Blue Cross cut rates, but some have sticker shock

The Charlotte Observer - - Front Page - BY JOHN MURAWSKI

jmu­[email protected]­sob­

Call it the law of un­in­tended con­se­quences, or the law of mis­un­der­stood form let­ters.

Some Blue Cross and Blue Shield cus­tomers are see­ing their health in­sur­ance rates spike this year de­spite the com­pany’s first rate cut since it en­tered North Carolina’s in­di­vid­ual in­sur­ance mar­ket more than 25 years ago.

The Blue Cross re­duc­tion for 2019 av­er­aged 4.1 per­cent statewide for in­di­vid­ual health in­sur­ance, which are mostly plans sold through the Af­ford­able Care Act mar­ket­place. The rate cut was much more sig­nif­i­cant in some parts of the state: down 21 per­cent in the Tri­an­gle, and down 16.5 per­cent in the Char­lotte mar­ket.

But it didn’t nec­es­sar­ily work out that way for all the in­surer’s cus­tomers. That’s be­cause the rate cut trig­gered a cor­re­spond­ing re­duc­tion in fed­eral ACA sub­si­dies for low-in­come and mid­dlein­come cus­tomers. And some cus­tomers didn’t un­der­stand the im­pli­ca­tion un­til it was too late.

“It is com­pli­cated — for most peo­ple, it’s in­com­pre­hen­si­ble,” said Ti­mothy Jost, a Washington & Lee Uni­ver­sity law pro­fes­sor spe­cial­iz­ing in health care, in a phone in­ter­view. “You have vari­ables that are con­stantly chang­ing and it’s easy to catch peo­ple by sur­prise.”

One of those caught un­awares was Troy Austin Jr. of Char­lotte, who saw his net monthly pay­ment go up by 51 per­cent, from $ 268.64 a month in 2018 to $406.64 a month this year, when his fed­eral sub­sidy was slashed. Par­tic­u­larly galling for Austin is that the rate no­tice let­ter he got from Blue Cross in Septem­ber es­ti­mated his cost in 2019 would be $ 202.64, once the fed­eral sub­sidy was fac­tored in.

“It just blew me out of he water when I saw that,” Austin said by phone. “I’d have come out bet­ter if they had gone up on these, not low­ered the price.”

The cost in­crease stings, be­cause Austin, 57, is fi­nan­cially lim­ited. He stays at home to care for his severely dis­abled adult sis­ter, for which he’s paid an an­nual stipend through Med­i­caid. On top of the monthly pre­mi­ums he has to pay, the an­nual de­ductible on his health in­sur­ance is $4,000.

Blue Cross won’t know ex­actly how many cus­tomers have been sim­i­larly af­fected un­til next month, when it fi­nal­izes its en­roll­ment data, said Blue Cross spokesman Austin Ve­vurka.

The form let­ter Troy Austin re­ceived from Blue Cross stated it was an es­ti­mate and ad­vised cus­tomers to ver­ify costs dur­ing en­roll­ment. He said that warn­ing seemed like boil­er­plate lan­guage.

“I can’t be the only one this hap­pened to,” he said. “I def­i­nitely won’t be­lieve that let­ter again.”

Austin’s predica­ment stems from the for­mula used to cal­cu­late ACA sub­si­dies. Each cus­tomer’s sub­sidy is cal­cu­lated off a sin­gle health plan of­fered in ev­ery ACA mar­ket: the sec­ond-low­est cost “sil­ver” plan, no mat­ter what plan the cus­tomer buys, said Karen Pol­litz, a se­nior fel­low at the Kaiser Fam­ily Foun­da­tion, which re­searches health care is­sues.

What’s more, the plan used to cal­cu­late the sub­sidy changes from year to year, as prices change. Austin let his Blue Cross health in­sur­ance roll over au­to­mat­i­cally, so that his plan qual­i­fied for a much lower sub­sidy than it did last year, even though his in­come didn’t change.

The only way to know for sure what your costs are go­ing to be is to reap­ply for health in­sur­ance ev­ery year, and not to rely on an in­surer’s es­ti­mates. The es­ti­mates are un­re­li­able be­cause they are sent out in the fall, be­fore ACA sub­sidy amounts are known.

“Never auto-re­new,” Pol­litz said. “Just don’t.”

Ve­vurka, the Blue Cross spokesman, said the sub­sidy co­nun­drum is an is­sue in the nine-county Char­lotte mar­ket, where Blue Cross has more health plans and more price vari­a­tions than in other ar­eas of the state. He said that cus­tomers who con­firmed costs on­line or by phone with a cus­tomer ser­vice rep­re­sen­ta­tive, in­stead of au­to­mat­i­cally rolling over, would have com­pared ac­tual costs for 2019. And the early in­di­ca­tions are that “that peo­ple re­ceived the mes­sage from our mem­ber com­mu­ni­ca­tions about the sub­sidy be­ing im­pacted,” Ve­vurka said.

Deputy In­sur­ance Com­mis­sioner Ted Hamby said the N.C. Depart­ment of In­sur­ance has not re­ceived com­plaints about the is­sue. Hamby wrote in an email that the rate no­tice sent to Austin clearly states the 2019 cost cited is an es­ti­mate, “and en­cour­ages the con­sumer to up­date their in­for­ma­tion on the ‘mar­ket­place’ en­roll­ment web­site.”

As for Austin, he’s stuck in his plan. His only way out is an un­usual event — such as mov­ing, get­ting mar­ried or di­vorced, hav­ing a baby or los­ing a mem­ber of his house­hold — that would qual­ify him to change his health plan.

John Murawski: 919- 829- 8932

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