Here We Go: Insurers Begin Blaming Health Law For Premiums Increases

On Friday, the News & Observer in North Carolina reported that Blue Cross Blue Shield of North Carolina — the largest insurer in the state — would be increasing premiums to keep up with medical inflation and the requirements of the new health care law:

“With everything that’s been added, you can’t really expect costs to go down,” he said.

The situation isn’t likely to improve any time soon. As more provisions of the health overhaul law take affect in 2014, Blue Cross officials said they expect rates to rise further.

“We do expect significant premium volatility in 2014 as the industry moves to an entirely new rating structure,” said Patrick Getzen, Blue Cross’ chief actuary.

But aside from allowing dependent coverage and eliminating annual limits, BCBSNC is also taking early steps to implement other provisions of the health law. The company is starting to move people into a single risk pool and is slowly eliminating the rating bands that many insurers are so infamous for. That sounds good, but it means that younger people who now pay relatively little for individual policies will pay substantially higher premiums, with some rates going up as much as 30%.

Adam Linker, a policy analyst with the N.C. Justice Center’s Health Access Coalition, doesn’t think that policy holders should have to bear the brunt of the issuer’s decision to adopt early changes, particularly since they’ll have to pay higher premiums without the added benefit of the law’s subsidies or Medicaid expansion (both of which don’t begin before 2014). He believes that if BCBSNC wants to institute a policy of early compliance, then it should pay for these changes itself. After all, the issuer does has an unusually high amount of money set away in its reserves and could certainly afford it.

“I’d like to see insurers take a small hit now and then figure out what adjustments they need to make in 2014,” when federal subsidies will help the uninsured afford coverage, Linker said. At that point, health insurers also will get a boost in business from new members.

But what’s really interesting about this approach is that BCBSNC is trying to get its policyholders to pay for its early compliance efforts and any “premium volatility in 2014” — the very same kind of “volatility” that early compliance is presumably designed to reduce. The problem is that the health care law provides many insurers with an easy scapegoat, even if actuaries have estimated that the initial provisions (dependent coverage and eliminating annual limits) would increase costs by as little as 1%. They can raise premiums higher and blame all the increases on the taxes and coverage provisions of the new health law.