Claims Pushing ACA Marketplace Rates Higher, Some Providers Out
By Michael Waddell | Memphis Daily: Emphasis, Healthcare
VOL. 9 | NO. 43 | Saturday, October 22, 2016 – Memphians with health care insurance through the state’s marketplace exchange or those looking to acquire health care insurance are bracing for rate increases that come on Jan. 1.
Rates for the two remaining insurers with marketplace plans available for the Memphis market next year – Cigna and Humana – are set to increase roughly 45 percent each.
BlueCross BlueShield of Tennessee is dropping its Affordable Care Act marketplace plan coverage in three major regions of the state, including Memphis, citing losses of nearly $500 million on marketplace plans by the end of 2016.
UnitedHealth Group Inc. is exiting the state exchange altogether.
“Humana’s 2017 rates for individual health insurance plans offered through the public exchanges, such as Healthcare.gov, reflect many changing factors in the market,” said Humana spokesperson Kate Marx, “but are primarily driven by changes in expected claims costs that reflect the rising cost of medical services; changes in Humana’s contracts with hospitals, physicians, and other health care providers; increased use of medical services by Humana members; as well as the expiration of the temporary federal reinsurance and risk-corridor programs.”
Since many of the company’s individual on-exchange health plan members receive financial assistance in the form of premium subsidies, the increase in out-of-pocket premiums paid will vary widely.
“Humana will continue to work closely with the current and future federal administrations and state governments, including Tennessee’s, to address persistent challenges and develop solutions that encourage all individuals to obtain and maintain coverage,” Marx said. “In that way, people without access to employer and government-provided coverage will have sustainable access to meaningful coverage options in the future.”
Cigna spokesperson Joe Mondy said Cigna will be able to provide insight after regulatory discussions, which are underway due to the unanticipated changes to the 2017 Tennessee public marketplace, have concluded.
The root of the exchange problem is probably related to inherent problems with the Affordable Care Act itself, according to Dr. Keith Anderson, cardiologist at Sutherland Cardiology and current Tennessee Medical Association (TMA) president.
“What happened is the penalties for not participating in the exchanges are really pretty low, particularly for low-income younger patients,” Anderson said. “So instead of buying health insurance, they just pay the penalty, and thus the only people that are buying into the exchanges are those that have a need for higher expenditures.
“This is what’s driven the rates up. I don’t think it’s a (price) gauging technique,” Anderson said.
He feels some adjustments need to be made to the Affordable Care Act to make the system work, and until that is done there will be problems.
“ACA has many desirable benefits including outlawing the use of pre-existing conditions as a reason for denying coverage and not allowing rates to be set by the applicant’s health history alone,” said Dr. Cyril Chang, professor of economics at the University of Memphis Fogelman College of Business and Economics and director of the Methodist LeBonheur Center for Healthcare Economics. “Whatever the fixes, let’s keep the beneficial parts of ACA.”
Chang believes that with rates rising so sharply in the exchanges, some local enrollees will be priced out of the market. However, low-income enrollees will receive larger subsidies from the federal government to offset some of the rate increases.
He points out that the sharp increases are mostly limited to the individual markets. The rate increases in the other markets, such as those of Medicare and employer-sponsored health plans, have been modest in the single-digit range.
The other area of concern for the state, according to Anderson, is that Tennessee has elected not to expand Medicaid.
“It compounds the problem because that option’s been taken away, too,” he said. “If we could expand Medicaid, then it would help draw some of these people off of the exchange and make it more workable.”
Anderson hopes the rising marketplace rates might prompt the Tennessee Legislature to go back and reevaluate Medicaid expansion.
Like Chang, Anderson also thinks the rising insurance rates will price some Memphians out of purchasing insurance on the exchange.
“Unless you can qualify for federal government vouchers, you would just be out of luck, and there’s a large gap in the population who won’t qualify for government subsidies,” Anderson said. “It’s probably worse in other areas of state than Memphis because Cigna does not offer an exchange plan in Knoxville or Nashville, so people in those cities might be left with just Humana.”
This year, the General Assembly approved a new bill that allows primary care offices to see patients directly without following insurance regulations.
“It’s an option for patients, and I think it’s is a good thing for the state,” Anderson said. “The TMA has supported primary care doctors that have chosen to do it. It’s an alternative way of delivering care.
“The downside is those patients are left without hospital coverage, imaging coverage and specialty coverages.”
Higher health insurance premiums will make it more difficult for people choosing the direct primary care route to augment their coverage with high-deductible, low monthly premium emergency coverage in case of more serious injury or illness.
“Because we want patients to have access to care and because we want Tennesseans to not be left out of the health care situation, we take on a lot of the patients who aren’t sufficiently insured or not insured at all,” Anderson said. “We aren’t going to leave them out in the cold. What it does is put the burden back on hospital systems and physicians to absorb the costs. Because of the failure of the finances, hospitals and doctors are left holding expenses.”
Now, as health care dollars get tighter, it’s harder and harder for hospitals to survive. Anderson cites seven hospital closures in Tennessee this year.
“You’re seeing systems starting to fail,” he said. “It is getting to be a little concerning.”