North Carolina's largest health insurance company says enrollment through the new exchange that's part of the Affordable Care Act missed expectations, and that means premiums on the exchange will likely rise.
How far off were BlueCross BlueShield's enrollment numbers?
BlueCross expected 50 percent of its customers on the exchange to be younger than 35. But only 32 percent are under 35. That's a big deal because the mix of people is much more important than the total number.
The way health insurance works, you need a certain number of younger, healthier people to balance out the costs of older people. There's a simple reason for that: BlueCross says health care used by the average 60-year-old costs almost four times as much as the average 20-year old. So Blue Cross is factoring in how much it needs to charge in premiums to be able to cover the mix it's going to get, and it's anticipation of that mix was off.
Why was enrollment off?
The problems with the online exchange, healthcare.gov, obviously didn't help. But those were largely resolved over the past couple months.
There's another thing that BlueCross says is a large reason the numbers were off. Remember how there was all that fuss about plans being canceled? The Obama administration decided, actually, we'll let you keep those plans for another year or two. Well, BlueCross says 243,000 of its customers were eligible for those plans, many were younger and healthier, and the majority of them ended up keeping the plans.
So that right there took off a large number of people BlueCross was planning on being told you can no longer use these plans, you have to get them somewhere else – probably the exchange.
What do the missed expectations mean for the insurance market?
In short, that premiums will have to go up. BlueCross would not get specific about how much they would increase, but the company said it will file rates in June. The bottom line is that if, as BlueCross expects, it's not bringing in enough money in premiums to cover the cost of this pool of people, it'll ask for higher premiums.
Let's say I have insurance with Blue Cross but it's not through the exchange. Will my premium go up?
No – this won't impact roughly 90 percent of BlueCross' customers. The overwhelming majority of people in North Carolina (and across the country) get health insurance through their employers. So in the whole scheme of things, this is a pretty small part of BlueCross' business.
Also, keep in mind there's another insurance company that offered plans on the exchange in North Carolina, Coventry Health Care, and we haven't heard about its mix yet.
