Tag: insurance premiums

Health insurance premium increases in Massachusetts: More ways it can happen

July 30th, 2014 by

Last week (ACA rollout hits some Massachusetts businesses harder than expected) I described how the implementation of Obamacare caused one small businesses’s Blue Cross Blue Shield of Massachusetts premium to jump by 29 percent for the upcoming renewal. The main issue was family size –previously only the first two kids were counted when calculating premiums, now it’s the first three kids. This group, with lots of kids, is paying the price.

After that I heard from two other BCBS MA customers who were experiencing big premium hikes. One is a two-family partnership where one family has two kids and the other has none. Their premium is up 17%. The second is a non-profit organization where the number of kids also shouldn’t be a deciding factor. Their premium increase is 26%.

Here’s what BCBS MA told me about these two:

The first group was a new customer entering its first renewal year. Initially, BCBS rated the company based on the expected –rather than actual– number of dependents. The rate was based on ~1.5 kids for one family and 0 for the other. (Something tells me they probably knew 1.5 was either too high or too low and not right on!) In any case, in a small group that is enough to make a significant difference in rates. With the ACA, health plans have to gather the dependent info even for new customers.

For the non-profit organization, the number of members covered declined from 12 to 7, which pushed them into a more expensive rate per member. (Even though rating based on group size is being phased out, it’s still a significant factor.) In addition, the group’s prior year increase had been tempered under a state law that limited the rates of increase for renewals. The ACA overrides the state’s rule and BCBS tells me they are unable to cap this year’s rate increase.

For what it’s worth, BCBS tells me that the median rate increase in the merged (individual + small group market) this year is 5-6%, which means these three examples are outliers. They also tell me that rate increases a year from now should be in the low single digits for all three of these customers and others like them.

I’d be interested in hearing from other Massachusetts customers of Blue Cross and other plans. Have your rates jumped? Are they steady? Did they fall? Do the explanations above seem to account for what’s happened to you?

Leave a note in the comments or mention on Twitter @HealthBizBlog.

By healthcare business consultant David E. Williams of the Health Business Group

Giving smokers a pass on health premiums

July 17th, 2013 by

The Affordable Care Act lets the new health insurance exchanges charge smokers 50% higher premiums. The policy is justified by the fact that smokers are less healthy and tend to spend more on health care costs, and as an incentive to quit.

I’m sympathetic to this logic, but I also understand why a few states have decided to forego the punitive pricing. Smoking is incredibly addictive; most smokers want to quit but have trouble doing so. A lot of those smokers also have lower incomes and some are mentally ill. Having higher premiums might be fair in one sense –in that it compensates non-smokers for the higher health care costs of smokers– but it’s also unfair in that it punishes the vulnerable.

From a practical standpoint punishing smokers is also likely to drive them away from the insurance marketplace, which will limit the effectiveness of the Affordable Care Act, the main point of which is to bring more people into coverage.

In any case most exchanges will charge smokers more, so it will be a good opportunity to study the impact of this policy. For now I would place my bet on the effectiveness of charging little or no differential for smokers.