Obamacare is turning out to be an expensive proposition in West Virginia.

New figures released by the Department of Health and Human Services show that the average monthly premium for customers in the exchange will rise by 32 percent next year, from $294 to $386 a month.  (The figure is based on the second-lowest cost plan—the Silver Plan—for a 27-year-old and before tax credits.)  The national average increase is 25 percent.

Highmark Blue Cross Blue Shield, which insures 35,000 of the 37,000 customers in the West Virginia exchange, says premiums have shot up because individuals in the exchange need more health care.

“Our ACA (Affordable Care Act) population is sicker,” said Highmark.   The exchange members are 85 percent more likely to have had a cancer diagnosis in the last year, 88 percent more likely to have coronary artery disease, 69 percent more likely to have hypertension, 80 percent more likely to have COPD and 110 percent more likely to have chronic kidney disease.”

Highmark says as a result, the insurance company is paying out $1.19 in claims for every $1 in premiums.  “This is not sustainable,” the company said.

Skyrocketing prescription costs are also contributing to the dramatic premium increases.  “On average, a specialty drug costs about $5,500 per prescription and is becoming a larger proportion… of overall pharmacy expenses,” the company reported.

Another problem is what’s known as “adverse selection.”  That’s where a person enrolls in the exchange, uses benefits, and then stops paying the premiums.

All these factors and more add up to the insurance companies–Highmark and CareSource are the only two operating in West Virginia—raising their premiums significantly to offset the costs.  “Both are paying out more in claims than they are collecting in premiums for the individual market,” said state Insurance Commissioner Michael Riley.

Most West Virginians in the exchange won’t see much difference in their insurance bills despite the skyrocketing premiums.  Riley says 86 percent of the individuals and families qualify for subsides from the federal government based on their income.  “However, the concern remains with the 14 percent that do not qualify for a subsidy and are subject to the full increase.”

On the plus side, the sickest among us have insurance options under Obamacare that they did not have previously.  The exchange is a Godsend for somebody with a preexisting condition who previously would not have been able to buy insurance.

However, serious problems remain. Insurance companies are dropping out of the exchanges in many states, lessening choices and driving up rates. Not enough young, healthy individuals are entering the exchanges to help offset the cost of sicker patients. And perhaps most importantly, health care costs keep rising rapidly.

“Over the past three years, as the ACA has unfolded, little has been done to control rising health care costs, particularly specialty drug costs,” said Highmark.

The state Insurance Commission reports that CareSource is expanding its footprint in West Virginia and that will provide a few more options, but our state is not a desirable market. Our population is older and less healthy than the national average.

Obamacare does guarantee that people are going to be able to get insurance. But as this new round of premium increases show, it’s not going to be cheap.

 

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