Insurance Commissioner Wayne Goodwin expressed shock and disappointment Tuesday at Aetna’s decision to “abandon” the federal health insurance marketplace in North Carolina – the second company to do so for 2017.
“We … were in the middle of reviewing Aetna’s rate requests for 2017,” Goodwin said in a statement. “I am angered by the impact Aetna’s decision will have on Tar Heel families and our market.”
Aetna’s decision to pull out of North Carolina leaves essentially one insurer – Blue Cross and Blue Shield of North Carolina, which offers policies in all 100 counties.
UnitedHealthcare announced in April that it would leave the state’s marketplace after experiencing losses connected with policies sold through the Affordable Care Act.
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Blue Cross has also indicated it’s weighing whether to continue selling policies under the ACA. “We are assessing operational and business impacts of this decision by Aetna,” Blue Cross said Tuesday. “We have not made a final decision of our continued participation until the answers to these questions are known.”
Aetna announced Monday it will stop selling individual plans through the ACA next year in 11 of the 15 states where it had been participating, including North Carolina and South Carolina.
Aetna, which sold individual health insurance coverage in 39 North Carolina counties, has said it expects to lose $300 million on plans sold through the ACA. Aetna will continue to sell individual health insurance in North Carolina, but not through the ACA marketplace.
While health insurance premiums increase almost every year, losing Aetna and United will leave consumers with few choices in 2017, insurance brokers and agents said.
“What are the people of North Carolina going to do?” asked Paul Hassler, an insurance salesman in Denver. “… It seems like the whole network is just all of a sudden falling apart.”
Aetna’s decision is the latest blow to President Barack Obama’s signature domestic policy. While the ACA has brought coverage to millions – and reduced the number of uninsured North Carolinians by nearly a half million, the new markets have proven volatile for some of the largest insurers.
UnitedHealthcare, the nation’s largest insurer, announced this spring that it would shrink its ACA participation in 2017 to only a few states because it expects losses from that business nationwide to total more than $1 billion for 2015 and 2016.
Blue Cross, the state’s biggest insurer, has lost about $1 billion on ACA plans in the past two years, but the losses were reduced to $405 million after compensation from federally created assistance programs. Blue Cross’ rate request for 2017 is being reviewed by the Department of Insurance.
North Carolina has been viewed as an ACA success story, with hundreds of “navigators” statewide assisting low-income applicants and soaring enrollment numbers. But Goodwin’s insurance department approved a 32.5 percent rate increase for Blue Cross for 2016 as the company reeled from expenses incurred by sicker and older customers on ACA policies.
Earlier this year, Goodwin warned federal health officials that the ACA has destabilized the state’s insurance market and threatens to leave some residents without options for health insurance.
In a letter to Sylvia Burwell, secretary of the U.S. Department of Health and Human Services, he said the law is driving up insurance costs, reducing consumer options and generating unsustainable financial losses for the insurers. He wrote: “If North Carolina continues along this path and we have no carriers, what do we do?”
Next year will be the fourth year for the Affordable Care Act markets, which officials touted as a way to provide affordable options for individuals who aren’t covered by employer-sponsored plans. Brokers and agents say the plans have not always been affordable. And with less competition, they’ll be even less so.
“People coming in with expiring Aetna plans (will be) getting a depressing sticker-shock price increase when Blue Cross is the only offering,” said Michael Sheffield, who owns a Gastonia brokerage.
For 2016, Sheffield said about 95 percent of the policies he sold through the ACA were with Aetna because Aetna’s least expensive plans were $300 to $400 a month cheaper than the least expensive Blue Cross plans.
He and other agents said they won’t be surprised if Blue Cross drops out of the individual health insurance market too. “That is a very real possibility,” Sheffield said. National carriers “can spread their losses across the whole United States. But Blue Cross is just North Carolina. … No one can afford to be the only carrier.”
Hassler, the Denver agent, said some of his clients will have to choose whether to pay the premium or pay the fine for not having insurance. For tax year 2017, the fine is 2.5 percent of total household adjusted gross income, or $695 per adult and $347.50 per child, to a maximum of $2,085.
High deductibles common
Sheffield said the loss of insurance options is “a serious thing for our state. I wish that this whole process had been better planned.”
He said families with incomes of $25,000 to $30,000 a year “are getting left out.” Even if they qualify for subsidies, the insurance plans they can afford have such high deductibles that “they still can’t afford what’s being offered.”
For example, he sold a policy with a premium of $1,200 per month, but after the subsidy, the customer paid $52 a month. The policy had a $5,000 deductible, so each time the customer went to the doctor, until he met the high deductible, he would have had to pay the full price.
“He said, ‘I’ve got to pay $52 a month and I still can’t go to the doctor?’ And we the taxpayers were fortunate enough to pay $1,150 a month (the subsidy) for a man to get insurance but he couldn’t even go to the doctor. … That is ridiculous,” Sheffield said.
Consumer help offered
Brokers and agents can answer questions for those who need help understanding the ACA marketplace. Consumers can also get free help from “navigators,” who have been trained to help with enrollment.
Madison Hardee, a lawyer with Legal Services of Southern Piedmont, encouraged consumers to arrange in-person appointments by calling the statewide helpline, 855-733-3711, or visiting the Get Covered America website, gcaconnector.org.
“Our role as navigators is more important now than ever,” Hardee said. “Consumers will continue to be eligible for financial assistance. Consumers will still have access to quality affordable plans in 2017.”