Insurance premiums set to jump next year

Oct. 26--PULLMAN -- Medical insurance premiums for many individual plans will increase by 20 percent or more in north central Idaho and southeastern Washington next year as prices rise under the Affordable Care Act.

Many consumers will have to figure out what they're going to do soon, since the annual open enrollment periods for state health care exchanges start Wednesday in Idaho and Washington.

The exchanges are where many individual medical insurance plans are purchased by people who don't have coverage through their employers, even if consumers don't receive help from the federal government in affording their coverage.

Prices are escalating because of high usage rates for individual plans coupled with the recent executive order of President Donald Trump involving the Affordable Care Act's tax credits and cost-sharing reductions, said Dave Gregory, vice president of benefits at Stonebraker McQuary Insurance in Spokane. He spoke Wednesday at a talk sponsored by the Pullman Chamber of Commerce.

"I wish I had great news for you, but it's a pretty scary picture," said Gregory, who serves on the Washington State Insurance Commissioner's advisory committee.

A large number of consumers in the individual market earn less than 400 percent of the federal poverty level and qualify for tax credits on their premiums. Those between 100 percent and 250 percent of the poverty level receive help in the form of cost-sharing reductions for out-of-pocket expenses, such as deductibles and co-payments.

The problem is that even before the forecast rate hikes, individual plans were exceedingly expensive because of high usage rates, Gregory said.

The least expensive policies with high deductibles start at about $325 per month for those in their early 20s, and reach as high as $1,000 per month for those in their 60s. The penalty for not carrying insurance is $695 per year. Many young, healthy people choose to save more than $3,000 per year by gambling they won't get sick or hurt, Gregory said.

At the same time, many of those who could afford insurance for the first time with help from the Affordable Care Act hadn't had access to care for a long period of time. They went to the doctor a lot as they tackled chronic issues like high blood pressure or diabetes, Gregory said.

A recent Trump executive order is expected to push rates even higher, Gregory said. Qualifying individuals will still receive the federal help with premiums and out-of-pocket expenses, but the private insurance companies that offer the coverage won't be reimbursed, so they are covering the higher costs through premium increases, Gregory said.

As costs of individual medical plans soar, businesses that don't offer benefits are losing employees to competitors who do, Gregory said.

One of the best options is for small employers of 49 or fewer employees to start offering medical insurance, despite the fact the Affordable Care Act doesn't require them to do so, Gregory said.

Rates for even small group plans that cover five or fewer people are rising significantly less than individual plans because they typically cover a broader mix of healthy and sick people, Gregory said.

"Statistically, that claim dollar doesn't get drained as quickly."

That's a change from a few years ago, right after the Affordable Care Act passed, when prices of individual and small group plans were pretty close to the same, Gregory said.

And the federal government is cracking down on workarounds at small employers that had been tolerated previously, such as giving bonuses that were earmarked to pay for medical premiums, Gregory said.

Plus, small employers typically have a high amount of flexibility in how they structure their plans, compared with large ones that generally have to cover anyone who averages 30 hours a week or more, he said.

Small businesses can exclude seasonal or temporary workers. They can set the average number of hours to qualify for coverage anywhere between 20 and 40 hours a week as long as they apply the rule consistently, he said.

For people who can't join group plans, the situation is much tougher, Gregory said.

"The question I hate most in my job right now is, 'What do I do?' -- because there isn't an option."

Next year isn't likely to be much better because there isn't an easy fix. Insurance providers already have taken many steps to control costs, such as cutting reimbursements for services.

Those types of measures didn't work well because a number of hospitals, clinics and physicians stopped participating, Gregory said.

"It's a big issue for us as a society."

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Williams may be contacted at ewilliam@lmtribune.com or (208) 848-2261.

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