Health care decision is not a one and done, analysts warn
People who bought health insurance through online marketplaces are going to want to shop for a better deal in 2016 and avoid being hit by skyrocketing premium prices.
Experts say that advice is even more important for the millions of Americans who receive government subsidies through HealthCare.gov that offset the cost of coverage.
In Western Pennsylvania, Highmark Inc. has proposed raising premiums by as much as 39 percent. But the level of subsidy is likely to increase by only about 10 percent, meaning people with Highmark plans are going to pay a lot more each month if they let their enrollment automatically renew later this year.
“It's very disheartening to see a proposed rate increase of nearly 40 percent,” said Jason Snyder, executive director of the Consumer Health Coalition, a North Side nonprofit that helps people enroll in Affordable Care Act insurance coverage.
“But the beauty of the marketplace is there is choice,” he said.
“I would strongly urge anyone who has bought a Highmark plan or any other plan on the marketplace to do their homework.”
Don't auto renew
Experts said too many people let their coverage automatically renew for 2015 instead of comparing their options. The Centers for Medicare & Medicaid Services, which runs HealthCare.gov, last week said nearly half of people who had coverage in 2014 let their plans renew for 2015 without shopping. Open enrollment for 2016 begins Nov. 1.
“There is enough movement in this market — and health insurance is such a big piece of people's pocketbook — that you have to shop,” said Michael Stahl, senior vice president of marketing for HealthMarkets Inc., a Texas-based insurance agency that operates in all 50 states. “You want to recheck ... and not just blindly re-enroll.”
The three other insurers selling individual policies in Western Pennsylvania are proposing smaller rate increases than Highmark: 3 percent and 7.9 percent for UnitedHealthCare; 5.6 percent for Aetna Inc.; and 9.6 percent and 9.9 percent for UPMC Health Plan.
Going with price
The disparity in prices is likely to lead to membership losses for Highmark, which dominated the marketplace business in the first two years that it operated with the least expensive plans in the region. Next year, if their proposed rates are approved, the state's largest health insurer will have some of the most-costly plans.
“The average consumer is going to go with price. They're not going to be loyal to the insurance company,” said Bob Nelson, owner of Robert Nelson Agency, an Ambridge insurance brokerage.
Highmark has 164,500 marketplace members in Pennsylvania this year, up from 131,000 in 2014. UPMC health Plan jumped to 62,000 members this year after lowering its rates, up from 4,000 in 2014. And it expects to increase marketplace membership to more than 90,000 for 2016.
“We anticipate that our networks and benefit designs as well as our pricing will continue to be very attractive in the market,” spokeswoman Gina Pferdehirt said.
Highmark spokesman Aaron Billger said the company had to ask for higher rates after losing money when it gained lots of individuals who used more medical services than the company predicted.
“Health plans that secured large memberships are experiencing the same factors of high utilization,” he said. “We recognize that consumers have a variety of choices. We hope they will value their coverage.”
Stahl said many health insurers that were successful in the first year or two of attracting marketplace customers with low prices are experiencing “the winner's curse.”
“By winning the auction, you have the worst margin,” he said. “If you were the lowest price, you have the most pressure from a profit standpoint.”
Larry Levitt, a senior vice president at Kaiser Family Foundation, a nonprofit health care research organization in California, said there are trade-offs that shoppers need to consider when switching plans — first and foremost they need to know what an insurer's network includes and if they'll be able to keep seeing their doctor.
Many insurers offer limited networks of hospitals and doctors in their marketplace plans, he said. That's the case in Western Pennsylvania, where a reimbursement contract that expired between UPMC and Highmark prevents many Highmark members from having in-network access at many of UPMC's hospitals.
“There will be better deals to be had, but it might mean switching plans and perhaps switching doctors,” Levitt said.
Shopping will be especially important for people who receive government subsidies, which on average cover about 75 percent of premium costs, he said.
In Pennsylvania, about 470,000 people signed up for coverage through HealthCare.gov and 81 percent of them received a subsidy. On average nationwide, subsidies covered about three-quarters of the premium cost in 2015. Subsidies are available to people, on a sliding scale, if their incomes are within 100 percent to 400 percent of the federal poverty level — or between $11,770 and $47,080 for a single person.
As prices rise, the subsidy isn't likely to keep pace with premiums, Levitt said. The value of the subsidy is pegged to the second lowest-cost silver level plan in each market. In Western Pennsylvania, that is likely to be a UPMC product, with a premium that may rise by 10 percent. But Highmark premiums could increase by 20 percent to 40 percent.
“People have to be active shoppers to protect themselves from premium increases,” he said.
Alex Nixon is a staff writer for Trib Total Media. He can be reached at 412-320-7928 or email@example.com.