Some consumers may pay significantly higher health insurance premiums in 2016 if insurers in Illinois get their way.
At least 14 plans on the Illinois health insurance exchange could see double-digit rate hikes next year, some in excess of 30 percent. While the federal health insurance reforms known as “Obamacare” give federal and state governments the power to review the rate increases, the law’s lack of a meaningful enforcement mechanism renders the reviews essentially toothless.
The federal Affordable Care Act, nicknamed Obamacare, passed in 2010 as a reform to several aspects of the nation’s health care system. Among the central pillars of the law was the creation of state and federal health insurance exchanges, in which consumers can compare and purchase health insurance plans that meet certain coverage standards. Illinois lawmakers failed to create a state-run insurance exchange, so Illinois uses the marketplace created by the federal government.
The law also requires insurance companies to justify to the federal and state governments any premium rate increases greater than 10 percent.
In Illinois, the state Department of Insurance “reviews” rate increases of more than 10 percent, but DOI spokeswoman Alissandra Calderon says the agency doesn’t have the authority to actually deny them. Meanwhile, the federal Centers for Medicare and Medicaid has the power to exclude an insurance company from offering plans on the exchange, but that only happens in practice if an insurer’s plans don’t meet the basic standards of coverage.
Case in point: The Department of Insurance approved a 79-percent rate increase request in 2013 from Humana Insurance Company for one of its plans on the exchange. The federal CMS didn’t exclude Humana from the exchange, either. Humana has received approval of double-digit rate increases 11 times in Illinois since 2013.
Out of the 25 requests insurers in Illinois have filed since 2013 for rate increases over 10 percent, the Department of Insurance and CMS have approved every one. There are 14 double-digit rate increase requests pending in Illinois for the 2016 plan year.
What happens if the state doesn’t approve a rate increase request over 10 percent, but an insurer hikes its rates by that much anyway? The only consequence is that the insurer must post the justification for the increase on its website.
The justifications used have included accounting for the new taxes and fees that Obamacare imposed, rising medical costs and more. Blue Cross Blue Shield justifies a proposed 38% increase for the 2016 plan year by saying “The main driver of the increase in the proposed rates is that the actual claims experience of the members in these Individual ACA metallic policies is significantly higher than expected.” In essence, the company underestimated how much it would have to spend honoring the plans it sold, so consumers must pay more.
Despite the likelihood of quickly rising premium rates, the Affordable Care Act seems to have achieved one of its goals locally: reducing visits to the emergency room by uninsured patients. The cost of those expensive visits often falls to taxpayers.
Dr. Harry Lausen, chief medical officer of SIU Health Care and assistant dean for medical education, says SIU saw an 80% decrease in write-offs for charity care in the first year of the ACA’s implementation, compared with before the federal law took effect. He says that number dropped again by about 40 percent in the second year of implementation.
Michael Leathers, spokesman for Memorial Medical Center in Springfield, says MMC’s emergency department has actually seen a higher volume of patients overall since the ACA rollout, but the hospital doesn’t specifically track “non-emergency” patients – those who tend to be uninsured and use the emergency room for general care.
Brian Reardon, spokesman for Hospital Sisters Health System, which includes St. John’s Hospital in Springfield, says the hospital saw a “tremendous number” of Medicaid patients in January 2014, which he attributes to previously uninsured people now being covered by Medicaid.
While the increase in newly covered Medicaid patients seeking emergency room care for non-emergencies runs counter to the intent of the federal reforms, efforts to pair those patients with a primary care physician may reduce emergency room visits in the long run.
Reardon says it’s not necessarily cheaper for an emergency room to treat Medicaid patients than uninsured patients, but Medicaid patients are more likely to seek treatment before a health problem requires drastic action, which tends to be more costly.
“It’s less expensive to the health care system in general if you can treat a patient early on, instead of waiting until they’re really sick,” he said.
Contact Patrick Yeagle at firstname.lastname@example.org.