Rates for Obamacare plans jump in Wisconsin

When the fourth open-enrollment period begins Tuesday, most people who buy health insurance on the marketplaces set up through the Affordable Care Act will see little, if any, change in their monthly costs.

But the tens of thousands of people throughout the state who don’t qualify for federal subsidies — most of whom have already seen the cost of their health insurance jump in recent years — will be in for additional pain.

They will pay the full cost of double-digit premium increases. Several insurers, including at least four in the Milwaukee area, are raising premiums by more than 20%.

The rate increases and cost of insurance vary based on the design of the health plan, including factors such as deductibles, location and age.

The higher costs are almost certain to lessen the chance of pulling more people — particularly those who are young and healthy — into the market. That is considered essential to the long-term stability of the market for insurance sold directly to individuals and families, as opposed to those who get insurance through an employer.

The increases are the largest since the Affordable Care Act remade the health insurance market, by requiring insurers to cover people with pre-existing health problems, for example, and capping how much older people could be charged compared with younger people.

For 2016 and 2015, several insurers in Wisconsin lowered their rates, while others raised rates sharply. For next year, only MercyCare Health Plans, a subsidiary of Mercy Health System in Janesville, is lowering its rates, according to the Office of the Commissioner of Insurance.

Federal subsidies, in the form of tax credits, are available to individuals and families with incomes below 400% of the federal poverty threshold — that amounts to $47,520 for one person and $97,200 for a family of four next year.

The subsidies, which are linked to a percentage of household income, limit what an individual or a family must pay for the most popular type of coverage in a market.

For that reason, people eligible for the subsidies will not see any increase in the cost of their insurance next year, provided their income hasn’t changed and they are willing to shop around for the plan that best fits their needs.

About 85% of the 224,208 people who bought health plans on the marketplace as of March 2016 were eligible for subsidies. The percentage may be higher now.

People must buy health plans on the marketplaces to receive subsidies. People not eligible for subsidies can buy plans on or off the marketplaces.

Estimates of the number of people who buy health plans outside the marketplaces vary. But Charles Gaba of ACA Signups estimates 77,000 people in Wisconsin bought health plans outside the marketplace that met the requirements of the Affordable Care Act and did not receive subsidies as of March.

Some of those people may be eligible for subsidies, but most will get hit with the increases next year.

For example, Molina Healthcare, which sells plans in 30 Wisconsin counties, said its rates will increase about 22% in the Milwaukee area and about 27% overall.

Its least expensive plan with the most popular level of coverage, which has a $2,400 deductible in the Milwaukee area, costs:

• $311 a month, or $3,732 a year, for someone 27 years old.
• $378 a month, or $4,536 a year, for someone 40 years old.
• $804.50 a month, or $9,654, for someone 60 years old.

Its rates in Brown County are $8 to $22.50 a month higher.

Premiums are just one part the cost. Deductibles and other out-of-pocket costs also matter.

“There are some wide swings in premiums based on the benefits offered,” said Ben Lynam, an actuary and vice president of pricing for Molina.

Premiums for family coverage are much higher.

For example, a family of four, in which the parents are 40, would pay $13,157 a year, or $1,096.46 a month, for insurance — and that’s with a $10,400 medical deductible and a separate $7,000 deductible for prescription drugs, up to the $14,300 limit on out-of-pocket expenses for family coverage next year.

The plan, offered by Common Ground Healthcare Cooperative, is one of the least-expensive in Milwaukee County.

“I’ve talked to people who are exasperated,” said Todd Catlin of Transition Benefits in Brookfield. “They are just at wit’s end.”

The plans make clear just how expensive health insurance  — and, indirectly, health care  — is.

Yet the cost is roughly in line with what employers and employees pay for insurance.

Nationally, the average cost was $6,435 for single coverage and $18,142 for family coverage for health insurance provided by employers this year, according to an annual survey by the Kaiser Family Foundation and the Health Research & Educational Trust.

“Health insurance was expensive before the Affordable Care Act,” said Donna Friedsam, director of Health policy programs at the University of Wisconsin Population Health Institute. “The difference is that people who could not get coverage before can get coverage.”

The cost is high even for individuals and families eligible for subsidies.

Individuals and families with very low incomes receive additional subsidies for deductibles and other out-of-pocket expenses. But the subsidies are much lower for individuals and families with middle-class incomes.

Someone making $30,000 a year, for example, would pay 8.18% of his or her income, or roughly $2,454, next year for insurance. That doesn’t include deductibles and is after the subsidy.

The market in Wisconsin — as in other states — has been in flux since the changes from the Affordable Care Act went into effect in 2014. But the market is far more competitive than most states.

Several states, such as South Carolina, Oklahoma and Alabama, have only one insurance company selling health plans on the marketplaces. Wisconsin will have 15 for next year, down from 16 this year, according to the Kaiser Family Foundation.

“We still have a fair amount of competition,” said Mark Rakowski, vice president of Children's Community Health Plan.

Several insurers, including UnitedHealthcare and Humana, are no longer selling health insurance directly to individuals in Wisconsin, though UnitedHealthcare is allowing people to continue renewing certain plans. Both companies will continue to sell insurance to employers as well as Medicare Advantage plans and Medicare Part D plans for prescription drugs.

The two companies were the only plans that included most hospitals and doctors in the area and also provided some coverage if someone went out of network.

The Milwaukee marketplace has plans from four insurers, and Waukesha County has six. They include Children’s Community Health Plan, which is entering the market this year, and Network Health Plan, which entered the market last year.

Brown County has plans from three insurers, and Racine County also has plans from three, both down from six last year.

The unknown is whether the increase in premiums this year is an aberration or will become the norm.

The ACA law needs fixes, said Lynam, the Molina actuary. But he believes that the price increases could help the market in the long term.

“There will be more stability in pricing,” he said.

For additional information or to apply for coverage through the Affordable Care Act, visit. www.healthcare.gov.