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Statement on North Carolina Health Insurance Rates

WASHINGTON, DC – Jonathan Gold, Press Secretary at the U.S. Department of Health and Human Services issued the following statement on 2017 North Carolina health insurance rate changes.

 “Consumers in North Carolina will continue to have affordable Marketplace options next year. Among Marketplace consumers, most will be able to select a plan for less than $75 per month. Headline rate changes do not reflect what these consumers actually pay because tax credits reduce the cost of coverage below the sticker price and shopping helps consumers find the best deal. Meanwhile, for people in North Carolina with employer coverage, premiums have grown at some of the slowest rates on record since the Affordable Care Act was enacted. All North Carolina consumers, no matter where they get their coverage, are benefiting from ACA protections like no more exclusions for preexisting conditions, no annual limits on coverage, and no cost sharing for preventive services.” 

BACKGROUND

Since the Affordable Care Act became law, health care prices have risen at the lowest rate in 50 years.  Premiums for the 150 million Americans with employer-sponsored insurance have grown at some of theslowest rates on record. And, a recent analysis finds that 82% of Marketplace consumers in North Carolina would be able to purchase coverage for less than $75 per month, even if all rates went up double digits.

 The Health Insurance Marketplace is designed for affordability. Two important features of the Marketplace protect North Carolina consumers from the impact of rate increases.

 Tax credits go up along with premiums. Tax credits are designed to protect consumers from rate increases and keep coverage affordable, increasing by whatever amount the cost of the second-lowest-cost silver, or benchmark plan increases. So if all premiums in North Carolina go up by similar amounts, 91 percent of consumers will not necessarily have to pay more, since tax credits will increase in parallel. Last year, despite headlines projecting double-digit rate increases, the average premium increased just $4 per month for HealthCare.gov consumers with tax credits, and 7 out of 10 Marketplace consumers could purchase 2016 coverage for less than $75 per month.  Even if premiums and tax credits rise, the overall cost of the ACA is still below CBO’s original projections. CBO’s recent projections estimate that for 2019 coverage, ACA coverage will cost $49 billion less than originally predicted.

Consumers can shop around to find the best plan. In 2016, consumers could choose among an average of 10 plans per issuer. Variations in provider network and drug formulary makeup from plan to plan can offer consumers meaningful choice. Prior to the Affordable Care Act, it was almost impossible to shop around for health insurance. Not only were many Americans barred from coverage due to pre-existing conditions, but those who did have insurance through the individual market were often trapped in a plan, since people with even small health problems could be denied coverage or charged an exorbitant price if they tried to switch plans. Today, any Marketplace consumer can purchase any plan during open enrollment, and Marketplaces let consumers compare prices, plan designs, and networks to find the best choice for them. Last year, 43 percent of returning North Carolina HealthCare.gov consumers switched plans. They saved an average of $48 per month.Current Marketplace rates are well below initial Congressional Budget Office (CBO) projections.

  • Independent researchers recently calculated that 2016 Marketplace rates are anywhere between12 percent and 20 percent below what CBO initially predicted.
  • 2017 Marketplace rate increases are subject to a number of predictable upward pressures that will dissipate next year.
    • The end of the ACA’s temporary reinsurance program in 2016 puts upward pressure on 2017 rate increases that won’t exist for 2018 and beyond.
    • Evidence suggests that some issuers priced below cost for 2014, reflecting the uncertainties of a new market and a desire to offer strongly competitive initial rates. With two full years of experience, many issuers are making one-time adjustments this year to bring premiums in line with observed costs.
  • CBO’s projections show that the law is working to cover the uninsured, while costing less than expected. Recent estimates find that the law’s coverage provisions will cost 28 percent less in 2019 than in CBO’s original projections.

Medicaid expansion lowers Marketplace premiums by 7 percent.

  • In addition to limiting access to coverage for millions of Americans, the decision not to expand Medicaid also has costs for Marketplace consumers, who pay significantly higher premiums than they would if the coverage provisions of the ACA were working together in their state as intended.
  • Economic analysis finds that Medicaid expansion brings down Marketplace rates by 7 percent, even after controlling for differences across states in demographic characteristics, pre-ACA uninsured rates, health care costs, and state policy decisions.

 Marketplace and non-Marketplace consumers are benefiting from slow health care cost growth since the enactment of the ACA.

  • Since 2010, per-enrollee costs in both public and private health insurance have grown moreslowly than in previous decades – contributing to lower-than-expected costs in the Marketplace.
  • Ten times as many people are covered by employers as purchase insurance in the Marketplace and the average premium for families with employer-sponsored health plans grew just 3.4 percent in 2016, according to the Kaiser Family Foundation and Health Research and Educational Trust survey, extending a period of unusually slow growth since 2010.
  • The White House Council of Economic Advisers calculates that the average family premium in North Carolina was $2,400 lower in 2015 than if premiums had grown at the same rate as the pre-ACA decade.
  • Part of the progress in slowing cost growth is the Administration’s work to develop new,innovative ways of paying for care that align payment with improved outcomes which can help sustain and build on the slowdown in health care costs
  • This benefits Marketplace consumers as well. CBO has consistently predicted that Marketplace rates would grow faster than employer premiums for the first few years, but then grow at the same pace as employer coverage.
  • That means Marketplace consumers will also benefit if slow health care cost growth can be sustained and the Marketplace advances in its stability and reaches a steady state.

 The Marketplace is providing 545,354 North Carolina consumers with coverage they value, because it improves their access to care and financial security.

  • Nearly 4 out of 5 Marketplace consumers are very or somewhat satisfied with their health insurance. Importantly, they are just as satisfied with their coverage as people with employer plans.
  • Marketplace consumers are accessing primary, specialist, and other care they need at rates similar to people with employer coverage and far higher than the uninsured, thanks in part tomoderate cost sharing.
  • The share of families struggling to pay medical bills fell for all income groups between 2013 and 2015, and fell the most for the moderate-income families most likely to have gained coverage through the Marketplace.
  • ·Only 11.2 percent of people in North Carolina went uninsured in 2015, new Census data show, down from 16.8 percent in 2010. That dramatic drop means 552,000 more North Carolinians had coverage in 2015.

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