Why will some health plans in Philly cost more next year?

As the first week of open enrollment under the Affordable Care Act wraps up, those helping people sign up and renew their plans have this resounding bit of advice: consider all the options out there.

Updated Nov. 20: As the first week of open enrollment under the Affordable Care Act wraps up, those helping people sign up and renew their plans have this resounding bit of advice: consider all the options out there.

With all the details now available to review and compare plans for 2015, people in Southeastern Pennsylvania, especially, may find  the option that was most affordable and comprehensive this past year may not be for this coming year.

Frustration, confusion, hope

Enrollment kicked off to a smoother start last Saturday, with officials reporting that 100,000 people nationwide had already submitted applications by the end of the first day.

About 90 minutes into an enrollment event at the Northern Liberties community center in Philadelphia, organizers finally had a reason to celebrate.

Applause erupted when James Rizzo, who’s 33, was the first successful enrollee of the day. Rizzo says he lost his job and health insurance last spring. He heads out of the community center with a plan he says will give him some “piece of mind.”

Others who showed up and already had coverage through the Marketplace were less enthused. Many learned they’re now facing some surprising price jumps in premiums and changes in benefits this coming year.

Take Joseph Krakauskas, 62, of Philadelphia. He arrived at the community center early, with a stack of insurance notices, seeking help from a certified application counselor.

[For more on where to find in-person help signing up, click here]

Krakauskas had enrolled in a personal choice Independence Blue Cross silver plan through the Marketplace last year, costing him $82.42 a month, after qualifying for $605 in monthly subsidies.

It’s a good deal for him, he said, until receiving a notice that effective Jan 1., the plan and the subsidies would be changing. It would go from no coinsurance after his $750 deductible to 10 percent coinsurance, and even with a subsidy, the plan’s premiums would go up to nearly $300 a month.

“This is such a dramatic – this is almost like bait and switch,” said Krakauskas. “I don’t know what they’re doing here, and they’re getting away with this.”

Premiums for Blue Cross’ most popular HMO plan in Philadelphia are going up about 15 percent beginning Jan. 1. For example, for a 40-year-old nonsmoker, the HMO silver proactive is going from $256 a month to $294.

“This shows the importance of the re-enrollment process,” said Antoinette Kraus, an organizer of the Northern Liberties event and head of the Pennsylvania Health Access Network. She says Blue Cross may be more expensive this time around, but two other companies are now offering cheaper plans in Pennsylvania.

“We’re calling folks to let them know they should look at the different options,” she said. “There are now three plans – two United Health Plans and one Aetna that are cheaper this year than the [IBX] silver proactive.”

A recent Kaiser Family Foundation study mapped out changes by city, and found that while rates did go up for many plans across Pennsylvania, premium rates for the new benchmark silver plan in Philadelphia will be falling 10.7 percent from 2014.

Why the price changes?

In a statement, Independence Blue Cross’ vice president of marketing, Brian Lobley, wrote with regards to the plan changes:

“Our rates vary by plan. The cost of providing access to quality health care has the biggest impact on insurance premiums, and our rates reflect this. There are also new pressures like increased costs that are part of the ACA.”

An analysis from Avalere found that the changes extend beyond IBX and Pennsylvania. The most popular exchange plans in 2014, selected by 28 percent of all enrollees, increased premiums by an average of 10 percent for 2015.

Joel Cantor, director of the Center for State Health Policy at Rutgers University, said one reason for price increases is that, last year, insurers didn’t really know who would enroll, and may have underestimated the costs.

“The actuaries had little more than a Ouija board to work with,” he says. “They didn’t know whether only sick people would enroll, whether healthy people would enroll, and they had to make their best estimate. This year, they had a lot more data to work with.”

Carriers are having to react quickly, according to Pennsylvania’s Department of Insurance, and adjust to new changes, including the new ban on insurers denying people coverage due to a preexisting health condition.

“The changes to rating brought about by the ACA – such as guaranteed issue and limited rate factors – have created a new environment for all carriers,” Pennsylvania insurance department spokeswoman Melissa Fox said in an email. “In addition, carriers needed to submit rates after only a few months of actual experience in the 2014 marketplace.  Therefore, it is not surprising that we see carriers adjusting their rates – either up or down – to adapt to this new environment.”

While costs may vary be region, Cantor says overall in New Jersey, the market remained stable between last year and this coming year, with “minor” premium changes ranging from plus or minus two percent for most types.

In general, Delaware is experiencing about a 4 percent rate increase, lower than the average from other states, according to review of state plans by PricewaterhouseCoopers. 

For New Jersey, the biggest change this enrollment period concerns which carriers are offering the lowest cost options, Cantor said. It means that some individuals who stay with their current plans could experience large increases if they stay with that same plan in the coming year, instead of shopping around.

As for Krakauskas, he had trouble accessing his account and making changes to his plan on day one of open enrollment, but by Wednesday, he was able to sign up for a new plan. He found an HMO option that he says is more affordable, and with subsidies would cost him about $40 more a month compared to what he’s currently paying.

“I feel OK, that’s OK for me,” he said. “But it’s not going to be the same type of plan that I have.”

Current enrollees have until Dec. 15 to make changes and avoid getting automatically re-enrolled in their current plans.

The absolute deadline to sign up for the first time or switch plans during this enrollment period is Feb. 15.

Have you tried enrolling in health coverage through the Affordable Care Act? The Pulse wants to hear how it’s working for you. Email us at thepulse@whyy.org.

This disclosure: Independence Blue Cross supports WHYY.