Blue Cross Blue Shield of Alabama is the last remaining company offering individual plans on the Obamacare exchange in the state. Today it announced proposed premium increases for 2017 that average 39 percent. AL.com reports:
The proposed rate hikes will affect more than 160,000 people in Alabama who purchase insurance through the federal exchange, or about 5 percent of Blue Cross membership.
Rate increases range from 26 to 41 percent, depending on the type of plan. Proposed increases are lowest for bronze plans, which offer the least amount of coverage, and greatest for the most popular silver plans.
Blue Cross is the only insurance company that will offer Alabamians individual insurance plans through the exchange next year after the departure of Humana and UnitedHealth.
Last year BCBS of Alabama raised rates an average of 28 percent. According to a recent story at AL.com, the state will review the rate request proposed by BCBS this year but does not have the ability to reject the proposed rate increases.
[Alabama Department of Insurance’s chief of staff Mark] Fowler said the state will not have the power to reject proposed rate increases, but regulators can try to determine whether insurance costs are justified or not. The plan right now is to make that information public either through the Department of Insurance website or through public records requests. Department officials are still determining the best way to publicize its findings, Fowler said.
Given that BCBS no longer has any competition on the exchange it’s not clear what publicizing information about the rate increases would really accomplish. The bottom line is that individuals have no choice but to buy from BCBS.
UnitedHealth announced it was pulling out of most Obamacare markets in April. An analysis concluded that UnitedHealth’s retreat would significantly reduce competition, especially in more rural areas. Humana announced it was leaving behind most of its exchange business last month. The company will go from offering plans in 1,351 counties down to just 156 counties.
In a press release announcing the proposed rate hikes, BCBS of Alabama pointed to its ongoing losses in the Obamacare market:
The dynamics of the ACA individual market have been very challenging as total claims paid and their related administrative expenses have continued to exceed premiums. Blue Cross reported an overall financial loss of $138 million for 2015 and projects underwriting losses on its ACA individual plans to exceed $250 million over the 2014-2016 period.
The exiting of other insurers from the exchange in Alabama is a clear indication of the difficulty in providing ACA health plans at the most affordable price without incurring significant financial losses. Because Blue Cross has been providing Alabamians access to healthcare coverage for 80 years, we are planning to stay in this market for another year.
I may be reading too much into it but that last line sounds a bit ominous. Is this a hint from BCBS that they are nearing the end of their patience with the ACA?
Back in June I highlighted a statement by a spokesman for BCBS of Louisiana who told the Times-Picayune, “The way the law was designed and is now being administered simply does not work.” Later that month BCBS of Minnesota announced it was leaving the exchange. It’s possible we could still see other insurers following UnitedHealth and Humana toward the exit.
Democrats are now campaigning for the revival of the public option as a solution to the declining competition on the exchanges.