Savings opportunities abound for 2018 DC health plans despite premium increases from 2017.
On average, premiums for health insurance in the individual market increased 15.4% from 2017.
These increases, however, mask the variation in the rates among insurers and among plans. Some premiums will rise by 8.0% from 2017 while others will rise 25.2%. The increases vary by the plan’s deductible, network restrictions, and compatibility with Health Savings Accounts (HSAs).
Employees of small businesses will pay 7.3% more on average than 2017 for their health plan. This increase, like the one in the individual market, masks the variation in price increases among different types of plans.
So please shop among plans before auto-renewing your 2017 DC health plan for 2018. By doing so, you can not only cut your costs but make sure the plan’s features are right for you.
Earlier this year, Carefirst and other insurers offering health plans to individuals and employees of small businesses proposed substantial increases for 2018 compared to 2017.
The Affordable Care Act requires state insurance departments to review health plan premium increases for individuals and small employers. Insurers propose premiums for plans at four “medal levels:” bronze, silver, gold, and platinum.
Bronze plans have higher deductibles (around $6,000 year) and more cost-sharing when you receive services (i.e., a bigger co-pay). Platinum plans don’t usually have deductibles and little to no cost-sharing.
Insurers propose different premiums for the same plan in the individual and small business markets because DC regulations require insurers to price these two groups separately. There is no reason the two markets can’t be unified to spread the risk more widely. But it is what it is.
DC Health Insurance Landscape
CareFirst BlueCross BlueShield is the largest health insurer on the DC Health Link. It provides health insurance plans in the both the individual and small group markets to over 73,000 persons. Kaiser Foundation Health Plans covers 6,366 covered lives in both the individual and small business markets. United Healthcare and Aetna compete only in the small business market and cover about 8,600 and 1,200 lives, respectively.
In the individual market, Carefirst proposed increases of 39.6% for Health Maintenance Organizations (HMOs) and 19.7% for Preferred Provider Organizations (PPOs). Kaiser proposed an average increase of 13% for its HMO plans (it doesn’t offer PPO plans).
In the small business market, Carefirst’s increases were smaller of 9.5% for HMO plans and 15.3% for PPO plans. Kaiser proposed only a 5% increase for its HMO plans.
An HMO gives the plan member access to certain doctors and hospitals within the insurer’s network. Cost of your care under an HMO plan is covered only if the doctor or hospital is in that HMO’s network. There are few opportunities to see a non-network doctor. There are typically more restrictions for coverage under an HMO than other plans, such as a limited number of visits, tests, or treatments. Carefirst markets their HMO plans as “Blue Choice” – how ironic!
PPO plans, by contrast, offer more flexibility when picking a doctor or hospital. They also feature a network of providers, but there are fewer restrictions on seeing non-network providers. In addition, PPO plans will pay for non-network providers, although it may be at a lower rate than in-network providers. Carefirst markets their PPO plans as “Blue Preferred.”
Four Considerations about 2018 DC Health Plans in the Individual Market
1. HMO Prices: Kaiser is less expensive at the gold and platinum levels than Carefirst.
You have two choices in DC if you use an HMO: Carefirst and Kaiser.
Carefirst’s network of physicians and facilities is broader than Kaiser’s because it contracts with independent physicians and hospitals in the DC metropolitan area.
Kaiser, by contrast, employees physicians and owns its own facilities.
At the bronze level , the price difference between the Kaiser and Carefirst plans is only a few dollars each month. So there isn’t much of a premium savings if you switch between the two.
There is a bigger difference in monthly HMO premiums if you have a gold or platinum plan. The Kaiser monthly premium is lower than Carefirst’s by about $30/month for a 40-year old with a gold plan.
Kaiser HMO plans are less expensive than Carefirst’s for older people. At age 55, the average premium difference is $70/month and it keeps getting larger as you age.
If you’ve used Carefirst for a long time but don’t use a lot of services, then you may want to switch to the lower-priced Kaiser plan with its restricted network. You can always switch back next year if you don’t like the Kaiser plan.
2. Carefirst HMO and PPO Price Differences are Small
Carefirst is the only insurer that offers PPO plans in the individual market.
The price differences for Carefirst PPOs and HMOs aren’t that great. For example, a silver PPO plan for a 40-year old is only $20/month more than the HMO plan.
If you want some flexibility on your choice of physicians or if you don’t want to have to get referrals when you see a specialist, you may want to look into using a Carefirst PPO rather than their HMO.
And if you have any providers that are out of Carefirst’s HMO network, you’ll receive some reimbursement from a PPO plan compared to the HMO plan.
3. HSA-Compatible Plans Cost Less than Standard Plans
Both Kaiser and Carefirst offer “standard” plans and Health Savings Account-compatible plans at the each medal level. An HSA allows you to save pre-tax money and to use it to pay for your medical expenses. HSAs make financial sense if you can afford to contribute to them and have few medical expenses.
A“standard” plan has set co-payments for various services (e.g., $75 for a specialist visit). Standard plans are not HSA-compatible.
The HSA-compatible plans instead charge a co-insurance amount (e.g., 20% of the rate paid to the provider). And you are responsible for all charges up to the annual deductible.
It is maddening to me to not know how much a specific service costs ahead of time since Carefirst and Kaiser do not list their prices for you to calculate your 20% share of the cost.
If you want an HSA-compatible plan, don’t sign up for a standard plan. Of course, if you have extra dollars in an HSA from earlier years you can still use them for medical expenses this year if you enroll in a standard plan.
4. Individual and Small Business Market Premium Differences
I still don’t understand the premium differences for the same plan in the individual market versus the small business market for Carefirst plans.
The same Carefirst HMO plan is more expensive in the individual market compared to the small business market. But their PPO plans are more expensive in the small business market than in the individual market. Go figure.
In sum, decide on the type of 2018 DC health plan (HMO or PPO) that best suits your needs, whether Kaiser’s restricted network works for you, and whether you should get an HSA-compatible plan.