This story was updated at 10:30 a.m. November 1 with more information about the tax penalty for not carrying insurance.
Open enrollment for health insurance through the Affordable Care Act starts Tuesday. People in Kansas and across the country will be able to log in to the online marketplace, healthcare.gov, and purchase plans for 2017 with federal subsidies based on income.
Some Kansans will face the sticker shock of big premium hikes, but their premium increases will be lower than those for some nearby states. And, thanks to Kansas Insurance Commissioner Ken Selzer, they will have choices that they otherwise would not have.
Like every candidate in the five-way Republican primary race for insurance commissioner in 2014, Selzer made opposition to the ACA, commonly called “Obamacare,” part of his campaign.
But once elected to work on behalf of Kansas insurance consumers within the confines of the federal system, Selzer put practicality ahead of politics by recruiting a new insurer, Medica, into the Kansas ACA marketplace for 2017.
Selzer worked for months to get Medica and another insurer, Coventry Health and Life (a subsidiary of Aetna), to join the exchange.
Things ultimately didn’t work out with Coventry, but getting Minnesota-based Medica was important.
Avoiding a single option
UnitedHealthcare’s decision to exit Kansas — and many other state exchanges — appeared to leave Kansans able to buy 2017 ACA coverage from only one insurer: Blue Cross and Blue Shield of Kansas City in Wyandotte and Johnson counties and Blue Cross and Blue Shield Kansas Solutions in the rest of the state.
If that had happened, Kansas would have joined five other states — South Carolina, Alabama, Alaska, Oklahoma and Wyoming — in which Blue Cross was the only marketplace option.
Under that scenario, Kansans outside the Kansas City metropolitan area also would have been restricted in their choice of medical providers.
Blue Cross and Blue Shield of Kansas City is offering traditional insurance plans in which members get reimbursed more if they visit providers in a “preferred” network but still are reimbursed something for out-of-network care.
But Blue Cross and Blue Shield Kansas Solutions is offering only HMO plans, which provide no coverage for out-of-network care, on the marketplace. Those plans won’t provide any coverage to see specialists outside the network at places like the University of Kansas Hospital in Kansas City.
If Blue Cross were the only insurer on the exchange, Kansans outside the KC area whose doctors aren’t in the HMO network would have had two choices: pay entirely out of pocket or find a new doctor. As it is, they will have a third choice: Buy a traditional plan from Medica, which provide some coverage even for out-of-network care.
Effect on premiums
It’s hard to say exactly what effect it would have had on premiums if Blue Cross became the only seller on the Kansas exchange. But in general, getting more insurers into a market drives down premiums, so long as they’re selling comparable plans.
With Medica in the marketplace, premiums are still up substantially. The Kaiser Family Foundation has been tracking premiums of benchmark plans in major metropolitan areas year over year and found that such a plan in Wichita will cost 46 percent more in 2017 than the year before.
But without Medica the increases might have been higher.
Consumers in Oklahoma City saw premiums for their benchmark plan rise by 67 percent. Premiums were up 55 percent in Minneapolis and 48 percent in Chicago.
Experts say premiums are increasing and insurers are leaving the ACA marketplace for several reasons:
- Those who are signing up for plans are requiring more health care than estimated.
- Not enough young, healthy people are signing up through the marketplace.
- Prescription drug costs are driving up health insurance prices both on and off the marketplace.
Some of that could turn around in 2017. The tax penalty for not carrying insurance, known as the “individual mandate,” has been rising and is up to a minimum of $695 per adult in 2016. The penalty is either the per-person fee or 2.5 percent of income, whichever is higher, so those with a penalty based on income could pay far more. The fee for not having insurance in 2017 hasn’t been set yet, but by law it rises with inflation so it could go higher again. That changes the risk-reward calculation for generally healthy people trying to decide if it makes more personal financial sense to pay premiums and get health insurance or just pay the tax penalty.
As more people get insured and stay insured, the costs of pent-up care that they had been going without should also dissipate.
But it’s also possible that by now premiums and other out-of-pocket costs for ACA plans are so high that they will attract only buyers who need a lot of medical care, which will further drive up costs — what the insurance industry calls a “death spiral.”
Either way, there was little Selzer and his team in the insurance department could do to hold down premiums this year. A spokesman for Selzer’s office did not respond to a request for comment.
It’s also important to note that most Kansans won’t be personally affected by the ACA marketplace premium hikes.
Most Kansans get their insurance from an employer or from government programs like Medicare and Medicaid. In past years, about 100,000 Kansans — or 3.5 percent of the state population — have purchased insurance from the ACA marketplace.
Of those 100,000, about 85 percent will get federal subsidies based on their income to offset the premium increases, according to estimates from the U.S. Department of Health and Human Services.
That leaves about 15,000 Kansans who will take the brunt of the sticker shock when open enrollment begins.
But, thanks to the recruiting efforts of Selzer and his team, they will at least have choices.