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North Carolina’s rising health insurance rates demand smart strategies

People renewing health insurance bought on the Affordable Care Act exchange are seeing higher rate increases in Charlotte and North Carolina than most places across the country, a flurry of national analyses show.

For instance, a Kaiser Family Foundation look at the largest city in each state found that only Anchorage, Alaska, had higher rates and bigger increases than Charlotte. North Carolina’s results vary with studies using different methods, but the state consistently comes out high.

Enrollment for 2015 began Nov. 15 and runs through Feb. 15. As national policy analysts began crunching numbers, local customers got a look at their new rates.

Julie and Mike Tuggle, self-employed real estate brokers in Charlotte, bought a subsidized Blue Cross and Blue Shield policy in 2014 and paid $376 a month. Their notice said the total premium was going up 16 percent, but their share would go to $622, a 65 percent increase.

“I expected it to be the same, or like 10 percent different,” Julie Tuggle said.

Such increases don’t necessarily mean customers will pay more. They do mean it’s important to look at this year’s offerings, rather than letting a policy automatically renew. UnitedHealthcare has joined Blue Cross and Coventry in offering subsidized health insurance in North Carolina, and the two that were in the 2014 market have revised some plans.

Because federal subsidies are pegged to premiums, North Carolina’s big bump could actually cut costs for some people who get aid. More than 357,000 residents bought policies during last year’s enrollment, and 91 percent got subsidies.

“Everybody should absolutely shop around,” said Adam Linker, a health policy analyst for the N.C. Justice Center.

That’s what the Tuggles did. They chose a UnitedHealthcare policy that will cost them $353 a month, with slightly higher out-of-pocket costs.

Linker and Cynthia Cox, an author of the Kaiser Foundation analysis, say tepid competition and the absence of public rate review likely contribute to North Carolina’s high rates. While some states disclose proposed rate increases and take public comments, North Carolina does not. And only Blue Cross offers policies on the ACA exchange in all 100 North Carolina counties.

“We’re getting the introduction of some of that competition,” Linker said, “but it’s still too early for that to translate into better rates.”

Changes are complex

Calculating a year-to-year rate change might seem like basic math, but it’s not.

Each company offers an array of plans. The ACA labels policies on the exchange as bronze, silver or gold, with bronze offering the lowest premiums and benefits. Higher levels cost more but come with lower out-of-pocket costs, access to more doctors and other advantages.

Premiums vary by age, smoking status and place of residence. Crossing a county line can make a difference, based on the health of people who sign up and the rates each insurer can negotiate with hospitals and physicians.

One approach to comparing rates is to average all the plans in the 2015 database and compare them with the 2014 average. The PricewaterhouseCoopers Health Research Institute did that and found that North Carolina’s average rate increase is 11.8 percent, compared with a national average of 5.2 percent. The average 2015 rate in North Carolina is tallied at $384 a month, $2 below the national average.

But critics say that’s like calculating an average car price without taking into account that people buy more Hondas than Lamborghinis. Most of the priciest plans on the exchange get few takers, experts say, with buyers overwhelmingly favoring the cheapest silver and bronze plans.

Silver standard

Tax credits, or subsidies, are based on the buyer’s household income and the premium for the second-cheapest silver plan in the market. That’s what some experts look at for 2015 trends.

Avalere Health, a Washington-based consulting company, compared rates for the “benchmark” silver plans – the second-cheapest in each market – in 34 states that use the federal exchange.

North Carolina’s 2015 average for a 50-year-old nonsmoker choosing that plan is $456, a 9 percent increase, Avalere reports. For all 34 states, the average was $395, a 3 percent increase.

Kaiser, a Washington-based foundation focused on health issues, tallied changes in the premium for the benchmark silver plan in the biggest city of each state. Anchorage, where the rate rose 28 percent to $488 a month, was by far the most expensive.

Charlotte’s rate rose 7 percent, to $328 a month. In addition to Anchorage, five cities (New York; Indianapolis; Milwaukee; Burlington, Vt.; and Cheyenne, Wyo.) had rates higher than Charlotte’s but saw smaller year-to-year increases. Another half-dozen cities with lower rates saw bigger percentage increases than Charlotte, but only Anchorage topped Charlotte on both counts.

Additional data Kaiser provided to the Observer show that Wake County’s benchmark plan rose 13 percent, to $305 a month. Residents of Gaston and Lincoln counties will pay a little less than their counterparts in Mecklenburg, while those in nearby Rowan County will pay more.

It’s important to note that the benchmark plan in 2014 isn’t necessarily the benchmark for 2015, so people who simply let their policy renew automatically may end up paying more.

The New York Times did a similar analysis to Kaiser’s, but it looked at changes in the cheapest silver plan in each market. In most cases, the Times found, people who have those plans will save money if they switch to the new cheapest plan.

In the Charlotte area, for instance, customers who renew will pay $328 a month, a 9.1 percent increase, while those who switch to the new lowest-cost silver plan will pay $324, or 7.6 percent more.

“Of course, switching plans has its costs – in many cases, it means changing doctors and drug lists. It also may mean mastering new deductibles, co-payments and other benefit structures,” the Times reports. “The tough choice before consumers – between a price hike and the inconveniences of switching – is a consequence of the Affordable Care Act’s reliance on competition to control health insurance prices.”

It’s not always a choice. Deanna May of Charlotte says she has a subsidized Coventry silver plan that costs her $58 a month. Her renewal notice says that plan is being dropped. If she does nothing, she’ll be enrolled in a different Coventry silver plan that will cost her $102.39.

May says she’s shopping, and she’s frustrated by the complexity of figuring out which specialists are in the network for plans.

“It does not matter what insurance you use, Healthcare Marketplace or other, problems of this nature are rampant and systemic,” May said. “The system needs to be simplified and expanded.”

Vivian Wilson of Charlotte, an early childhood teacher, said she doesn’t plan to switch, even though her payment for the Coventry plan she bought in October will go from $43 to $76 a month. She qualified for a belated 2014 enrollment when she left a job where insurance cost her more than $300 a month for one that doesn’t offer coverage.

“I was surprised at how much the cost went up” for 2015, Wilson said, but “it’s still a great rate for me.”

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