Obamacare Causing Major Harm in North Carolina

Last week, Blue Cross Blue Shield of North Carolina announced that it is raising rates an average of 13.5 percent on its Obamacare plans for 2015 – an increase of nearly $700 for a 45-year old. BCBS is the state’s largest health insurer, enrolling nearly three-quarters of state exchange enrollees, and the only one offering coverage throughout the entire state. These premium hikes are on top of very large rate increases in 2014, when average premiums soared by 136 percent for North Carolinians, the fourth largest increase in the country. Premiums for young men increased the most, up 171 percent on average.

BCBS said it is raising premiums in 2015 because new Obamacare customers “are older and less healthy than we anticipated. That means we have a large pool of older, less healthy customers, and rates will increase partly to help cover the high health care usage of these customers.” Unfortunately for North Carolinians, Obamacare’s destructive effects have carried over to people purchasing coverage in the rest of the individual market as well. The insurer is also raising premiums for people with grandfathered plans – plans that were in effect prior to Obamacare that don’t have to satisfy all of the law’s expensive mandates – by an average of 13.4 percent. Premiums for people in transitional plans are rising by 19.2 percent on average as BCBS has found that healthier customers are leaving this group at a higher rate than expected. Transitional plans are non-grandfathered plans that the administration decided could be extended late last year after the public outcry over massive insurance cancellations caused by Obamacare, affecting 473,000 people in North Carolina.

Obamacare Risk Pools Skewing Older, Sicker

When it was setting rates for 2014, BCBS anticipated that 22 percent of its enrollees would be under the age of 18; and 28 percent would be between the ages of 18 and 34. As it turned out, the shares of enrollees in these age categories were only eight percent and 24 percent, respectively. In contrast, BCBS enrolled twice as many people over 55 as it had anticipated.

In North Carolina, more older enrollees than anticipated

Source: BCBS

The severe skew toward older customers in the Obamacare risk pools is not limited to North Carolina. In July, a House of Representatives committee released its examination of aggregate enrollment information for 10 insurers. The age-mix data showed that only about a third as many children as insurers had anticipated were enrolled in Obamacare plans, yet significantly more people over the age of 55 enrolled.

Enrollment skews older nationwide

Source: House Oversight Committee

The House report was not the only one to find that Obamacare plans were being selected by a disproportionate number of older and sicker people. In April, pharmacy benefits manager Express Scripts reported that exchange plan enrollees were using greater amounts of expensive specialty drugs compared to people on commercial plans. On June 24, the Wall Street Journal reported that exchange enrollees were 70 percent more likely to have significant health issues compared to people in individual market plans in 2013.

Previous research has found that Obamacare disproportionately harms the young and healthy by forcing them to pay for Obamacare’s expensive mandates and subsidies. In North Carolina, BCBS found that healthy people are leaving transitional coverage faster than insurers anticipated. They also found that customers in grandfathered plans are older and sicker than they expected. So it is worth asking what happened to young and healthy people in North Carolina, and whether some of them are choosing to go without insurance and will have to pay the IRS the individual mandate penalty.

The data released by BCBS suggest that large rate increases for Obamacare plans are on tap for the next few years. As insurers stop offering grandfathered and transitional plans, many of the older and less healthy customers selecting those plans will head to Obamacare’s exchanges to purchase coverage. When they enter the exchanges, premiums will continue to spiral upward.