North Carolina’s 2019 ACA market has a lot of news this week. First, Centene is entering two counties:
Missouri-based Centene Corp., the nation’s largest provider of individual health insurance under the Affordable Care Act, is expanding its coverage throughout the country, including North Carolina where it will offer plans in Durham and Wake counties under the name Ambetter.
These two counties are in different rating regions. Durham is in Region 11 while Wake is in Region 13. These rating areas each have multiple counties in them. Recent research by Fang and Ko shows that partial rating region entry is a risk selection play.
Risk selection plays are consistent with other Centene strategies including aggressively Silver spamming regions to capture the low risk, price sensitive market while avoiding high cost individuals. Assuming Centene follows their national strategy that they use in multi-insurer markets, I expect the benchmark silver premium to decrease significantly. This will be very good for healthy non-subsidized buyers and indifferent for healthy subsidized buyers as these two counties are currently seeing a minimal Silver Gap in 2018. It will be significantly worse for any subsidized individual who wants/needs to maintain coverage with their current insurer as relative price spreads will increase and they’ll pay more net of premium subsidy.
The second big story is that Blue Cross and Blue Shield of North Carolina released their rates today. BCBS-NC is the only insurer in every county. They’ve engaged in a fairly aggressive Silverload for 2018. They are planning to drop rates:
Blue Cross and Blue Shield of North Carolina (Blue Cross NC) announced today it requested an overall average rate decrease of 4.1 percent for 2019 Affordable Care Act (ACA) plans offered to individuals. The reduction marks the first rate decrease in the history of Blue Cross NC since entering the current individual market more than 25 years ago….Had the federal government not eliminated the individual mandate penalty, requested rates would be another 4 percent lower….If federal Cost Sharing Reduction (CSR) payments to insurers that were eliminated as of October 2017 were still in place, requested rates would be another 14 percent lower.
A couple of interesting things to me in this announcement. The first is the net rate drop. Secondly, BCBS-NC actuaries don’t think the individual mandate is a huge deal. Finally, the CSR costs have been constant from their 2018 rate filing estimated increment. All of that is a long way of saying that I think BCBS-NC overpriced 2018. I think that overpricing is between 8% to 12% given medical cost trend minus premium tax changes. I think their Medical Loss Ratio will be very low this year.
Finally, BCBS-NC is slimming their networks for their central NC products. Duke University Hospital System** and Wake Med are out of network now. UNC Med is the sole tertiary care provider in the local ACA products. From the press release and the e-mail that was shared with me, BCBS-NC decided to use its buyer’s leverage to get a good price from UNC. That is a logical strategy for cost control. It will require thousands of people to transition docs though.
So this is a lot of North Carolina ACA news this week.
** As always, I work for Duke University which is intertwined with DUHS. I only speak for myself and no one else.
TKinNC
THANKS! I will share this with my fellow Person County people.
Mike E
Local paper was pushing the 50,000 number in estimating the extent of how many NCers will have to switch doctors
David Anderson
@Mike E: That assumes no one buys a Centene plan and everyone stays in the plan that they either currently have or will be crosswalked into. It is probably an under-estimate.
p.a.
I realize every year brings new rules and financing changes at the fed, state, and insurer level, but can you (David) discern any meta for the ACA over the near term (3-ish years)? The sabotage doesn’t seem to be working currently, but is the foundation sturdy, or in future danger given current design? (In effect not asking you to crystal ball future rethug sapper efforts)
David Anderson
@p.a.: Great question, I will reply in length tomorrow. I think it is conditional — does the House flip this year or not.
If it flips, we muddle through. People who make over 400% FPL and who can’t pass underwriting are more screwed than they are in 2018 but everyone else is either insulated or slightly better off.
If there is a 5+ seat GOP House majority and 53 GOP Senators, we get Graham Cassidy next year.