The post below is a guest blog from Jay Lowe who serves as Principal, Health & Welfare Consultant for CAI’s employee benefits partner Hill, Chesson & Woody.
Now is the time when insurance carriers will begin determining premium pricing for their individual plans and filing for approval with state departments of insurance. Undoubtedly, their goal will be to offer plans that meet the needs of most, maintain competitive pricing, and avoid losses associated with not being able to underwrite or deny coverage during the Annual Enrollment Period (AEP) or Special Enrollment Periods (SEP). The Kaiser Family Foundation discusses some of the challenges that insurers will continue to face when determining rates for the upcoming calendar year. One challenge that is of interest continues to be those individuals that remain uninsured. The Kaiser article indicates that these uninsured individuals are generally healthier and their enrollment would help to offset costs as they are expected to have a fewer health care claims. The Individual Mandate provision of the ACA requires everyone to have coverage, or else face a penalty. In 2016, that penalty is $695 or 2.5% of household income, whichever is greater. In 2017, these penalties will be adjusted upward for inflation. As these penalties continue to rise it will be interesting to see how many people continue to remain uninsured and if their eventual compliance with the Individual Mandate actually has a positive impact on rates.
In North Carolina, the pricing challenge becomes more difficult in 2017 as one major carrier, United Healthcare, is pulling their individual plans from the Marketplace (where individuals can receive a federal subsidy for insurance premiums) as they have decided to no longer participate in this state. This will leave our state with only 1 major carrier offering subsidy-eligible plans, Blue Cross Blue Shield of North Carolina. This may put additional pricing pressure on BCBSNC and drive their premiums even higher. They have already been forced to make dramatic network changes in an effort to keep pricing at acceptable levels with both their members as well as the NC Department of Insurance. Time will tell if these changes create more stability in premium pricing.
As 2017 approaches, those with individual insurance plans will be anxious to see what their premium increases will be for the next year. Double-digit increases in the 20-30% range would not be a surprise as insurance carriers may still be trying to offset losses from prior years. State Departments of Insurance will be responsible for approving any increase requests and plan design changes, as the carriers will most likely adjust benefit levels to maximum premium savings. Regarding the Marketplace departure of United Healthcare in 2017, small group employers need to understand that UHC will continue to offer group-based plans. With moving away from the Marketplace, UHC is looking 2-3 years to the future to ensure that they will continue to be competitive with individual plans outside of the Marketplace, as well as with their small group plans. In North Carolina, will BCBSNC follow suit? Time will tell.