Obamacare rate hikes in Cook County held in check by competition
Friday, December 12, 2014
Chicago Tribune by Wes Venteicher
As health insurers compete for a second year on the federal marketplace in Illinois, Cook County residents are seeing relatively low rate increases and an array of options
for 2015, a Tribune analysis shows.
But downstate, the picture is different: Residents face higher increases and have fewer options, but in many cases stand to save the most money by switching plans.
The Tribune analyzed monthly costs of the state's lowest-cost silver plans — the most popular category of plans sold on the Affordable Care Act's federal exchange for 2014 — to determine how much people could save by switching from 2014's cheapest silver plans to 2015's cheapest silver plans. Health plans sold on the federal exchange are arrayed in bronze, silver, gold and platinum categories.
Changes in Illinois reflect national trends, where increased competition correlates with lower rate increases. Nationally, the number of insurers offering silver plans is increasing in two-thirds of
counties, according to Kaiser Health News. On average, rates are increasing 1 percent for the lowest-cost silver plans in counties adding at least one insurer for 2015, compared with an increase of 7 percent where the number of insurers remains the same.
Three new insurers entered the Illinois market for 2015, bringing the total to 10. Blue Cross and Blue Shield of Illinois dominated the 2014 market, offering the lowest-cost silver plan in 88 of the state's 102 counties and selling 92 percent of the plans bought on the exchange.
Coventry Health Care, federally funded co-op Land of Lincoln Health and downstate insurer Health Alliance took many of the lowest-cost silver spots from Blue Cross for 2015. Blue Cross will still offer the lowest-cost silver plan in 20 counties next year, according to state data. Blue Cross, Land of Lincoln and Coventry are the only insurers that offer plans across the entire state.
In Cook County, where eight insurers offer plans, the monthly cost of the cheapest silver plan for 2014 is increasing by 2.4 percent next year. In Champaign County, where four insurers are selling plans, the cost of the cheapest silver plan is increasing by 9.1 percent, according to the Tribune analysis.
People who have bought health insurance through the federal exchange will automatically be enrolled for another year in their current plans if they don't switch by the end of the day Monday. From Tuesday through Feb. 15, the last day of open enrollment, they can still call their insurer to cancel and switch plans.
"The cheapest plan is usually different now, and most people are looking for the cheapest plan," said Sharon Post, director of the Center for Long-Term Care Reform at Chicago-based Health and Medicine Policy Research Group.
Across Illinois, 2014's cheapest silver plans are increasing an average of 6 percent, according to an analysis by national consultant Avalere Health. If everyone with those plans were to switch to next year's cheapest silver plans, the increase would drop to 4 percent, according to Avalere.
State officials last month said the cheapest silver plans in Illinois are increasing by an average of 2.6 percent. But their calculation gave more weight to areas with bigger populations, bringing down the increase.
A 40-year-old nonsmoker who renews 2014's cheapest silver plan in Illinois would pay an average of $260 per month next year, according to Avalere. By switching to next year's cheapest silver plan, the same 40-year-old's average premium would drop to $240. Those premium amounts do not account for tax credits that reduce costs for some people based on income.
Nationally, 2014's cheapest silver plans are increasing by an average 10 percent next year, compared with an average increase of 4 percent if policyholders switch. The 40-year-old nonsmoker who renews would pay an average $286 per month, compared with an average of $272 per month after switching.
Cook County's cheapest silver plan for 2014, sold by Blue Cross, will increase to $215 per month for a 40-year-old nonsmoker, up 2.4 percent from $210. The 40-year-old could reduce the premium to $212, an increase of 1 percent, by switching to next year's cheapest silver plan, from Land of Lincoln Health.
In Champaign County, Blue Cross also sold 2014's cheapest silver plan, the cost of which is increasing by 9.1 percent next year. By switching to next year's cheapest silver plan, offered by Health Alliance, policyholders could reduce what they pay this year by 2.5 percent. The 40-year-old nonsmoker who renews would pay $290 per month, versus $259 after switching.
While competition is generally a good thing, health insurance is complicated, and consumers should look beyond the premium, said Nancy Daas, a partner at Chicago-based health consultant CMC Advisory Group.
"This is buyer-beware," Daas said. "It's an exchange. It's the marketplace. What that means is it's incumbent on each individual to be fully aware and to understand what they're buying."
The Health Alliance plan offered in Champaign, while cheaper, is a health maintenance organization-style plan that imposes more limits than do other styles of plans. For example, the plan doesn't cover any out-of-network costs except in emergencies, said Ericka Williams, Health Alliance's consumer product sales manager.
Limiting the number of doctors and hospitals in a plan is a common way to control costs while keeping a plan's premiums low, Daas said. Other variables are deductibles, out-of-pocket maximums, prescription coverage, emergency-room payments and other costs.
Federal law sets cost standards for each plan level. Bronze plans are designed to cover about 60 percent of costs, while silver plans are designed to cover 70 percent of costs; gold plans cover 80 percent; and platinum plans cover 90 percent.
Tax credits that reduce monthly premiums are available for anyone making up to 400 percent of the federal poverty level, which is about $46,680 for an individual and $95,400 for a family of four in 2015. In Illinois, 77 percent of people who bought exchange plans for 2014 received tax credits.
In addition to the tax credits, subsidies that reduce other costs in a plan — such as deductibles and out-of-pocket maximums — are available for people who enroll in silver plans. The income limit for those subsidies is 250 percent of the federal poverty level.
How prices change in coming years will provide a test of how well the federal marketplace, a central component of the federal health law, controls costs for consumers, said Anthony LoSasso, a professor of health policy and administration at the School of Public Health at the University of Illinois at Chicago.
"The good outcome would be that overall premium increases grow at a modest rate," he said. "And so that's the ultimate kind of outcome that you're looking for. That regardless of the distribution of enrollees in insurers, if the mechanism of the exchange and having this marketplace environment can keep a lid on premiums, then you're good."
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