What Idahoans need to know about health insurance

State insurance regulators recently signed off on 2016 rates that Idahoans will pay the five companies that sell health insurance on Idaho’s exchange and five that don’t.

Almost all of those companies raised their average rates, from 7 percent to 27 percent. One company, PacificSource Health Plans, lowered its rates by 8 percent.

But “average” is no indication of what any actual Idahoan will pay next year. The Statesman analyzed data underlying the 2015 and 2016 rates and found variations in premiums and rate increases by region.

The data also show that the Idaho Department of Insurance’s review of Blue Cross of Idaho’s rate filings in May led to an outsized reduction in Blue Cross’s final rates when compared with other companies.

Q: How much will my premiums for health insurance go up next year?

A: That depends on your age, whether you use tobacco and how generous your insurance plan is.

And the place you call home plays a big role in determining how much you pay. If you live in Boise, your premiums might be lower than if you lived in Pocatello, for example, because your insurance company was able to negotiate cheaper prices with local hospitals or doctors. If you buy a plan that also spells out which doctors you may or may not use — something that often varies by region in Idaho — then you’ll probably end up paying lower premiums, too.

“I believe there is significant disparity between contracts with providers between geographic area, and even between carriers,” said Idaho Department of Insurance Director Dean Cameron. “This is a concern to me.”

The actual rate change next year for a 40-year-old Treasure Valley resident will range from a 38 percent increase for a Mountain Health CO-OP plan to an 11 percent decrease for a PacificSource plan.

Q: So I should choose PacificSource when I sign up for a health plan this fall?

A: Not necessarily. The Oregon-based insurer is lowering the price of many of its plans in the coming year. But last year, its rates rose an average of 37 percent. The company’s premiums still rank among the costliest on the exchange.

“I believe PacificSource and maybe even Regence to a small degree had overpriced their products to begin with,” Cameron said. “It was too aggressive, and their experience bore out that it was too aggressive. ... When you talk about percentages, it’s maybe not reflective of what’s going on. Mountain Health CO-OP, even with the highest increase, is in many places the lowest price available.”

And those plans are not created equal. If you use brand-name prescription drugs, a plan that has tiered drug pricing and separate prescription deductibles may cost you more than a plan without them.

Q: When Cameron says PacificSource learned through “experience” that it overpriced its plans, what does that mean?

A: Insurance companies have fretted over who would buy their plans from the exchange. Blue Cross of Idaho surveyed people who bought its plans from Your Health Idaho and found that more than 40 percent of them had no insurance beforehand or had significant gaps in their coverage.

To an insurance company, first-time customers mean claims, and lots of them. Claims for first-time visits to primary care doctors. Claims to treat newly diagnosed diabetes or high blood pressure that went untreated for years. Claims for surgery to fix long-neglected knee injuries.

Cameron said some insurers overestimated how many of their new customers would fall into this group or file high-cost claims. They pulled back on their rates after determining that the evidence isn’t there to back up a huge rate increase.

The increasing cost of medical care — not just for the more frequent claims but for the more expensive ones — is the main driver of premiums.

There’s also a new dynamic playing into this year’s rate boosts: the 3Rs. That’s Affordable Care Act shorthand for risk adjustment, rate corridors and reinsurance. These are programs created by the law to help insurers ease into the new marketplace, stabilize premiums and make sure people with costly conditions are not priced out of the market. The programs move money from insurers who have lots of healthy customers to those who have lots of sick ones. They help soften the blow of huge medical claims. Two of these programs are being phased out at the federal level. Some insurers say they now need to charge more because their safety nets are disappearing.

Q: In all likelihood, then, I’m going to end up paying more for health insurance? Great. I thought this was the “Affordable Care Act.”

A: Actually, you might not pay more, even though underlying rates are up. That’s because of subsidies.

The Affordable Care Act created “advanced premium tax credits” — in short, subsidies that lower your out-of-pocket costs — based on your income. The insurance company receives the credit and uses it to offset the full amount of your premium.

The amount depends in large part on the price of the second-cheapest plan on each state’s health insurance exchange. The “silver” plan pays about 70 percent of a consumer’s costs, and it is situated between the cheaper bronze and costlier gold plans.

The silver plan can change from one year to the next, such as when a new insurer enters the market or when companies change rates. In Idaho next year, that subsidy-setting plan varies by region, but generally will be more expensive than it was this year — so much that its difference will surpass some rate increases, according to Blue Cross of Idaho.

So, depending on who you are, where you live and what kind of benefits you want, you could end up with more money in your pocket next year than you had this year, even if your rates go up. Or you could still pay more, but not as much more as the rate increase alone might suggest.

“When we’re looking at it, our members in the Treasure Valley and Magic Valley should see their out-of-pocket costs go down because of the (subsidy),” said Josh Jordan, Blue Cross of Idaho spokesman. “That’s really good news. I think that means (the subsidy) is working the way it should be.

“While it looks like a 23 percent rate increase for some of them, what they may end up feeling out of their pocket is a 6 to 8 percent increase. ... We saw someone with a Silver Choice 4000 (plan) who would pay $38.47 less per month out of pocket.”

People whose income falls just above the poverty line will qualify for large subsidies. People who make more than four times the poverty line will receive no subsidies. Those who receive insurance through an employer’s plan may see entirely different rate increases than those who do not — even if the plan they have is from Blue Cross, SelectHealth or any other insurer who also sells plans on the exchange.

Q: Are you saying it benefits me to make less money?

A: In this one, isolated case of tax credits, maybe. And it is a fine line. If you’re below the poverty line, you won’t qualify for anything.

The Affordable Care Act assumed that states would expand their Medicaid programs to cover all residents in poverty, with almost total financial support from the federal government. But that requirement of the law was stricken by the Supreme Court. Idaho and several other states decided not to expand their Medicaid programs. As a result, Idahoans in poverty will continue to be unable to afford health insurance unless they’re poor enough to qualify for Medicaid.

Visit medicaid.idaho.gov for more information about Medicaid, or visit yourhealthidaho.org to find out whether you qualify for either subsidies or Medicaid.

Q: Did the Idaho insurance regulators stand up for consumers? Or did they rubber-stamp the rate increases for 2016?

A: The data analyzed by the Statesman show that, in some cases, companies brought down their final rates after a negotiation period with the department. Blue Cross of Idaho had the largest change, bringing down its rates by an average of 2.6 percent between its initial filings in May and its final filings in late summer — with the department’s review leading to 10 percent lower rates in some parts of Idaho, and a 6 percent increase for one health plan. The reviews had little to no effect on other insurers’ rates.

The department “personally reached out to the carriers with the most egregious increases and had discussions with their folks, multiple times, and (we) pushed back — said that they were beyond what we thought was acceptable,” Cameron said. “Sometimes they got fairly aggressive and, you know, my tools as the director aren’t very many. This is a common misconception. I don’t have the right or the ability to reject the rates. I can’t set rates. ... That authority has never been given by the Legislature.”

Q: Which insurance companies started out with unacceptable rates?

A: Cameron said the department tried to negotiate with most insurers.

“Particularly with Blue Cross of Idaho, we had numerous phone calls, face-to-face meetings and conference calls where we pushed back particularly on the bronze and silver plans,” he said. “And we focused there because the majority of the high-end claims were coming out of the gold plans. We also engaged with Mountain States CO-OP, though we couldn’t push back against them as much, simply because of their financial standings and the concerns about what that would lead to down the road.”

The concern he is referring to is the pattern of failing CO-OPs — an acronym for consumer operated and oriented plans — around the country. The Affordable Care Act offered financial support to get those low-overhead programs up and running, but very few have succeeded. The Mountain Health CO-OP in Idaho is heading into its second year in the market.

“We had conversations with Select Health, as well, but not extensive. The company we spent the most time on was Blue Cross. They were reluctant because, frankly, the claims data indicates they should be charging at least the premiums they’re requesting. But we felt like it wasn’t an appropriate view of the marketplace,” Cameron said.

Q: How much should Blue Cross be charging?

A: According to the insurer’s spokesman, Blue Cross is on track to pay out $1.07 in claims this year for every $1 it collects. The company has a huge amount of cash in its reserves, but Blue Cross says it needs to increase rates to keep up with these rising costs despite the safety-net measures meant to help insurers weather these claims.

The reason, the spokesman said, is that those newcomers who racked up high costs in the first year are still racking up high costs, and the company expects that to continue for a while.

Cameron said there’s truth to that.

“Many of those individuals went to Blue Cross because they have a very strong brand, they’re recognized as having a strong network ... and if you are a person with health conditions, that is something you want,” he said.

But the high costs for the newly insured won’t go on forever, Cameron indicated.

This story was originally published September 12, 2015 at 9:50 PM with the headline "What Idahoans need to know about health insurance."