The first comparison was of two individuals at a Sacramento company enrolled in a Sutter small group HMO Silver plan. The rate for the 60-year-old employee is $838 and $688 for the 56-year-old employee. An IFP Silver plan directly from Sutter Health Plus HMO is $1,115 for the 60-year-old and $958 for the 56-year-old. The IFP rate is 25% and 28% higher than the small group plan at the respective ages. The lowest IFP plan available to these employees in the Sacramento region is a Kaiser Silver HMO plan at $990 for age 60 and $851 for age 56.
For individuals transitioning into Medicare in 2019 they will see a higher Part B premium. The new Part B premium will be $135.50, up from $134.00. Many Medicare beneficiaries already in Medicare will not pay the full Part B premium because certain provisions limit the Part B premium increase to be no greater than the increase in their Social Security benefits.
Covered California takes a dig at the federal government correctly pointing out that rate increases, because of the removal of the individual mandate, means the subsidy amounts for consumers in Covered California will increase, “…the federal government will end up paying an estimated $250 million more in higher tax credits.” The loss of consumers will also impact Covered California. They estimate that enrollment in Covered California could decrease by as much as 162,000 individuals. Covered California is funded by a health plan fee for every member who enrolls through Covered California.
Covered California consumers are penalized for having the good fortune of their household income’s increase. To add another layer of insult, if the consumer makes over 400% of the federal poverty level, they have to repay all the monthly tax credit subsidies they received during the year and pay for an artificially inflated Silver plan rate. Ouch!
The increased revenue is also in light of reducing health plan assessment from 4% of the gross premiums down to 3.75% for the individual and family plan market. The proposed operating budget for FY 2018-19 is $340.2 million. This represents a 6.55 increase over the FY 2017-18 budget or an increase of $20,686,242.
In their conclusion, Covered California notes that health plans have already begun their decision-making process for participation and rates for 2019. The decisions the health insurance companies make will be based on existing federal rules. If the rules and policies to stabilize the marketplace are not implemented in the next couple of months, consumers will most likely face premium increases of 12% to 32% in 2019.
The question no one can answer for me is if the expanded Medi-Cal HMO capitation rates have been decreasing because there are more healthy people in the Medi-Cal pool? Or are there other factors that are driving down the rates. There must be good money in Medi-Cal as Aetna, Blue Shield, and United Healthcare have all been approved to offer Medi-Cal HMO plans alongside other private health insurance companies such as Anthem Blue Cross, Health Net, Kaiser, and Molina.
A glaring deficiency in the report is the failure to attribute any decline in enrollments, either on the federal level or at Covered California, to an improving economy. Unemployment is at record low percentages and more people are working for employers who offer group health plans. Covered California’s own small group plans have seen increased enrollment since its inception in 2014 and their budget report estimates continued enrollment growth.
Health insurance companies are smarter than your average house cat. They have reams of data about health care claims and demographics. They can forecast, with reasonable confidence, that altering some of the member cost-sharing benefits may reduce their final exposure to pay member claims. It has also been suggested that consumers who purchase health insurance off-exchange, paying the full premium rate with no subsidy, may be more judicious in how they use health care services. In other word, off-exchange consumer mays tend to file fewer health care expense claims. This results in lower rates to the consumer.
Finally, some folks are considering just enrolling in Medi-Cal because they are eligible. They have very little or no income to report on their taxes because they are living off of savings, interest, and dividends. Here again, Medi-Cal would be used as a containment strategy to an unexpected accident or illness. Medi-Cal is typically a HMO plan which requires a Primary Care Physician to make referrals to specialists, order tests, or imaging.