Premiums
Health insurance premium costs in the US have been rising every year since number crunchers have been watching this. In the past some of those numbers have been very high, double digits for years. The Affordable Care Act (ACA) is working to keep the rate of those increases down to a minimum, below where they have been in previous years.
However, for Kansas there is a report showing that we are not doing as well as other states. Perhaps not surprisingly given the political nature of evaluating the success of the ACA, there is disagreement by analysts over the accuracy and the relevance of those numbers.
The national report singling out premium increases in Kansas as being higher than all but Alaska came from PricewaterhouseCoopers (PwC) (http://www.pwc.com/us/en/health-industries/health-research-institute/aca-state-exchanges.jhtml). That report projected Kansas’ health insurance premiums overall up more than 15 percent this year compared to about a 5 percent average increase nationwide. As reported in the NY Times, these reports, however, are misleading on several levels. http://www.nytimes.com/2014/11/19/upshot/how-much-did-health-insurance-rates-go-up-its-complicated.html?_r=1&abt=0002&abg=1
For one, if you are concerned with what consumers are really paying, these national analyses muddy the waters by including premiums for all plans offered in each state as opposed to only using data for those plans people are actually enrolling in. In reality most consumers purchased one of the lower cost bronze or silver plans.
To correct this bias, they commissioned an analysis looking at the costs of those bronze and silver plans for all federally facilitated marketplace states, including the one in Kansas. For Kansas, the cost increase for an average lowest bronze plan for a 50 year old non smoker was 8 percent, compared to 3 percent increase nationally, but the average lowest silver plan for the same person went down 6 percent in Kansas compared to a 4 percent increase nationally. http://avalere.com/expertise/life-sciences/insights/avalere-analysis-2015-exchange-premium-file
A more detailed analysis of the Kansas marketplace is provided by the Kansas Health Institute (KHI) (http://www.khi.org/news/2014/nov/15/kansas-marketplace-opens-year-two/). Their report said that the average premium for all plans offered in the marketplace increased just 0.1 percent from 2014 to 2015, while acknowledging that individual Kansans could see a wide range of price changes for specific level plans. As an example, premiums for some silver plans are anywhere from 11.6 percent more to 13 percent less in 2015 compared to 2014.
When considering what these premium increases really mean for consumers we also have to remember that last year the Kansas marketplace was ranked as having the 5th lowest premium costs of all states. Even an 8 percent increase of a smaller starting amount will likely yield an affordable premium compared to others. So, coupled with the lower starting point, these reports provide evidence that Kansas premium increases are at minimum comparable to other states, in some cases better, and that the actual premium costs still provide value at a good cost to Kansas consumers. It is surprising and encouraging that even as Kansas has a small number of insurance companies offering plans in the marketplace, those insurers seem to be offering affordable products to Kansans. We might expect with less competition prices could be higher.
As time goes on we would expect insurers to adjust their premiums based on the collected health care expense experiences of all insureds in those plans. According to the Henry J. Kaiser Family Foundation (http://kff.org/health-reform/state-indicator/marketplace-enrollment-as-a-share-of-the-potential-marketplace-population/#table), this past year only 19 percent of Kansans expected to be eligible for enrollment in the Kansas marketplace actually signed up. This was less than the 28 percent national average. Still Kansas had a good number of the valued younger (under 35) adults enroll, 38 percent, helping to ensure a workable mix for insurance rates overall. All states are expected to see growth in their enrolled populations for 2015.
Tax Subsidies
This year it is likely to be the change in the tax subsidies rather than premium increases that have the potential to make health insurance more expensive. Over 80 percent of families nationwide and in Kansas are using these subsidies to help pay for insurance. This financial assistance to pay for premiums is based on the premium of the second lowest cost silver plan offered. So, if there are plans that have lower premiums in that tier compared to last year…and there are…then the subsidy will be based on the cost of those new plans resulting in a smaller subsidy. Re-enrolling in the same silver plan may cost more even if the premium hasn’t changed because the subsidy one gets to pay for that premium is now based on a different plan. This difference is one of the important reasons why people need to consider plans carefully this year. It could be that an individual finds the higher price she has to pay worth it but one needs to be aware and make this decision with full knowledge. The reason there are less expensive plans in the same tier is that some of the plans offered for the first time this year have larger restrictions on network providers than those plans offered last year. Restricted networks vs paying a higher portion of the premium is the choice many Kansas families may have to make.
Cost-Sharing
The cost-sharing arrangements constitute a major part of the cost of health insurance. These are payments you make outside of the monthly premium. They include deductibles and actual copayments or coinsurance. They are cost-sharing mechanisms when you actually use care and receive a bill. Even those payments schedules may change within the insurance policies being offered so this is another feature people have to pay attention to when choosing a plan for this coming calendar year. The bottom line is to be careful to see if you may be paying more for the types of health care services you may usually receive.
Penalties
When one considers the overall costs of insurance she should also consider the cost of not being insured. Besides the real risk of financial consequences if one has an unexpected major illness (one hospitalization can wipe out personal finances for those uninsured), there is also the tax penalty. Kansans who fall under 138 percent of the federal poverty level (FPL) won’t incur a tax penalty for being uninsured. With a few other exceptions everyone else who’s uninsured will face a penalty much higher for 2015 than in 2014. People who obtain health insurance through their employers, Medicare, TRICARE, Veteran’s Affairs, or KanCare, Kansas’ Medicaid program, are considered insured and will not face penalties. Tax penalties will continue to go up every year. For 2014, you will face a tax penalty when you file in April 2015 of $95 per person or 1 percent of annual household income above the tax-filing threshold (about $10,000 for an individual), whichever is greater. You will face a penalty every year that you continue to be uninsured, and that penalty will increase every year. If you choose not to enroll in 2015, you will face a tax penalty when you file in April 2016 of $325 per person or $975 a family or 2 percent of annual household income above the tax-filing threshold (about $10,000 for an individual), whichever is greater.
How to get insured
Open enrollment in the marketplace began Nov. 15 and goes through Dec. 15 to be covered beginning Jan. 1. People have until Feb. 15 to sign up for health insurance next year, though, for coverage to begin March 1. Whether or not a person buys in the Health Insurance Marketplace, as long as the coverage by some qualifying insurance plan starts by April 1, that person is meeting the federal mandate and will not be subject to penalties.
If obtaining insurance through the marketplace, log on to www.healthcare.gov. To learn more about how to enroll in the marketplace or KanCare, Kansas’ Medicaid program, call the marketplace, available 24/7, at 800-318-2596.
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