WASHINGTON — People and small businesses that buy health insurance on New York’s marketplace face the possibility of double-digit premium increases in 2018, due to the state’s approval Tuesday of a new set of rates for the coming year.
The state’s decision will not affect the vast majority of New York residents, who get their health insurance through a big employer, Medicare, Medicaid or the state’s Essential Plan.
But the new rates could have a profound impact on the 15,000 people in the eight-county Western New York region who buy individual health plans on the state’s health exchange, as well as the 128,000 Western New Yorkers who belong to small group plans.
The state approved rate increases for all four of the insurers that sell health plans to individuals in the region.
The rate changes are as follows:
— At Buffalo-based HealthNow New York, which operates locally as BlueCross BlueShield of Western New York, rates will go up an average of 31.1 percent for individual plans and 8.6 percent for small group plans.
— At Amherst-based Independent Health, rates for individual plans will increase an average of 22.3 percent, while small group plans will cost an average of 13.9 percent more.
— At Univera Healthcare of Amherst, rates for individual policies will increase by an average of 4.4 percent while small-group policies will cost an average of 8.6 percent less than they cost this year.
— At Fidelis Care New York, which has a large operations center in Getzville, rates for individual plans will increase by an average of 9.6 percent. Fidelis doesn’t offer small-group plans.
The rates for individual plans could go up a bit more — generally another 0.5 percent or so — if President Trump follows through on his threat to withhold paying subsidies to insurers for plans offered on the health exchanges created under the Affordable Care Act.
That’s far less than the 20 percent spike the Congressional Budget Office projected Tuesday, and it’s all because the state created a new health program — the Essential Plan — to serve many middle-income state residents.
But health care experts said the Essential Plan’s existence would be threatened if Trump were to withhold the subsidies.
Those who buy insurance on the state’s health exchange will find that the actual increase they end up paying for their policies next year could be different from the average increases the state announced Tuesday. That’s because the Affordable Care Act — Obamacare — created a series of tax credits that varies with income, making policies cheaper for people who earn less.
“Many consumers buying plans through the NY State of Health Marketplace will be eligible to receive federal tax credits, reducing the monthly cost of coverage,” said NY State of Health’s executive director, Donna Frescatore. “In many cases, after tax credits, consumers’ costs will be about the same or in some cases lower in 2018.”
Conversely, higher-income people could end up seeing their insurance rates go up by more than the average increases reported by the state.
BlueCross BlueShield sought the biggest local rate increase for individual plans: 48.8 percent. The company argued it needed a big increase because it hadn’t been allowed to raise rates enough in recent years, meaning it lost money on individual plans.
But regulatory changes involving “risk adjustment” — an actuarial tool to determine how much policies should cost, depending on who buys them — account for more than half of the 2018 rate increase, said Kyle Rogers, manager of corporate relations for BlueCross BlueShield.
“Our community has become increasingly aware and concerned about the underlying costs of health care – driven by soaring prescription drug prices, new technologies and treatment advancements,” Rogers said. “However, the difficult news we’ve had to deliver to our individual members is that regulatory changes – not increasing health care costs – has the most significant impact on their 2018 premiums.”
Independent Health offered a different take on why it needed substantial rate increases.
“Our small group and individual rate adjustments are necessary to account for continued rising health care costs, driven largely by increases in the usage and cost of medical services, procedures, and prescription drugs, especially specialty medications,” said Nora McGuire, Independent Health’s senior vice president and chief marketing officer.
The risk-adjustment issue that BlueCross BlueShield raised contributed to Independent Health’s rate hike as well, she said.
“Despite rising health care costs and the changes to risk adjustment funding, we have continued to balance necessary premium changes while maintaining benefits and minimizing cost-share changes, such as deductibles and co-pays,” McGuire said.
The State Department of Financial Services — which oversees the health insurance industry — defended the premium increases it approved.
“DFS has carefully examined the rates requested by health insurers to reduce the burden of excessive health insurance premium increases on New Yorkers while maintaining competitive markets in the face of rising national healthcare and pharmaceutical costs, compounded by ill-conceived Congressional attempts to repeal or replace the Affordable Care Act,” said Financial Services Superintendent Maria T. Vullo.
Vullo stressed that New York’s marketplace for individual and small group health plans remains healthy. While the number of insurers selling such policies has dwindled in some states, she said New Yorkers and the state’s small employers can still choose from a wide variety of health plans.
Many New Yorkers also benefit from the Essential Plan. Created under Obamacare, that plan serves people who have to buy their own health insurance but who earn a bit too much to qualify for Medicaid, the government health plan for people with lower incomes.
New York was one of only two states to create an Essential Plan, and its creation appears to shield the people who are on it from what could be an additional 20 percent hike in premiums.
That’s the average premium increase the Congressional Budget Office projected Tuesday if Trump refuses to continue funding federal “cost sharing reductions”: subsidies provided to insurers to get them to offer affordable individual health plans.
A federal court ruled the government shouldn’t be paying insurers those subsidies because Congress never set aside money for them. So far, Trump has continued to pay the subsidies, but he has repeatedly threatened to stop paying them — either to force Congress to repeal Obamacare, or to force Congress to fund his promised wall at the U.S.-Mexico border.
Those subsidies are far less important to New York insurers than they are in other states. That’s because so many New Yorkers — 19,000 in the Buffalo area alone — are on the Essential Plan and therefore don’t get their health care from private insurers.
The Essential Plan gets a huge federal subsidy — about $850 million a year, accounting for about a quarter of its funding. State officials are uncertain whether that subsidy would continue if Trump stopped paying the subsidies to private insurers. Health experts said the Essential Plan’s future would be in question if it suddenly loses a quarter of its funding.
Senate Minority Leader Charles E. Schumer, New York Democrat, Tuesday urged Trump to keep paying the subsidies.
“Try to wriggle out of his responsibilities as he might, the CBO report makes clear that if President Trump refuses to make these payments, he will be responsible for American families paying more for less care,” Schumer said. “He’s the President and the ball is his court – American families await his action.”