Oklahomans planning to sign up for 2017 health coverage under the Affordable Care Act might prepare for a possible case of sticker shock.
Only one company, Blue Cross Blue Shield of Oklahoma, is offering ACA individual health plans in this state next year. Its rates for one type of benchmark policy are rising 67 percent in the Oklahoma City area and 71 percent in Tulsa, before federal subsidies are taken into account.
The full impact of the rate hikes will be felt mainly by higher-income people who do not qualify for federal premium subsidies. Those with lower incomes generally will see smaller percentage increases.
Even so, the political impact of double-digit rate increases in Oklahoma and other states is causing big problems for the program’s supporters, particularly amid a vitriolic presidential election in which “Obamacare” is a central campaign issue.
In this Q&A, Oklahoma Watch examines the reasons behind the ACA market turmoil and the options for 2017 available to Oklahomans.
Q: When does 2017 enrollment begin?
A: It starts on Nov. 1 and ends on Jan. 31. Applications must be submitted by Dec. 15, though, to take effect on Jan. 1.
Q: Should I wait until after the election before buying insurance?
A: You can, but the election outcome is unlikely to have any effect on your options for 2017, Oklahoma Insurance Commissioner John Doak told Oklahoma Watch. That’s because any Affordable Care Act changes probably could not take effect until 2018 or later. “Nothing is going to happen quickly no matter who’s in office,” Doak said.
Q: How many people are affected by the ACA market in Oklahoma?
A: About 130,000 Oklahomans currently are covered by ACA policies, according to the Insurance Department. The Henry J. Kaiser Family Foundation estimates 491,000 Oklahomans were uninsured in 2016. It said 122,000 were eligible for ACA subsidies, 65,000 were eligible for Medicaid, 82,000 fell into the “coverage gap” caused by Oklahoma’s refusal to participate in Medicaid expansion, and 221,000 were ineligible for government assistance for other reasons, such as non-citizenship or high incomes.
Q: What categories of people are required to obtain coverage?
A: Generally speaking, the Affordable Care Act requires you to buy an individual policy if you are not already covered by some kind of group policy, such as Medicare, Medicaid or employer-provided plans, and your household income exceeds the federal poverty level. The poverty level for 2017 is $11,880 for a single person and $16,020 for two people, plus $4,140 for each additional person.
Q: Where can I get information about my options?
A: You can shop for policies and get premium subsidy estimates on the federal government’s health care exchange, http://www.healthcare.gov, or by calling the ACA hotline, 800-318-2596. You can do the same thing on the Blue Cross Blue Shield website, http://www.bcbsok.com/, or by calling the company at 866-793-8111. You can also contact an insurance agent. For assistance in finding one, see https://localhelp.healthcare.gov/.
Q: Why are rates rising so much?
A: According to federal and state regulators and insurance company officials, it’s mainly because companies have been losing money on the ACA policies they issued over the past three years. One big factor is that many younger, healthier people have not signed up for coverage, leaving the ACA insurers with a risk pool consisting of older people who tend to use more health care services.
Q: Is this happening in other states?
A: Rates are rising in many states. The average increase for the 39 states operating under the federal-run health exchange is 25 percent. Oklahoma’s increases are among the highest in the country, though. Blue Cross Blue Shield of Oklahoma said it’s been losing money in Oklahoma’s ACA market, paying out $1.38 in claims for every $1 in premium revenue collected in 2015. “This is not sustainable,” the company said.
Q: Why is Blue Cross the only company left in the market here?
A: The number of ACA insurers in Oklahoma has steadily dwindled, from five in 2014 to four in 2015 to two in 2016. Blue Cross’ only remaining competitor in Oklahoma, United Healthcare, announced it was dropping out of the market in 2017 because it could not provide coverage profitably here.
Q: What effect will the lack of competition have?
A: Insurance Commissioner Doak said his department is prodding Blue Cross to “ramp up” the quality and quantity of its service across the state. “These rate increases are significant,” Doak said. “We want the company to be responsive.” Blue Cross said it already is taking steps to improve customer service and outreach.
Q: What’s happening to the people who have United Healthcare policies?
A: If you are one of about 6,000 people who are covered by United Healthcare ACA policies in Oklahoma, you will automatically “migrate” into a similar Blue Cross Blue Shield plan. If you want to change your coverage options, you will need to do so on the ACA or Blue Cross website, or by calling Blue Cross.
Q: How are ACA health policies priced?
A: Health care premiums are highly variable, ranging from as little as zero after federal subsidies are taken into account, to as much as $2,000 a month for a gold-plated plan purchased by a single older person who smokes and does not qualify for subsidies. Unsubsidized rates for Blue Cross plans are priced by age, family size, geographic location, tobacco use, provider network, coverage tier and plan provisions, such as deductibles and copays. Federal subsidies reduce the premiums for about 86 percent of policyholders in Oklahoma.
Q: How much difference do the subsidies make?
A: Quite a lot, for many people. For example, the federal government compares markets by using the price of a benchmark “silver” plan purchased by a 27-year-old single person. In Tulsa, Blue Cross will charge $423 a month for that policy next year. If the buyer’s annual earnings equaled that age group’s median income of $27,500, he would qualify for a monthly premium subsidy of $250, reducing the net cost to $173 a month.
Q: How many policy choices will I have?
A: You should expect to choose between at least a dozen plans. Most will be in the “bronze” or “silver” coverage tiers, which are designed to cover 60 percent or 70 percent of average annual health expenses, respectively. You’ll also need to choose between Blue Cross’ “Advantage” and “Preferred” provider networks. Advantage policies are cheaper but cover only 54 of Oklahoma’s 77 counties and include 8,622 providers. Preferred policies cost more but are available in all 77 counties and include 14,680 providers.
Q: How can I tell if my doctor, hospital or other provider participates in a plan?
A: The Blue Cross website has a doctor and hospital look-up feature: http://www.bcbsok.com/find-a-doctor-or-hospital.
Q: What happens if I don’t buy a policy next year?
A: If you are covered by the ACA mandate and don’t qualify for an exemption, you will be subject to a fine. The amount of the fine is either a flat-rate amount of up to $2,085 per household or 2.5 percent of gross income, whichever is greater. For example, a household with gross income of $100,000 would pay a penalty of $2,500. The fine will be assessed when you file your 2017 tax return in 2018. But the Affordable Care Act waives the fine if a basic plan costs more than 8.1 percent of household income.
Q: What if I would rather pay the fine than pay even more expensive premiums?
A: You have that right, but it would be risky. “The problem is if you get sick or have an accident and you don’t have coverage, you get hammered,” said Deputy Insurance Commissioner Mike Rhoads. “You’re between a rock and a hard place on this thing.”
Q: What happens if I already have an Affordable Care Act policy? Do I have to reapply?
A: No. If you acquired a 2016 policy and you don’t reapply, you will be automatically reenrolled in your existing plan. Your premium probably will increase, perhaps substantially. You might want to check the ACA or Blue Cross websites to see how much you would pay for other policies.
Q: Do other programs offer low-cost coverage for poor people?
A: Yes. The state operates a separate program called Insure Oklahoma that provides subsidized coverage to about 19,000 working Oklahomans. For some people, it offers health coverage at even lower costs than the Affordable Care Act. For more information, see http://www.insureoklahoma.org/.
Q: Why can’t poor people receive premium subsidies?
A: Because the state of Oklahoma rejected an Obama administration proposal to expand its Medicaid program, known as SoonerCare. Unless you already qualify for SoonerCare, which covers only a portion of the working poor, the Affordable Care Act won’t change your situation.