Monday, August 18, 2014

Sneak peek at 2015 rates? Not in NC

When I started covering the Affordable Care Act recently,  the folks at Families USA urged me to write about public review of proposed health insurance rates for 2015.  Several states require companies to post their rates for public comment,  and the consumer advocacy group says those comments can help save millions.

But in North Carolina,  rate review is done privately by the Department of Insurance.  Proposed rates are considered trade secrets,  not to be disclosed to competitors  (and therefore shielded from consumers as well).  We'll have to wait until fall,  probably October,  to see what's in store for folks who buy insurance on the federal exchange.

Meanwhile,  a reader sent a link to a Manhattan Institute analysis that appears to forecast huge hikes,  with North Carolina facing one of the biggest increases in premiums.  "Obamacare To Increase Individual-Market Premiums By Average of 41%,"  reads the headline on a Forbes piece by Avik Roy,  a senior fellow at the Manhattan Institute and former health care adviser to GOP presidential candidate Mitt Romney.  North Carolina's increase is listed as 136 percent.

Manhattan Institute map
The future tense is misleading;  the analysis is based on comparing 2013 rates with 2014 rates offered on the exchange. The methodology page describes a complex approach that compares five of the cheapest pre-ACA rates for various ages with the cheapest offerings on the ACA exchange.

"The key thing to understand about our before-and-after comparison is that it is an average,"  Roy writes.  "If you're healthy today,  you will face steeper rate increases than these figures indicate.  If you have a serious medical condition,  however,  and haven't been able to find affordable coverage as a result,  you will do much better under Obamacare than the average person.  Men will face steeper increases than women in most cases,  because women consume more health care than men do,  and Obamacare forbids insurers to charge different prices on the basis of gender."

"In addition,  our comparison ignores other differences between pre-Obamacare and post-Obamacare plans,"  he continues.  "For example,  in some cases,  people looking for comparably-prices coverage on the exchanges will need to accept higher deductibles and other cost-sharing arrangements."

So,  is this meaningful data about what has actually happened in North Carolina and across the country?  I asked health care experts from UNC Chapel Hill,  Winthrop University and the Knight Family Foundation to look at the report and share their thoughts.  All were skeptical,  not only because of the Manhattan Institute's political agenda but because of the assumptions,  extrapolations and proxy measures used in the calculations.

"What this analysis basically concludes is that those who are purchasing lower cost health plans will pay more in premiums for insurance,"  wrote Winthrop's Michael Matthews and Laura Ullrich,  who specialize in health care administration and economics,  respectively.  "However,  you cannot assume any generalizability to the population at large or the average healthcare insurance enrollee.  This report simply supports what was already assumed:  those who are healthier,  younger and in lower cost plans will likely see premiums go up.  This is expected when you reduce price discrimination,  increase health plan benefits  (preventative services)  and disallow discrimination based on pre-existing conditions."

Matthews and Ullrich say the data isn't comprehensive enough to conclude that premiums are rising for  "the common healthcare consumer."

Jonathan Oberlander,  who specializes in health care policy at UNC Chapel Hill,  raised similar concerns:  "In a system of community rating, where everyone pays the same premium, the young and healthy always subsidize the older and sicker enrollees  --  that is how insurance pools work, and it's true as well of employer health plans like the one I am in (state health plan).  But the young and healthy will one day be neither young nor healthy, so they will benefit from the system in time as well."