs of the high-risk population. For the exchanges to maintain a balanced risk pool, the Obama administration projected that healthy 18-34-year-olds need to represent 40% of total enrollees. Of North Carolina’s 600,000 enrollees, just 27% of signups are in this demographic.
- The individual mandate, in which the federal government makes the purchase of health insurance compulsory, is the centerpiece to the exchanges’ viability. However, the exchange insurance market is unstable because weak tax penalties and a multitude of special exemptions make it a disincentive for low-risk consumers to sign up.
- Only two insurance companies offer plans on North Carolina’s exchange – Blue Cross and Blue Shield (BCBS NC) and Cigna. BCBS NC is the only insurer operating in all 100 counties in the state. Cigna will begin offering plans in just five counties in the Raleigh/Durham area in 2017. In other words, 95 percent of North Carolina’s counties will have Blue Cross and Blue Shield as the only insurance carrier offering non-group policies.
- UnitedHealth Group recently announced its exodus from North Carolina’s exchange, citing that its operating structure and federal regulations that prohibit companies from accurately pricing policyholder risk have resulted in the carrier losing hundreds of millions of dollars on its Obamacare line of business nationwide. Aetna has subsequently announced its departure from 70 percent of its exchange market nationwide, inclusive of its entire market presence in North Carolina. Within the first two fiscal quarters of 2016, the company suffered $200 million in losses.
- BCBS NC has suffered losses of $400 million within two years on its exchange business, largely because medical claims are outpacing premium revenue. Just 5 percent of its customers incurred $830 million in health care costs during the first year of the law’s exchange rollout in 2014. The carrier received just $75 million in revenue from collected premiums and federal funds from this population.
- BCBS NC has asked the North Carolina Department of Insurance (DOI) to be able to increase their 2017 Obamacare plan rates by an average of 18.8%.
- The Affordable Care Act has failed to live up to its name. The following consumer-driven principles could achieve real health care reform that emphasizes patient choice, affordability, access, and competition:
–Grant states – not Washington bureaucrats – total authority to create health plans that meet consumer preferences and demands.
–A refundable, universal tax credit could provide affordable private coverage for low-income patients.
–Repeal Obamacare regulations on Health Savings Account contribution limits.
- Let market innovations and state-based high-risk pools take care of the problem of individuals being denied health insurance coverage because of preexisting conditions. Health insurance companies should offer health-status insurance to assist those with preexisting conditions and prevent individuals from being priced out of the health insurance market if their health drastically changes.