Representatives from three of the health insurance companies whose plans are to be sold on Idaho’s government run insurance exchange met with legislators Monday and all three made it clear that the federal Affordable Care Act (Obamacare) has created significant uncertainty for the insurance industry.
“We face an uncertain world,” said Paul Harmon from BridgeSpan Health Insurance, a corporate affiliate of Regence Blue Shield. He was addressing the Idaho Legislature’s Health Care Task Force, a committee comprised of members of the Senate and the House of Representatives. Harmon noted that “we’re not sure what our population (of prospective clients) is going to look like on Jan. 1. It’s a whole new world for us.”
The task force had asked the three representatives to discuss the processes by which their respective insurance companies determined their new, adjusted insurance policy rates for 2014. Last month a spokesperson for the Idaho government-run insurance exchange announced what those rates would be for each company participating in the exchange, but declined to discuss how much higher the 2014 rates would be over the previous year, and deferred questions on the rates to the respective insurance companies.
According to Tom Donovan, deputy director of the Idaho Department of Insurance (the state agency that regulates insurance companies), determining the percentage by which insurance rates are increasing in 2014 compared to 2013 could be nearly impossible.
“I’m not aware of any attempt to tabulate that,” Donovan told IdahoReporter.com. The difficulty is because of the federal Obamacare law, insurance plans in 2014—their levels of coverage, their deductibles and their co-pays—are substantively different from the previous years’ plans.
“On average, rates are going to rise,” Harmon told the task force. “For one person they may experience a 10 percent decrease in rates, or a 30 percent increase. But on average things will rise. However, despite a rise in premiums, there will also be offsetting adjustments in co-pays and out-of-pocket expenses.”
Jack Myers of Blue Cross Idaho agreed with Harmon on the uncertainty that his company is facing, but also noted that “there is some thought that most of the people who will sign up in the first year (via the Idaho state insurance exchange) will be currently uninsured and may qualify for subsidies. We suspect that those who are less healthy will be more inclined to sign up, and those who are more healthy will be less inclined to buy insurance,” he said.
Dave Self, a representative of Pacific Source insurance and a member of the Idaho insurance exchange board of directors, told the task force that “we started with a very conservative process. We had to take into consideration the current insured population as well as the uninsured. The real game is in 2016 when all of the markets will begin to settle down.”
Sen. Dean Cameron, R-Rupert, co-chair of the task force, asked Self if he is “concerned that you are running the risk that those who go to the exchange may not end up doing business with Pacific Source, and instead might go to a different insurance company that they see on the website?”
“Yes, we are concerned about that,” Self replied. “Nobody likes to lose market share. We never like to see a customer leave. But this is not about Pacific Source. This is about creating a competitive marketplace in Idaho for the people of Idaho.”
Harmon noted that younger adults, in particular, who seek to buy insurance directly may see their rates rise significantly. Myers agreed, noting that “those on the younger, healthier side of it may see rate increases and decide that it’s not worth it any longer to buy health insurance.”
Harmon added because the Obamacare law prohibits insurance companies from considering “pre-existing conditions” with their insurance rates, people who are in good health will no longer receive lower insurance rates. “Previously those in good health received lower rates,” he explained. “You were still subsidizing those in poorer health, to some extent, but you got a lower rate for being in good health. Now your positive health status will be absolutely no benefit to you in terms of insurance costs.”
Bill Deal, director of the Idaho Department of Insurance, agreed with Harmon. “Insurance rates will only vary by company, coverage, age, your status as a tobacco user and your geography,” he said. “Pre-existing conditions and your present health status no longer matter.”
Rep. Gary Collins, R-Nampa, co-chair of the task force with Cameron, asked Deal “what are we to make of those who are experiencing a dramatic rise in insurance rates? We are aware that there are those who are being told that their insurance rates will increase by 100 percent next year. How do we justify that, when a person is paying dramatically more and getting significantly less in return?”
“I had that happen in my family,” Deal replied. “My son got a letter from his health insurance provider saying that his policy for a family of three was going up by $107 a month. Then he went to the website (the insurance exchange website) and found a policy for $107 less per month than what he was paying. Communication is the key here. We’re really relying on our agent-broker community to get the word out about the insurance exchange.”
Sen. Dan Schmidt, D-Moscow, asked Deal “I’ve heard that there are scams being targeted at the elderly and retirees. Is that something your department is addressing?”
“We are,” Deal said. “We are working with the attorney general’s office on that. And I suspect this is a problem that is going to proliferate and get worse. The elderly are being targeted now, but I think others will be eventually.”
The task force meets again in November.