At a time when inflation seems to be on the nation’s radar, it’s no surprise that Blue Cross and Blue Shield of North Carolina would tout that members in the healthcare plans it offers in the Affordable Care Act (ACA) marketplace will actually see their premiums decrease by 4% in 2024 compared to this year.
The rates, approved by the North Carolina Department of Insurance, “will lower total premiums by an estimated $130 million and reflects Blue Cross NC’s commitment to creating sustainable health plans that are more affordable for all,” according to a Blue Cross NC press release.
Tunde Sotunde, M.D., CEO and president of Blue Cross NC, said in the press release that “our rates for an individual ACA health plan are actually 5% lower than they were in 2018, despite the rising costs of healthcare and overall inflation in the U.S. As the only not-for-profit insurer in all 100 counties of the state, we are bringing savings directly to our members to make their healthcare more affordable.”
The cost of members’ collective medical and pharmacy claims determines premium rates, and they can vary depending on location, members’ ages or what plan they belong to. The amount of federal subsidies also matter, and the Centers for Medicare & Medicaid Services makes that determination for ACA plans each October.
An analysis in July by the American Academy of Actuaries warned about factors that could very well drive up costs for ACA premiums, such as inflation, the end of the COVID public health emergency and exactly how small employers might react to rising healthcare costs.
If more small employers become self-insured—a trend noted in a recent study by the Employee Benefit Research Institute—or small employers seek out other options, such as level-funded plans and purchasing associations, that could increase the morbidity of individuals remaining in the ACA plans and drive up premiums.
However, the study by the American Academy of Actuaries also noted there will be a lot of geographic variability when it comes to premium amounts for ACA plans.
The Blue Cross NC press release said that about 85% of the plan’s “current customers with individual ACA plans qualify for subsidies for their 2024 plans. Subsidies vary by plan and household income. The federal American Rescue Plan Act expanded these subsidies to more individuals, lowering premiums to no more than 8.5% of customers’ household incomes. In 2022, these expanded subsidies were extended for three years, through the federal Inflation Reduction Act.”
Blue Cross NC noted in its press release that while pharmaceutical costs grew 9.4% in 2022, Blue Cross NC held down pharmacy trend for its individual ACA market to 0.7% in 2022 and to 2.9% so far in 2023.
Overall, for Blue Cross NC, drug costs rose 5.1% per member in 2022, which plan officials say was driven by a 9% increase in the cost of specialty drugs. A Blue Cross NC spokesperson told Fierce Healthcare in an email that “this includes a 3.1% increase for fully-insured commercial business and a 9.9% increase for its Medicare Advantage business. Climbing drug costs slowed significantly in 2022, when compared to the 10% increase for drug costs and 15% increase for specialty drug costs in 2021.”
Blue Cross NC officials say that in many areas in the state it collaborates with local health systems in offering plans that feature “a smaller, curated network of high-quality providers, at a lower cost than a similar broad network PPO plan,” according to the press release.
That’s one of the ways it’s battling rising drug costs: collaborating with providers and offering research and communication tools for members while negotiating with drugmakers for lower prices and backing legislation that aims to do that.
“Blue Cross NC works with employers to create comprehensive health plans that include integrated pharmacy benefits, providing simplified, coordinated coverage for employees,” the spokesperson said.
The company intends to continue to offer its Blue Local and Blue Home plans in the Triad, Triangle, and Charlotte regions of the state, with average monthly rates $100 to $200 lower than a similar PPO plan.
The company will also continue to offer its Blue Value plans with rates $70 to $90 lower than a similar plan in the Wilmington, Hickory and Gastonia areas of the state.
The press release stated that “Blue Cross NC will continue offering renewal of what are considered ‘transitional plans’ in 2024, for both individuals and small groups. These are plans purchased between March 2010, when the ACA was signed, and October 2013 when regulations went into effect. Transitional plans do not meet ACA requirements but are allowed by federal law. The plans cannot be sold to new customers.”