NC insurance sign-up time: rising premiums, tougher penalties

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Friday, October 30, 2015
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RALEIGH -- The costs of buying health insurance outside the workplace or refusing to pay up are both rising in North Carolina as a new enrollment period for federally subsidized coverage opens on Sunday.

The cost of a benchmark plan on the state's federally run online insurance marketplace will go up by 23 percent for 2016 coverage, the U.S. Department of Health and Human Services said.

The increase is near the highest for the 37 states that rely on the website and well above the average increase of 7.5 percent from last year for the second lowest-cost silver plan, the government said. States with higher percentage increases all have smaller populations and are spread across the Plains and West with the exception of neighboring Tennessee, which also is experiencing a 23 percent rise.

While more people are covered as a result of President Barack Obama's federal health insurance overhaul, the early buyers have tended to be poorer and sicker than insurers expected. The sticker shock is likely the result of insurers recouping losses that came from underpricing policies last year, HHS Southeast regional director Pamela Roshell said on a conference call this week.

This could be the peak for price increases as insurers learn more about their customers, how much they'll spend for patient treatment, and how actively competitors try to cut costs, Wake Forest University professor Mark Hall said.

"There's no reason to believe that things won't stabilize, no reason to believe that when prices find the right level things (won't) get better rather than getting worse every year," said Hall, who studies health law and policy.

The law, called the Affordable Care Act and often nicknamed Obamacare, always anticipated that consumers could force down health care costs by comparison shopping on the online marketplaces, Roshell said. About half of policyholders who bought on the exchanges did shop around, HHS said.

Blue Cross and Blue Shield of North Carolina, the state's dominant insurer, will be allowed to raise its policies to individuals, whether sold on the exchange or elsewhere, by an average 32 percent next year, state Insurance Department regulators said Friday. Blue Cross officials said this summer they were seeking a big price jump primarily to recoup losses from newly covered consumers who poured into providers for treatment, especially for cancer and heart conditions, after potentially life-threatening spells without coverage.

Aetna will increase individual premiums sold on or off the exchange by an average 24 percent, while UnitedHealthcare was approved for an average 20 percent rise, state officials said. The three companies are the only ones selling on the exchange, but none of them are selling all their policy offerings in every community.

About 600,000 people, approximately 6 percent of North Carolina's population, buy their own health insurance. Nearly 460,000 purchased coverage on the exchange this year. By comparison, Blue Cross insures about 3.9 million people overall, mostly through group and company plans.

The rising prices will be eased by subsidies for nine out of 10 buyers of the private insurance plans sold on the exchange, advocates contend. On average, that subsidy was worth about $315 per month in North Carolina, leaving the consumer paying $95 per month, the government said.

The penalty to prod those slow to buy insurance, often the young and healthy, is also on the increase.

People who can afford coverage and don't buy at work or on their own could get hit with a penalty of either $695 or 2.5 percent of their yearly income, whichever is greater, for failing to get insured by January 31. So a married couple earning $60,000 a year could pay a penalty of about $785 each, unless they qualify for exemptions from the list of more than 30 waivers, according to the Tax Policy Center's Affordable Care Act online penalty calculator.

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