Today we are seeing a small sign that health care costs are starting to come under control in North Carolina. Many, but not all, people who shop for health insurance on the individual Affordable Care Act (ACA) marketplace, are expected to see their monthly premiums go down.
Blue Cross and Blue Shield of North Carolina (a member of the NC Coalition for Fiscal Health) announced an expected average 4.1% decrease in ACA marketplace health care premiums for 2019. The insurer’s rates had gone up at double digit rates every year since the implementation of the ACA. This is the first ever individual market rate decrease in the company’s history. Blue Cross NC is the state’s largest insurer and only insurer to offer ACA marketplace plans in all 100 NC counties.
While this is welcome news, there is still work to be done. Dr. Patrick Conway, President and CEO acknowledged,
“This is a historic rate decrease that will benefit people across North Carolina. We’re moving in the right direction, but even with a lower rate, premiums are still too high – particularly for those who don’t get a subsidy.”
While the decrease is surely welcome news for many of Blue Cross NC’s customers on the individual market, premiums remain high, and not every customer will be paying less. While some customers will enjoy decreases of 4.1% or more, others will see increases. Blue Cross says that no increase will exceed 10% - good news when compared to 2016’s 32.5% average hike. Rates differ based on location, age, subsidy amount and plan. Blue Cross says they will release region-specific rates by October.
It is important to note that, even with the decrease, customers receiving subsidies may not pay less. This is because lower rates also mean lower subsidies, so some customers’ out-of-pocket costs might not change for the better. Households with incomes between 100 and 400 percent of the Federal Poverty Level ($25,100 – $100,400 for a family of 4 in 2018) are eligible for government subsidies on the individual market, and as a result, may not feel any decrease directly.
The overall reductions are a result of a number of factors including the following.
- Blue Cross NC attributes part of the reduction, 0.5%, to the 2017 Tax Cuts and Jobs Act.
- An additional 3% is due to Congress’ temporary suspension of the Health Insurer Tax (which could come back in 2020).
- Perhaps most exciting for long-term health care cost prospects is that Blue Cross NC has entered into “new arrangements with health systems that will reduce costs in 2019.” We will be excited to see how these arrangements impact costs moving forward.
This is positive news for North Carolina. The average reduction in premiums represents $120 million in health care savings for 2019 in North Carolina. That’s real money that families and individuals will be free to spend how they choose.
Most important, it is a sign that there is progress in bringing health care costs under control. The Coalition applauds Blue Cross for proactively working to lower health care costs, and for passing on those savings on to its customers. This is a good step toward more affordable health care.