Blue Cross Blue Shield rate-hike request symptom of a troubled system

RALEIGH, North Carolina (WTVD) -- Hundreds of thousands of North Carolinians could - again - face substantial increases in their insurance rates and - again - it would be folks with plans on the "individual market" (basically, everyone who bought insurance through the Affordable Care Act, or Obamacare). In the Tarheel State, that's about 502,000 people and they could see price hikes of up to 31.6 percent next year if Blue Cross Blue Shield gets its way.

Today, the insurance giant asked the NC Department of Insurance to raise rates, on average, 22.9% next year. The nearly 23% hike fits neatly into three buckets and BCBS was very clear about what each represents.

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About 14.1% of the rate increase would cover uncertainty about whether the federal government will make good on its commitment to help pay subsidies for low income participants; another 5.8% is because of the increasing cost of care; 3% is because of the Federal Health Insurance Tax.

But the 22.9% rate hike increase request is actually an average made up of a range of possible increases. BCBS customers could see the cost of their insurance swing from a 7.6% increase to 31.6%. A spokesperson for BCBS, Ryan Vulcan, said there are four specific factors that determine how much a customer would have to pay: where someone lives, how old they are, whether they smoke, and what plan they're choosing.

As for how much of an impact the hike will have on people with individual plans, Vulcan offered this via email: "In addition to the proposed average rate increase of 22.9%, it's important to note, as premiums increase so do premium subsides. About 80% of our customers receive advance payment tax credits that go toward premiums. Many customers will not feel the impact of the rate increase based on these premium subsidies."

How might this affect a real-life scenario? Vulcan offered up this example of a 43-year-old living in Raleigh with a Blue Value plan:

2017 rate: $525.62
2018 rate: $654.32

"These rates do not account for premium subsidies," Vulcan said. "About 80% of our customers receive advance payment tax credits that go toward premiums. Many customers will not feel the impact of the rate increase based on these premium subsidies.

"We understand health insurance coverage is already a large portion of our customer's household income and with the proposed rate increase many customers will pay more for coverage," she added. "It is for this reason that any health care reform must address the underlying cost of care and not just access. Providing the funds for the CSR payments would also lesson the increase."

RELATED: Blue Cross wants 23% rate increase for North Carolina Obamacare plans

Still, liberal health care advocates were quick to jump on reasoning offered by Blue Cross Blue Shield for the lion's share of the increase. The company put out a press release Thursday saying "insurance companies can't count on being paid" by the federal government.

"What they've told us," said Brendan Riley with the left-leaning NC Justice Center, referring to Blue Cross, "is that the Affordable Care Act is working, the markets are stabilizing, and if it weren't for the Trump Administration and Congress destabilizing the insurance markets to score political points, they would be asking for less than 9 percent of a rate increase."

"They returned to profitability in 2016," Riley continued, "so they've learned to manage this business. What the Trump Administration is doing now is trying to sabotage the Affordable Care Act and put the coverage and the affordability for health care for North Carolinians at risk."

Observers looking through a conservative lens see it much differently.

Katherine Restrepo, from the John Locke Foundation, said the subsidies were the problem all along.

"Subsidies are putting a Band-Aid on the overall problem, which is the overall health care costs," she said. "All the regulations in the Affordable Care Act are driving up the cost of insurance and the overall cost of health care. So this has been a problem for the past seven years. This is not a problem with the current administration."

What's more, Restrepo said there's a limit on how long Republicans have to make a change.

"Congress is running out of time, frankly, until 2018 when the midterms happen and there could be a total shift power in Congress. They're running out of time to figure out how to pass a health care bill that will address those issues."

Riley pointed out there may be real costs in the meantime that could be avoided if the government agrees to pay the subsidies.

"It's possible we could see only a 9% increase in 2018 if (President) Trump and Congress get out of the way and stop sabotaging the health care market."

Vulcan said Blue Cross Blue Shield would consider revising the request and only asking for an 8.8% rate hike if the company got a clear indication from Washington that the commitment to subsidies would be met. But she said without that, the company decided it was it its best interest to ask for the larger increase.

The NC Insurance Department will decide on the request in late September.

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