Health care consumers should shop to avoid sharp premium increases
BOSTON >> Enrollees in subsidized and unsubsidized health plans offered through the Massachusetts Health Connector will need to seek out deals once open enrollment begins Nov. 1 to avoid major jumps in their health costs.
That was the message out of Thursday's meeting of the Health Connector board, where staff reported an overall 19 percent increase in unsubsidized plan premium costs and discussed plans to lower subsidies that mask major cost differences in subsidized ConnectorCare plans.
The pool of people affected by the premium increases in unsubsidized plans are generally those who do not access health insurance through their employers or through MassHealth.
Deals are available for both subsidized and unsubsidized health care consumers, and the search for them will likely put a "strain" on the Connector's customer service arm, Connector Executive Director Louis Gutierrez told reporters after the meeting.
"They're going to need to shop, and shopping means they're likely going to have to change provider networks," Gutierrez told reporters.
Established through the state's 2006 health reform law and reconfigured to comply with the 2010 federal Affordable Care Act, the Connector matches people of all income brackets who lack health insurance with health plans, offers subsidies for those within 300 percent of the federal poverty level, and sends those who qualify to MassHealth, the state's massive health insurance program.
At Thursday's meeting, staff singled out Neighborhood Health Plan and Harvard Pilgrim Health Care as outliers in their 2017 premium increases for unsubsidized plans. Neighborhood Health — which is the only plan including in its network the marquee Partners Healthcare hospitals Brigham and Women's and Massachusetts General — will increase 24.7 percent. Harvard Pilgrim Health Care will increase 47.1 percent.
The Connector bases its calculations on the changes members will experience rather than the "base rates."
"We are reviewing the information presented by the Connector today," Neighborhood Health said in a statement. "With regard to the merged market overall, including products offered through the Connector, rates are being driven up industrywide by increased medical costs and utilization as well as structural changes in the Affordable Care Act. We have worked aggressively to provide affordable premiums by keeping administrative expenses low, achieving medical cost savings and re-contracting with providers — and we continue to do so."
At the lower end of price increases, unsubsidized plans offered by Tufts Health Plan — Direct - formerly Network Health — will see an average premium increase of 2.6 percent; and Boston Medical Center HealthNet will see premiums rise an average of 1.4 percent.
Neighborhood Health accounts for 28 percent of unsubsidized plans, and Tufts Health Plan has the next largest share at 24 percent, according to the Connector.
Neighborhood Health had comparable increases in its plans offered through the subsidized ConnectorCare, and Harvard Pilgrim does not offer plans through ConnnectorCare, Brian Schuetz, director of program and product strategy for the Connector, told reporters. So-called "silver tier" health plans offered through ConnectorCare by BMC HealthNet will see a 7.9 percent decrease in cost.
Gutierrez said BMC and Tufts are "competing like cats and dogs" with their premium prices.
The Connector is also scaling back its "smoothing" of premium costs for the subsidized plans in ConnectorCare, a move that was a point of contention among some board members.
The lowest-cost plans for people making up to 150 percent of the federal poverty level will cost nothing under ConnectorCare and according to the state affordability schedule, but the Connector is restricting the "smoothing" subsidies it adds to lessen the cost of pricier plans within income brackets.
That means people below the federal poverty line — an income of $11,800 for individuals — who would have paid nothing no matter what plan they selected last year could pay as much as $165 if they choose a more expensive plan this year.
For those making 150 percent of the federal poverty level ConnectorCare plans cost no more than $29 last year, but the more expensive plans in that income bracket could cost as much as $174 next year, according to the Connector.
The Connector will continue to smooth the price differential of plans that cost $35 more than lower-cost options, but where there are big steps up in price, the Connector will no longer add that additional subsidy, said Ashley Hague, the Connector's deputy executive director of strategy and external affairs.
The Connector released a map of the state, showing the costs of different plans in different income brackets in different areas without the "smoothing" applied.
Gutierrez said continuing the "smoothing" subsidy at existing levels would be impossible given the state's tight budget picture, and would "reward behavior in the market that is less than competitive."
"Smoothing" would cost $51 million next year if it continued under the current structure, or $35 million after factoring in federal dollars, Gutierrez said. The more scaled-down "smoothing" the Connector said it would embark on without a board vote Thursday will cost a total of $4.2 million and $2.4 million after federal payments, he said.
"The fiscal reality of the Commonwealth's budget is real," said Health and Human Services Secretary Marylou Sudders, who chairs the Connector board. She said, "We're lucky if we might have a couple of a million dollars."
"I don't think we were given sufficient time or information to process this," said Nancy Turnbull, a Connector board member and associate dean at the Harvard School of Public Health, who said board members learned of the change less than a day ahead of Thursday's meeting.
Turnbull called the plan "very regressive," and said it would be "massively disruptive" for members who may for the first time be asked to pay a premium.
"The proposal is a very dramatic departure from what we've done in the past," Turnbull said.
Others said the "smoothing" process has rewarded health insurers that don't offer competitive prices.
"I have to believe Neighborhood knew exactly what they were doing when they priced these products," said Rina Vertes, a Connector board member and president of Marjos Business Consulting. She said, "I personally cannot support the state subsidizing a correction in pricing for Neighborhood Health Plan."
Division of Insurance Commissioner Dan Judson listed "stunning" increases in pharmaceutical costs and an "influx" of people who had put off care and are now seeking expensive treatment, as drivers of health care costs, and he said the Bay State is faring better than other parts of the country.
"We have one of the healthiest health insurance marketplaces in the United States right now. Carriers — they're not just withdrawing from states — carriers are going insolvent around this country. So we're doing OK," said Judson, who is a member of the Connector board.