Insurance giant UnitedHealthcare this week became the third health insurer to propose selling federally subsidized health insurance in North Carolina, a move that would expand choice and increase competition here.
But the company’s expansion here is likely not enough to prevent rates from climbing next year.
United, the nation’s largest health insurer, notified the N.C. Department of Insurance on Wednesday that it intends to sell subsidized coverage in the state under the Affordable Care Act, filing just days ahead of a Friday deadline for insurers to submit plans for federal certification.
United is currently North Carolina’s second-largest health insurer, controlling a third of the state’s market in employer health plans in 2013, and has established payment contracts with networks of doctors and hospitals across the state.
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“All eyes have been on United because United can immediately provide competition with Blue Cross,” said Adam Linker, a health policy analyst with the N.C. Justice Center. “It could really shake up the market share of individual plans in North Carolina.”
Blue Cross and Blue Shield, the state’s biggest health insurer with 3.6 million customers, has dominated North Carolina’s market for individual policies for years. The Chapel Hill nonprofit organization sold federally subsidized policies to 232,000 people in North Carolina for 2014.
Blue Cross is one of just two insurers in North Carolina that offer subsidized policies this year. The other is Coventry Health Care of the Carolinas. Both have notified state insurance officials that they plan to participate in the federal insurance exchange in 2015.
United’s decision to enter the North Carolina market answers the looming question of whether in its second year the Affordable Care Act would expand options for the uninsured, or whether insurers would hold back for lack of confidence in a government-created insurance market.
This year United offers subsidized individual policies in just four states, according to the Kaiser Family Foundation. United officials were not available Friday to explain why the company picked North Carolina to expand subsidized coverage, but one clue could be the state’s surprising leap to the fifth-highest enrollment in the nation for subsidized health insurance.
“It’s a very encouraging sign, a vote of confidence,” said Mark Hall, a professor of law and public health at Wake Forest University. “When they get in a market, they usually do it for the long haul.”
Rate hikes sought
The three insurers’ proposed rates were filed as corporate trade secrets, but both Blue Cross and Coventry say they are proposing rate increases in 2015 to cover the higher costs of insuring older, sicker people who signed up in droves for subsidized coverage this year.
That’s consistent with insurers in other states that are filing proposed 2015 rates. A Wall Street Journal analysis of 10 states where proposed filings are public found that in all but one state the largest health insurer proposed to raise premiums between 8.5 percent and 22.8 percent.
North Carolina residents won’t be able to compare health insurance rates until November, after the state insurance department approves the applications and the U.S. Department of Health and Human Services signs off on them.
In its May 30 cover letter to N.C. Insurance Commissioner Wayne Goodwin, Coventry’s MidSouth Market President Tracy Baker assured state insurance regulators that the company remains “strongly committed” to selling individual insurance policies here.
But the company warned that factors such as rising medical costs and an influx of older customers into the subsidized insurance market necessitated increasing rates.
“We strongly believe the rates we are filing for 2015 will be competitive with the products offered by other carriers in the market,” Baker wrote.
The effect of rate increases will be muted for customers who receive federal subsidies because the Affordable Care Act caps insurance premiums and out-of-pocket costs at specific levels pegged to household income.
Of the 357,000 North Carolinians who have subsidized policies this year through Blue Cross and Coventry, 91 percent qualified for subsidies, one of the highest subsidization rates in the nation.
United’s filing this week does not commit the insurer to offer insurance to the public. Last year a number of insurers around the country, including one in North Carolina, withdrew before potential customers could start enrolling.
Open enrollment will run from Nov. 15 through Feb. 15, 2015.
Blue Cross said it will operate in all 100 counties in 2015. It’s not clear where Coventry and United will focus.
“Our bias is to maintain our current footprint across 17 states,” Coventry spokesman Walt Cherniak said by email. “Our participation on any of these exchanges is not final until our filings – which include our products, networks and rates – are approved.”
This year, Blue Cross offers subsidized plans in all 100 counties in the state, while Coventry operates in 39 counties.
Still, it would appear that residents of the Triangle and other urban areas may have a choice of three insurers under the Affordable Care Act.
“Three is a good critical mass,” Hall said of United’s decision to file. “They know how to run an insurance company. They know how to be competitive.”
Individual insurance policies are sold to people who don’t have coverage through their employer, Medicare, Medicaid or through the military.
The Affordable Care Act requires most Americans to buy health insurance. The law makes it illegal to turn down applicants with pre-existing conditions.