Blue Cross to reinstate canceled insurance policies as price increases spur outcry

by John Murawski, News and Observer, November 16, 2013.

Blue Cross and Blue Shield of North Carolina, the state’s largest insurer, will allow tens of thousands of customers to stay on lapsed health policies next year to provide relief from steep price increases or prevent the loss of their health insurance coverage.

The company’s announcement Friday comes a day after President Barack Obama urged insurers to extend this year’s insurance policies through 2014, as pressure mounted to alleviate the crisis prompted by problems with the Affordable Care Act, the president’s signature domestic policy.

Blue Cross had notified 151,640 policy holders in recent months that their health plans will be phased out and replaced by new policies in January. Many of those customers were told their rates would double, or even triple, for health insurance that met the legal requirements of the new health care law.

Now those customers will have at least one year’s reprieve.

“Hallelujah!” said Nancy Mize, a Raleigh optometrist who had expected her insurance costs to double through higher premiums and out-of-pocket costs.

But she could still see some increase. As it has in past years, Blue Cross will propose rate increases for those health plans to the N.C. Department of Insurance next week. The increases are expected to be below 15 percent, on average.

The N.C. Department of Insurance will review the plans and costs, and determine if customers are being overcharged, potentially exposing the company to the risk of making customer refunds.

“Where we would normally catch things on the front end, we will catch things on the back end,” N.C. Insurance Commissioner Wayne Goodwin said Friday. “If upon later review we discover they’re overcharging and they’re not compliant with the law, insurers will be subject to administrative action.”

“This is a matter of weeks for many families,” Goodwin said. “If we use the normal review process, then families would have gaps in coverage.”

Blue Cross and Goodwin, a Democrat, said Friday that they had already been in discussions about extending this year’s insurance plans to address anxiety that thousands of customers could be stranded without coverage next year.

Blue Cross officials and Goodwin said they were not confident that healthcare.gov, the crash-prone federal Internet portal, would be fixed this year in time for those who qualified for federal subsidies to buy discounted policies.

Coventry Health Care of the Carolinas, which notified 13,100 policy holders that their coverage would end this year, has not decided if it will extend those policies for an extra year. Goodwin, on Friday, urged all insurers in the state to extend their coverage an extra year.

Goodwin said more than 473,000 individuals in North Carolina were affected by the cancellations, most of them with Blue Cross. The cancellations and increased prices around the country forced Obama to apologize for his repeated vow that everyone would be able to keep their insurance plan if they liked it.

Blue Cross has about 375,000 individual policy holders in the state, and said it canceled only those policies purchased or changed after March 2010, when the Affordable Care Act was enacted. Those who didn’t make changes were grandfathered in under the law. The cancellations affected nearly half the company’s individual policy holders.

Insurance experts stressed that the emergency step taken in North Carolina is not a permanent solution to the complications of the new health care law.

“This will provide some relief for those North Carolinians who now have individually purchased policies that they like and want to keep,” said UNC-Chapel Hill health policy professor Jonathan Oberlander. “It is a fantasy to believe that those on the individual market can stay in the same plans on the same terms in perpetuity – nobody can guarantee that.”

Blue Cross spokeswoman Michelle Douglas said about 10 percent of individual policy holders saw their rates decrease as a result of the new law, and they can keep their old policy or switch.

“If someone got a great deal under the ACA, they can absolutely stick with it,” she said. “If people had chosen an ACA plan and wanted to come back to their old plan, yes, they can do that.”

The choice won’t be obvious to many customers until the federal website reliably calculates subsidy amounts for those whose household incomes qualify.

“I’m still trying to get on healthcare.gov to see if we can get better insurance with the subsidy,” said Jennifer Perruccio of Apex.

Her family’s monthly premium is $330.63 and would have increased to $790.52 next year.

“I wouldn’t want to go 24 hours without insurance,” said Perruccio, who owns a home cleaning business.

Ron Matamoros, a retired lawyer in Winston-Salem, estimates the $420 monthly premium he and his wife pay would drop to about $150 with federal subsidies, but he can’t get an official confirmation that those numbers are accurate because the federal website seizes up.

Matamoros, 63, thinks the savings are almost obscene, and would amount to total annual insurance outlays of $2,800 under the ACA versus $16,000 on his current plan.

“To me that’s crazy,” he said. “I don’t think my health care should drop so low.”