SOUTH UNION STREET

Alabama insurance rates up in exchanges

Brian Lyman
Montgomery Advertiser

The cost of this year’s lowest-priced health insurance plan is going up in Alabama — but it may not be the lowest-cost option in 2015.

Analysis of the individual insurance plans being offered in Alabama through the federal exchange show the lowest-priced Silver plan — a benchmark for determining subsidies — climbing by as much as 8.4 percent in many of the state’s counties, particularly the rural ones.

In Montgomery, Autauga and Elmore counties, the cost of the cheapest plan is rising from $242 a month to $255 a month, an increase of about 5.3 percent.

The increases are coming despite the entry of UnitedHealthcare into marketplace, which is offering plans in all 67 counties in the state, providing Blue Cross Blue Shield with its first major statewide competition.

Nationally, the increases are below what was traditionally seen in the individual marketplace, which prior to the Affordable Care Act was notable for its instability and churn. Experts said a major issue with the increases is lack of providers, or the large number of areas in the state serviced by single providers.

The changes to the health care plans are because of prices charged by doctors and hospitals to the providers, said Cynthia Cox, a senior policy analyst with the Kaiser Family Foundation in Washington, D.C., which analyzes health policy.

“When there is competition, insurers then may be able to compete against each other, but provider competition really matters” she said.

The increases in Alabama were generally smaller in urban areas than rural ones, but 65 of the state’s 67 counties saw increases. Mobile and Limestone counties saw the price of their cheapest plans fall.

Other studies have cited the relative lack of competition among providers as a problem. A report released last August by the Washington, D.C.-based Urban Institute found the lowest-cost Silver plan premiums were about 4 percent higher in Alabama in 2014 than the lowest-cost plan in Denver.

“Given its market dominance, BCBS has considerable power in negotiating rates with providers,” the report said. “However, the large number of one-hospital cities or counties throughout the state makes it difficult to negotiate in many areas.”

John Holahan, a fellow at the Urban Institute who co-authored the report, said in an interview Friday that the issue is particularly acute in rural areas in the South and West.

“You need to have those particular hospitals and most of the physicians in the area in your network,” he said. “Otherwise, it’s pretty hard to sell a plan. When you get into New York, there’s a lot of insurers, (and) they don’t have to have any hospital in their network. They can force hospitals to give pretty good discounts.”

The system is only slowly catching up to the new numbers of insured, but Holahan said some hospitals are purchasing private practices and ambulatory clinics, where nurse practitioners and physician assistants can be better utilized.

“Because people have insurance cards, there are really a lot of interesting things happening,” Holahan said. “When you’re not seeing the expansion of Medicaid, you are probably not going to see the same kind of ingenuity you’re seeing elsewhere.”

Gov. Robert Bentley has ruled out an expansion of the state’s Medicaid program to those making up to 138 percent of the federal poverty level — $16,104 for an individual; $32,913 for a family of four — citing problems in the General Fund and his own opposition to the ACA.

Advocates for expansion have argued the expansion could bring both public health benefits and economic benefits to the state.

About 97,000 Alabamians signed up for health insurance through the federal exchange in the open enrollment period that ended April 19. The current enrollment period began Nov. 15 and will run through Feb. 15. Those with current plans who do not choose a plan or reapply for subsidy will be automatically re-enrolled.

However, those getting plans through the exchange, particularly in the River Region, should check their options.

Last year, the cheapest Silver plan offered in the exchange was Blue Cross Blue Shield’s Blue Value plan, at $242 a month. The cost of that plan for a 40-year-old nonsmoker has risen to about $263 a month. United Healthcare’s Silver Compass plan, at $255 a month, is currently the cheapest Silver plan available. Individuals buying plans should also reapply for subsidies to ensure they are getting the maximum coverage possible.

“This is still a market that is still going through change, and new insurers are going in,” Cox said. “Even if nothing’s changed with your family, it still can be important go back onto to marketplace and see your options.”

Some people may not see their out-of-pocket costs change a great deal. A Kaiser Family Foundation analysis found that in Birmingham, a 40-year-old nonsmoker making $30,000 a year might see their premium on a Silver plan increase 2.5 percent, from $258 a month to $264 a month.

However, with the subsidies available to that individual, the actual out-of-pocket cost would decline slightly, from $209 a month to $208.

An individual in Montgomery would pay the same amount. According to the foundation, a family of three — a 40-year-old, a 38-year-old and a child, all nonsmokers — making the median household income in Montgomery — $45,859 a year — would pay $285 a month for coverage, after subsidies that covered about 56 percent of the monthly costs.

Plans

Under the Affordable Care Act, insurance plans are broken into four categories:

• Platinum plans cover 90 percent of health care costs after the deductible, and usually have the lowest deductibles and highest monthly premium costs.

• Gold plans cover 80 percent of health care costs, with higher deductibles than Platinum plans but lower monthly premiums.

• Silver plans cover 70 percent of health care costs. These are usually the most popular plans in the exchanges, and subsidies to help pay the costs of the plans are tied to these. Silver plans also have cost-sharing assistance for those who qualify for premium tax credits, reducing out-of-pocket costs.

• Bronze plans cover 60 percent of health care costs. They have the lowest monthly premiums but usually high deductibles.