Arizonans should not panic about health insurance choice, feds say

Fewer health insurers and higher rates are expected on the federal marketplace, where more than 150,000 Arizonans bought plans last year.

Last year, five insurance companies sold 31,161 marketplace plans to Pima County residents. Open enrollment begins Nov. 1 for coverage in 2017.

So far this year, the number of insurers expected to sell to Pima County on the marketplace is two — Health Net of Arizona and Blue Cross Blue Shield of Arizona.

And there has not yet been a commitment from any company to sell marketplace plans in Pinal County, where 9,600 consumers bought Affordable Care Act marketplace plans last enrollment season.

$75 premiums

A federal report released Wednesday says consumers who purchase insurance on the marketplace, created through the Affordable Care Act, shouldn’t worry.

The important thing for consumers to know is that if rates go up, federal subsidies to help consumers pay for their insurance will also go up, federal officials say. Even if all insurers hike their rates by 50 percent, 68 percent of Arizonans would still be able to purchase coverage for less than $75 per month, the report says.

All marketplace premiums will be finalized and public in October. Enrollment is set to begin Nov. 1.

Some insurers have said they are pulling out of the marketplace, including insurance giant Aetna, which announced this month that it would be pulling out of selling marketplace plans in Arizona and several other states, too.

“The simple story is, it ain’t over until it’s over. It appears there are discussions going on regarding Pinal,” said Allen Gjersvig, director navigator and enrollment services for the Arizona Alliance for Community Health Centers.

“We are not panicking. ... People do want answers, but sometimes you have to wait until the process runs its course.”

Election games

Most Americans don’t get their health insurance via the marketplace, often also referred to as the exchange. If you are on Medicaid, Medicare (or any government insurance) or have employer-sponsored insurance, you don’t need to use the exchange.

Some people refer to the marketplace as “Obamacare insurance.” It’s where working-age individuals and families purchase commercial insurance and, depending on their income, can qualify for federal subsidies to help pay for it.

While some states have created their own marketplaces, often called exchanges, Arizonans use the federal marketplace. The website is Healthcare.gov. Nearly 180,000 Arizonans are currently covered by marketplace plans.

Most Arizonans who bought insurance through the insurance exchange last year qualified for federal subsidies to help them pay for it.

Officials from Blue Cross Blue Shield of Arizona said last week that they have been part of many conversations with the federal government since learning that Pinal County would have no marketplace plans. The company is currently re-evaluating its 2017 plans, spokeswoman Anne Christensen wrote in an email.

With fewer choices, the market doesn’t work as well and premiums go up, says health-policy expert Dr. Dan Derksen of the University of Arizona’s Mel & Enid Zuckerman College of Public Health .

Yet Derksen remains optimistic about Pinal County, and about the marketplace for Arizonans.

He says the people most vulnerable to rate hikes — those earning 250 percent of the federal poverty level or less — won’t see big jumps in their premiums due to subsidies and cost-sharing.

This year is an unusual one, he added. Next year the marketplace could be looking more like it did in 2015.

“The fourth open-enrollment period starts this Nov. 1. Another big event happens Nov. 8. I don’t think it’s a spurious correlation that large insurers are exiting right before the national election,” he said.

“In chess they call it a gambit. ... The market stuff is a little brutal, but this is more than just a bit coincidental.”

But it’s a risky gambit, Derksen says, as it’s late in the game to temporarily sacrifice market share in the hopes of getting a market monopoly, weakening federal regulations and/or increasing profits.

“Consumers and voters will remember, as will the next president,” he said.

Public option

The enthusiasm around former Democratic presidential candidate Bernie Sanders and his support of a Medicare-for-all public option for health insurance is not going to be forgotten under a new administration, Derksen said.

If there are no choices, then some kind of public option needs to be one of those so populations don’t go without coverage, he said.

“Should insurers continue displacing hundreds of thousands of Americans by jumping in and out of the ACA (Affordable Care Act) marketplace, public pressure will undoubtedly mount to create a public option,” Derksen said.

“Large swaths of rural and urban areas, and as the evidence shows, minority populations, are the populations left without reliable insurers or qualified health plans.”

During the second year of open enrollment — 2014 to 2015 — 10 insurers were offering more than 100 plans in Mariciopa and Pima counties, Derksen said.

“The consumer will still have choices, but there will be a difference in our market. There will be a lot fewer plans, but it will be a lot simpler,” he said. “When it was a huge number it was a bewildering array.”

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Finding a doctor

Tucson insurance broker Ray Magnuson, owner of Magnuson & Associates, is hearing everything from anger to panic from clients who are getting letters from insurers like United and Humana saying their marketplace plans will not be offered in 2017.

Magnuson says panicking is not helpful and like others stresses that the rates and plans available won’t be final until Nov. 1. And there still could be a third insurer offering plans to Pima County.

But he also understands consumer frustration. For one thing, constantly changing plans means consumers are often having to switch doctors. Magnuson hears from people who have a lot of trouble finding new primary-care physicians in Tucson.

And based on the information available right now, Magnuson says it looks like the only kinds of plans available on the Pima County marketplace for 2017 will be HMOs, which can mean a narrow network and a primary-care physician referral needed to see a specialist.

Also, Magnuson is worried that some Arizonans trying to buy marketplace plans are going to face big premium hikes, particularly if they don’t qualify for a subsidy. He says clients in the 2015-16 enrollment season were “regrettably satisfied,” meaning they weren’t thrilled with the prices of marketplace plans but it was better than not having insurance, he said.

But if prices go up double digit percentages, some consumers may opt to pay a penalty for not having insurance and decide to go without, he said.

And then there's a risk of what some call a "death spiral" for the marketplace.

"The risk is that folks will be scared out of the exchange and they won't buy and then we'll have more people uninsured again," said Phoenix-based healthcare expert Jim Hammond, who is CEO and publisher of The Hertel Report, a health newsletter.

"The people left in the insurance pool will be more low income and people who really need insurance...This is kind of a death spiral for the health insurance marketplace. You essentially scare out the healthy."

If insurers are only covering sick people, then they are going to have trouble making money, which is why they are leaving in the first place, Hammond said.

"If you make $85,000 per year and you have two kids and your insurance goes up by $70 per month, you might not buy it," he said.

Subsidy protection

Federal subsidies for marketplace plans are offered to individuals and families who earn up to 400 percent of the federal poverty level ($47,520 per year for a single person, $97,200 per year for a family of four) Those subsidies act as a protection to consumers to keep coverage affordable, Gjersvig said.

If premiums go up, then more people will receive greater amounts of tax credits in Arizona than in previous years, he said.

In the first year of the marketplace, Arizona premiums were some of the lowest in the country and as a result, tax credits here were also lower. This year, they are likely going to be higher, Gjersvig said.

“It is not yet final and there is a very good probability that one organization or two will offer plans in Pinal County. And the coverage that people have now stays in place until Dec. 31, as long as you pay your premiums,” he said.

“We’re watching very carefully to make sure that Arizona consumers using the marketplace understand their options.”

Gjersvig said some families will also have a new option for covering their children this year — KidsCare, which is a government insurance program for children in families that earn too much to qualify for Medicaid, but not enough to affordably pay for commercial health insurance.

Monthly premiums for KidsCare start at about $10 and go up to approximately $70 per month based on income and family size. Enrollment in the program was frozen in 2010 but reactivated this year, and about 30,000 Arizona children are expected to enroll by the end of the year.

Grim news

While there have been grim headlines about insurers pulling out of the marketplace and massive rate hikes, that does not always reflect what consumers pay, federal officials told reporters on Wednesday,

Last year, the average Arizona premium increased $4 per month for HealthCare.gov consumers with tax credits, and 7 out of 10 marketplace consumers could purchase 2016 coverage for less than $75 per month, the federal report says.

And the U.S. Department of Health and Human Services is stressing that before the Affordable Care Act, many Americans were barred from coverage because of pre-existing conditions.

Also, those who did have insurance through the individual market were often trapped in a plan, since people with even small health problems could be denied coverage or charged an exorbitant price if they tried to switch plans.

The federal report also says that independent researchers recently calculated that 2016 marketplace rates are anywhere between 12 and 20 percent below what the Congressional Budget Office initially predicted.

At the same time, the administration is working to develop “new, innovative ways of paying for care that align payment with improved outcomes and can help sustain and build on the slowdown in health care costs,” a federal news release says.

The nonprofit Commonwealth Fund released a report Wednesday that says robust enrollment is critical to keeping marketplace prices competitive. The report suggests federal action to keep prices competitive, including extending a reinsurance program funded through insurer fees. Another suggestion is having a public option.

The Commonwealth Fund estimates about 24 million Americans remain uninsured and that about half of them are potentially eligible for subsidized marketplace insurance.

"I am hopeful that the health plans will be able to get through this phase, but I think the law needs some tweaking," Hammond said.