NC Payer Raises Health Insurance Rates Due to CSR Lawsuit

June 01, 2017 - Blue Cross Blue Shield of North Carolina announced its 2018 individual premium rates will increase an average of 22.9 percent for coverage on and off the health insurance exchange in all 100 counties it serves.  The increase is a pinch lower than last year’s approved rise of 24.3 percent.

The rate hike is due to uncertainty about the future of the Affordable Care Act and the current debate over whether or not cost sharing reductions (CSRs) will be funded for the coming year.

“The biggest unknown that affects premiums and coverage for ACA customers for 2018 boils down to this: Will Congress ensure that federal payments continue for the program that helps certain lower-income ACA customers pay their out-of-pocket costs?” said CEO Brad Wilson. 

“In our view, with so many North Carolinians struggling to afford health care, the 2018 increase is still too steep. But higher premiums are necessary because key federal funding for health coverage appears to be going away.”  

Blue Cross NC also cited the 2018 return of the ACA mandated tax on health insurers, along with higher claims costs, as additional reasons for the proposals. 

However, the payer pointed out that filing rates with the state does not guarantee it will offer plans on the exchange, pushing that final decision to the fall.

Congress currently authorizes about $7 billion in CSRs annually.  As of now, the payments are continuing, despite the unknown verdict in an ongoing lawsuit brought by several House members that seeks to halt the payments as illegal.  A recent motion to delay the lawsuit has upped the uncertainty over the future of CSRs even more.

Blue Cross NC acknowledged that if federal funding disappeared, it would be policyholders that pay the difference. 

“With no funding for the federal payments for cost-sharing reduction plans, Blue Cross NC will need to factor the missing federal payments into our 2018 rates. That will drive more customers away from coverage and toward being uninsured,” said Wilson. “For some insurers, this additional pressure on premiums might lead to a decision to leave the exchange or the ACA market entirely.”

In 2016, Blue Cross NC received $200 million in CSRs, and expects to receive a larger amount this year as coverage has increased for 2017.

If 2018 CSRs were assured, Blue Cross NC actuaries formulated 2018 premium rates that showed an average increase of just 8.8 percent, a difference of 14 percentage points from the 22.9 percent filed. 

The intended 8.8 percent premium increase would have been the lowest since the payer began in the ACA exchange.

In general, however, the state’s health insurance marketplace has become more stable.  This has led to Blue Cross NC to better predict medical costs for its expanding member base.

“However, that’s not much comfort to those who depend on the ACA to cover themselves and their families. Regardless of future decisions in Washington on cost-sharing reduction plans and the health insurer tax, our commitment at Blue Cross NC is to offer choices that help North Carolinians get access to the best medical care,” said Brian Tajlili, Director of Actuarial and Pricing Services for Blue Cross Blue Shield of North Carolina