Plan to shop for insurance on Mississippi’s new health insurance exchange come Oct. 1?
Then brace for sticker shock.
Regardless of age, shoppers on the state’s “Federally Facilitated Marketplace” will find health insurance premiums at least 100 percent above rates to which they have become accustomed, Insurance Commissioner Mike Chaney said.
“The base rate is going to be a little more than $300, depending on where you live,” he said, and insisted the rates he approved for insurance marketplace carriers Humana Health Insurance Co. and Magnolia Health Plan were fair and in line with the higher rates that will accompany the new coverage mandates under the Affordable Care Act.
“If I thought the rates were excessive, I would not have approved them,” Chaney said. “In today’s market (post implementation of the market exchange) they are pretty competitive.”
The approvals, which must still get a nod from the Department of Health and Human Services, set a monthly premium base rate of $312 for Magnolia Health Plan and $302 for Humana.
The base rate reflects a three-to-one ratio that applies to what a 30-year-old non-smoker can buy coverage for on the individual market today. More simply, insurers on the exchange can set premiums three times above current individual market rates. That’s how, Chaney said, Magnolia and Humana set monthly rates for a 64-year-old non-smoker at about $900.
Figures cited by Chaney are for the Affordable Care Act’s “Silver Plan,” an offering that includes all of the coverage requirements of the Act.
The Silver Plan carries an average annual deductible of $3,075 across all age categories, according to Chaney.
The Affordable Care Act mandates that all Americans be covered after Jan. 1, though it provides subsidies for low-and-moderate income individuals.
“It doesn’t matter if you qualify for a subsidy or not, that’s the base rate,” he said of Humana’s $302 and Magnolia Health’s $312.”
Younger adults, for instance those 27 to 30 who are non-smokers, would be below the base rate, at $289. The same 27-to-30-year-old Mississippian can buy the identical coverage on the open market today for $120, Chaney said, expressing worries that the “30 to 50 year olds” aren’t going to pay the higher exchange premiums and will instead choose to pay an annual federal penalty that in the first year of Obamacare will be about $95 but will rise annually thereafter.
The absence of young, healthy ratepayers “might make it [the Affordable Care Act] a nightmare,” Chaney conceded.
As envisioned going into 2014, an older person, say, a 64 year-old non-smoker, would pay $900 a month for health insurance under the approved rate, Chaney said.
A 62-year-old non-smoker’s rate would be $794, he added.
Beyond the subsidy, buyers on the exchange will receive tax credits for their premiums and some tax benefits from money spent toward meeting the $3,075 deductible.
The 62-year-old single male would get a $6159 tax credit “and under no circumstance would he have to pay more than 9.5 percent of his income on health care,” said Jarvis Dortch, a lawyer and program director for the Mississippi Health Advocacy Program, a non-profit and non-partisan organization based in Jackson.
“What Mississippians actually pay will depend on their household income which will determine the tax credit they receive,” Dortch said.
The same 62-year-old, if earning no more than $30,000 a year, would be eligible for a federal subsidy of around 50 percent, lowering the individual cost to about $400 a month.
In devising the Federal Facilitated Marketplace, framers of the Affordable Care Act expected insurance providers would flock to the exchanges, where competition would drive down premiums. That has occurred somewhat in populous states like New York, California and Florida. Mississippi, however, struggled to gain any interest at all from carriers. Until Humana stepped up in late July to agree to offer marketplace policies in 36 counties that had no carriers, the state faced a coverage crisis, according to Chaney.
“We would have probably ended up with hospital closings if we hadn’t been able to pull this off,” the commissioner said.
The U.S. Centers for Medicare and Medicaid Services, an arm of HHS, had to bend the deadline to let Humana apply, according to Chaney.
Areas that will gain coverage because of Humana’s participation include swaths of the Delta and southwest Mississippi, plus scattered areas elsewhere. Among those areas are Corinth, Greenville, Laurel, Natchez and Picayune. The Center for Mississippi Health Policy estimated that 54,000 uninsured adults could be eligible to buy policies through the exchange in the counties in question, The Associated Press reported.
As days passed without an insurer for the 36 counties, Chaney worried that Magnolia Health, which administers a 77,000-member Medicaid network in counties throughout the state, would get discouraged by the lack of interest in the more-than-three-dozen counties and pull out. “They were antsy about what was going on,” Chaney said of the St. Louis headquarters of Magnolia’s parent company, Centene Corp.
Mississippi’s Department of Insurance “heavily facilitated” the talks between Humana and providers in the 36 counties, “because we know what it means to the state,” Chaney said.
Chaney called it “the right thing to do,” despite efforts by Gov. Phil Bryant and Republicans legislative leaders to block implementation of the Affordable Care Act in Mississippi.
Upon final approval from HHS in mid September, Magnolia will offer policies in 46 counties and Humana in 36 counties. The only competition between the two will occur in Hinds, Rankin, Madison and DeSoto counties.
Dr. Jason Dees, a New Albany physician who joined Magnolia Health upon the insurer’s 2011 entry into the state, said in a recent interview Magnolia has been busy contracting with health care providers “and getting ready from a marketing standpoint.”
The company has built off the network of Medicaid providers it already has, Dees said.
Conceding the challenge of insuring patents in a state with one of the worst ratios of health care providers to population size, Dees said effective “team-based care” with significant participation by nurse practitioners and physician assistants “is really going to be important.”
As with its tens of thousands of Medicaid clients, Magnolia will emphasize primary care and prevention. “We’ll look for much improved health outcomes with lower costs,” he said.
“Since we have been here since 2011, we do understand the population to a degree,” Dees added.
Mitch Lubitz, spokesman for the Louisville, Ky-based Humana, said that in addition to Mississippi, the insurer so far has agreed to provide coverage in Florida, Georgia, Kentucky, Alabama, Illinois and Texas.
Taking on the 40 counties, Humana said in a press statement, “builds on Humana’s current presence in the state of Mississippi, where Humana already covers well over 200,000 Mississippians, including individuals, employer groups, military retirees and their families, as well as Medicare beneficiaries.”
Chaney expects the insurance exchange to gain more providers in the next few years. So does Dees, the Magnolia Health CEO. “We full anticipate… there may be more in 2015,” he said.
Gary Claxton, a vice president of the Kaiser Family Foundation who leads a project studying the health insurance market, said Mississippi’s high poverty and Blue Cross’ dominance of the state’s market make it unsurprising that a flood of new entries did not occur. Any new insurer would have to try to sign up a network of doctors and hospitals, and could have a hard time negotiating favorable payment rates because it would have few customers at the beginning, he said in an Associated Press interview.
“The thing that makes it difficult is getting a network together, because you don’t have market share,” Claxton said.
Availability could improve in 2015 or 2016. By then, for example, multi-state plans may be offered in Mississippi. Claxton said the national Blue Cross and Blue Shield Association, UnitedHealth and Humana are all expected to offer national plans.