High Use of Medical Services Lead to Higher Premiums for 2016 ACA Plans

2015 Rate Filing Fact Sheet

CHAPEL HILL, N.C. – When North Carolina consumers shop for health insurance this fall, they’ll notice that premiums are quite a bit higher than last year. That’s because BCBSNC’s ACA customers continue to use a great deal of expensive health care – and that drives rates higher.

Blue Cross and Blue Shield of North Carolina proposes an average rate increase for individual ACA plans of 25.7 percent beginning January 1, 2016.

BCBSNC filed on and off Exchange1 rates for individual under 65 plans under the Affordable Care Act with North Carolina Department of Insurance (NCDOI) and Centers for Medicare and Medicaid Services (CMS) on May 15. Since filing, BCBSNC has received claims data and updated enrollment information from April and May, indicating that health care costs for the ACA group continue to soar. Based on this information, the company may need to revise this filing to reflect a higher increase.

During the Affordable Care Act’s (ACA) second annual enrollment period, 397,000 customers chose BCBSNC plans. These customers are about the same age as those who enrolled in 2014. However, more of them self-report that they have chronic health conditions, which typically result in higher use of health care services.  

This is the first year since offering ACA plans that insurers had a full year of claims information to use in setting rates. In 2014, BCBSNC’s ACA customers had high medical costs in several key areas:

  • inpatient costs, mainly in treatment of cancer and heart conditions
  • emergency room use
  • costs and use of specialty prescription drugs

“We continue learning about our ACA customers and how they use their health insurance. In setting these rates, we had a full year of health care usage and cost data to work with.” said Patrick Getzen, vice president and chief actuary for BCBSNC.

“That data shows that our ACA customers use more health care services and more expensive services than our individual customers had historically. Based on what we saw from this year’s enrollment, we’re not optimistic this will change in 2015. That means continued upward pressure on premiums.”

BCBSNC, and all insurers, set premiums based on the use of health services by those covered by the plan. A successful insurance pool needs a mix of younger, healthier customers to offset the costs of older customers or those with chronic conditions.

The ACA’s minimum Medical Loss Ratio (MLR) requirement protects consumers from excessive rate increases and uncertainties in the rate-setting process. Customers receive a rebate if their health insurer has overpriced plans or does not pay enough in health care claims. BCBSNC consistently spends more than the required amount on customers’ health care and has since before the requirement became effective in 2011. Since 2011, BCBSNC has spent $760 million more than required on health care.

 

About BCBSNC:

Blue Cross and Blue Shield of North Carolina improves the health and well-being of our customers and communities by providing innovative health care products, services and information to more than 3.91 million members, including approximately 1 million served on behalf of other Blue Plans. Since 1933, we have worked to make North Carolina a better place to live through our support of community organizations, programs and events that promote good health. We have been recognized as one of the World’s Most Ethical Companies by Ethisphere Institute every year since 2012. Blue Cross and Blue Shield of North Carolina is an independent licensee of the Blue Cross and Blue Shield Association. Visit BCBSNC online at bcbsnc.com. All other marks are the property of their respective owners.

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[1] The Exchange, or the Health Insurance Marketplace, is an independent entity run by the federal government.