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3 PPACA exchange plan premium pro tips

By Allison Bell

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Officials at the Centers for Medicare & Medicaid Services (CMS) generated publicity for the third annual individual health insurance open enrollment period Monday by releasing a batch of HealthCare.gov exchange plan rate data.

CMS uses the cost of the “second lowest cost” silver exchange plan in a market  to calculate how much Patient Protection and Affordable Care Act (PPACA) premium subsidy money an exchange buyer can get.

CMS says the the cost of the second-lowest-cost silver plan will rise an average of just 7.5 percent in 2016, with changes ranging from a decrease of 12.6 percent in Indiana to an increase of 34.5 percent in Montana.

Charles Gaba has estimated at his ACAsignsups.net blog that the average increase for all exchange plans, in states with state-based exchanges as well as states with exchanges that use the HealthCare.gov enrollment system, may be about 12 percent to 13 percent.

Krysty Ventimiglia, health and welfare practice leader at Arthur J. Gallagher & Co. (NYSE:AJG), recently said in an interview that, in the small-group market, typical 2016 rate increases have ranged from 10 percent to 30 percent. “I haven’t had a renewal in the single digits,” she said.

Exchange plan premium watchers have noted that competitive pressure may do more to hold the closely watched silver plan premiums down than it does to cut other exchange plan premiums; that consumers may be able to lower their actual monthly premiums by changing plans; and that rates and plan features vary widely from state to state. 

See also: 3 must-know facts about 2016 health rate filings

But the CMS data release has also revived questions about whether CMS exchange data releases paint a complete, accurate picture of how CMS officials see the exchange system and exchange plan menus.

Drafters of PPACA created the exchange system in an effort to help consumers compare health coverage on an apples-to-apples basis and buy the coverage through easy-to-use websites.

Regulators, insurers and exchange managers switched to the open enrollment period system starting with the 2014 plan year. Regulators and others developed the system to keep clever, cheap consumers from using the PPACA ban on most forms of medical underwriting as a chance to wait until they got sick to pay for coverage. Under the rules of the open enrollment system, consumers have to show they have a good reason to apply for individual coverage during most of the year. Insurers waive the good-reason-to-apply requirement only during the open enrollment period.

In states that use the HealthCare.gov exchanges operated by CMS, the open enrollment period for 2016 is set to start Nov. 1 and end Jan. 31, 2016.

For a look at some thoughts health insurance agents and brokers might want to keep in mind when looking at the new batch of CMS exchange plan premium data, read on. 

Zombies

1. HealthCare.gov managers weeded out most of the zombie plans.

CMS shows benchmark plan rates in South Carolina rising just 10.8 percent in 2016.

But there’s a problem with the HeathCare.gov exchange plan menu for South Carolina: It includes many plan options from Consumer’s Choice Health Plan, a plan that’s now on track to shut its doors at the end of 2015.

The cost of the second-lowest-priced silver plan offered by a living carrier, an affiliate of BlueCross BlueShield of South Carolina, appears to be 20 percent higher than the second-lowest-priced silver plan the carrier offered for 2015, and 38 percent that the second-lowest-priced silver plan Consumer’s Choice offered for 2015.

The inclusion of Consumer’s Choice in early HealthCare.gov “window shopping” results raised the possibility that HealthCare.gov menus might be stuffed with options from dead issuers.

A quick review of the HealthCare.gov menus for Florida, Tennessee, Wyoming and other states suggests that exchange managers have, in fact, pulled off the plan options from most of the issuers that have announced decisions to shut down at the end of the year. 

Apple with an orange

2. Making an apple-to-apple, or even apple-to-orange, comparison may be hard.

HealthCare.gov managers are emphasizing use of new out-of-pocket cost comparison tools  for 2016, to address complaints that some consumers who bought exchange plans for 2014 and 2015 based mainly on monthly premium amounts ended up with deductible and coinsurance bills they could not afford to pay.

See also: PPACA website upgraded to highlight costs as sign-ups near

CMS officials did not adjust their 2016 benchmark plan rate increase data for changes in plan out-of-pocket cost limits.

In Florida and Wyoming, for example, the benchmark plan deductible and out-of-pocket cost limits seem to be similar.

In Tennessee, however, the out-of-pocket cost limit for the 2016 benchmark plan is $6,250. The out-of-pocket cost limit for the second-lowest-priced 2015 silver plan in the HealthPocket.com database is just $4,250. 

A mirror

3. The gap between the full price of coverage and what consumers actually pay does have a cost.

CMS officials have noted that PPACA premium tax credit subsidies will reduce net monthly payments to $75 or less for about 70 percent of returning exchange plan users, and to $100 or less for about 80 percent of the returning exchange plan users.

For 2015, the average advance premium tax credit (APTC) subsidy was about $270, according to CMS officials.

CMS did not estimate what the average APTC amount might be in 2016.

Kevin Patterson, interim chief executive officer of Health Colorado, Colorado’s state-based exchange, estimated the typical APTC subsidy might increase to $328, or 74 percent of the average premium, in 2016, from $221, or 58 percent of the average premium, in 2015.

That could simply mean that the typical share of premiums covered by APTC subsidies in Colorado will converage on something close to what the national average was in 2014.

See also: Administration says subsidies cut premiums by 76 percent

But, if big subsidy increases also take place in the rest of the country, that could make paying for the APTC program more expensive for U.S. taxpayers.

 

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