I confess that I had a small panic attack when I read the initial notice to Brokers from Anthem stating “we will offer plans in three regions of Northern California only, which include Redding, Santa Clara County and Stockton/Modesto”. Would I be telling my clients to start using a friend’s Redding address if they lived in a non-Redding zip code?
Fortunately, Anthem was referring to the 3 full rating areas, which encompasses most of our rural northern California. This restriction only applies to the individual insurance market. It does not affect group insurance or Medicare Supplement plans.
California has the biggest individual market in the nation and we have the largest state based Exchange. The state’s uninsured rates has dropped from 17% in 2013 to 7.1% by the end of 2016. The government shows that our “risk mix” is about 20% lower than the national average.
The Anthem Blue Cross individual health insurance product line available in our area is an EPO (Exclusive Provider Organization) product that uses a provider network that is smaller than the full Anthem network. EPO means that the insured must use providers from this narrow network or no benefits are payable, (unless it is an emergency).
Individuals typically choose Anthem because the rates can be as much as 25% lower than those charged by Blue Shield of CA. This can translate to hundreds or thousands of dollars of savings to a family. The trade-off is that the insured may need to change physicians or pay the full charges with no credit toward deductible or coinsurance on their insurance plan if their service provider is not in the network.
Access to primary and some specialty care in our area is becoming more limited. Some Family Practice Physicians require an application and interview to determine if they will accept you as a patient. We are not alone in this situation. Many rural areas are finding the doctor shortage to be a real challenge. Narrow networks further complicate the issue of access to care.
So why does a carrier leave a market? First and foremost it’s important to remember that health insurance is a business in the US. Anthem has stockholders that require a return on their investment, so the companies must be able to price their products to make a profit. The Kaiser Family Foundation found that as of early 2017 health plans’ 1st quarter profits were at break-even or modest profits. They concluded that the market was stabilizing.
President Trump threatens every month that his administration will not pay the CSR (Cost Sharing Reduction) payments to insurers. The Congress continues to prattle on about repeal of the ACA or some version of repeal, but cannot agree what that should be. Carriers simply are unable to make realistic projections when they don’t know the rules what will be from month to month.
So the market may have been stabilizing in California, but Congress and the President have done everything possible to destabilize it. For some reason (unknown to me), the majority party is unwilling to sit down with the minority party to work out a compromise. They refuse to have hearings or get expert input. Perhaps that will change?
We know that health care trend is at about 12% this year. “Trend” is the amount that actuaries expect health care costs to rise in the next year. Remember, what drives health insurance premiums is health care costs! So if a hospital charges more, you see that in your premiums. If more people have procedures, you help pay for those.
The Affordable Care Act (ACA) requires insurers to offer additional benefits to certain low income consumers, earning between 138-250% of Federal Poverty Level. The CSR payments cover the cost of the enhanced benefits. The 250% threshold for a family of four is $61,500 annual income.
Covered CA will now add a surcharge to these enhanced policies, thereby guaranteeing the insurer will collect the full required premium. It is expected that subsidies or tax credits will be increased enough to cover the additional costs. Covered CA is suggesting that all non-subsidized Silver plans, be purchased outside the exchange as the rates will be as much as 20-25% lower without that surcharge.
Rates are expected to be available in September. Blue Shield is suggesting as much as 18% increase. Covered CA shows a weighted average increase for Region 1 at 33.2%, but we do not have actual rates yet.
Open enrollment for 2018 runs from November 1, 2017 to December 15, 2017, rather than January 31st. Since this is the same time as Medicare open enrollment and many calendar year group insurance plans, expect your agent to be pretty busy. Choices will be limited and I don’t expect anyone will be happy with the rates.