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Sticker shock hits NH health insurance buyers

New Hampshire Union Leader

November 23. 2017 8:54PM

MANCHESTER — Small business owners and middle-class individuals buying health insurance in New Hampshire have been warned for months that soaring premiums were in the offing for 2018.

But once the open enrollment period began earlier this month and they took to “shopping” for the limited options on the Obamacare exchange, the numbers were still eye-popping.

Most said they learned that even if they lowered the quality of their health care coverage — raised deductibles, introduced coinsurance payments they would have to make — none of it did much to soften the blow.

Scott Spradling of Manchester, a former WMUR political director, runs his own media/consulting company with his wife, Tracy Caruso, an ex-talk show host on WZID-FM.

“I will be spending $24,000 on insurance next year for my family. That is a 50 percent increase,” said Spradling. “This doesn’t include deductibles or copays. What the proverbial hell is going on with health care? Decision makers, if you are listening: fix this.”

Jay Surdukowski of Concord said as a healthy 38-year-old lawyer, it’s hard to accept having to pay this much for insurance he rarely uses.

“I’m up 68 percent in a Harvard Pilgrim Gold plan which I don’t use, knock on wood,” Surdukowski said. “It’s like a third mortgage.”

And there’s Alicia Preston of Hampton, who runs her own Seacoast consulting business and has decided she can no longer afford to carry insurance.

“I simply didn’t renew my insurance. In addition to the much higher deductible it went to, I had to pay a 40 percent co-pay,” Preston said. “I can go bankrupt at 40 percent as easily as 100 percent.”

David McConville, a retired business executive from Amherst, said he knows many associates in their late 50s and early 60s who are gambling they will remain healthy until they can qualify for Medicare.

“That is very dangerous because the older you get, the more complications there are,” McConville said.

“We were seeing the cost curve of health care going up and up, and to me the Affordable Care Act is the rocket ship that has taken costs into outer space.”

One unknown is how much of an income tax penalty people in 2018 will pay the following year for not having insurance.

The sanction for the 2017 tax year without coverage is $695 per adult or a maximum of $2,085 per family.

For those individuals who need health insurance, eliminating the mandate might not be a good thing.

“The people dropping coverage would generally be healthier than average so that would raise premiums for individual market coverage because the average cost to people in the individual market would now be higher,” says Matthew Fielder of the Brookings Institution

Getting creative

These market changes have forced some to get creative like Stephen Matthieu, who runs a small, financial services company in Manchester.

He and his wife, Jean, started four years ago buying a policy from Christian Med-A-Share, one of a handful of religious-based health plans that don’t have to comply with Obamacare mandates.

The option is a health sharing network which doesn’t obligate the company to cover all health care costs of its members but generally does step up when someone has a catastrophic event — such as after Stephen suffered a heart attack last April.

“The bills from that were over $100,000 and we had to only pay our $2,500 deductible plus a few other charges,” Matthieu said.

Members must demonstrate their faith to be admitted into the group, which doesn’t support health care that goes against their beliefs such as contraception, abortions or sex-change operations.

The couple also pays a family physician $2,000 a year for “concierge” service so they can see the doctor whenever they need to.

Along with a catastrophic health insurance policy, the couple in total spend $14,524 a year for coverage.

“It’s a lot of money and I do believe the mandates are driving up a lot of it,” Stephen Matthieu said. “Insurance didn’t use to cover all that it has to now under Obamacare.”

An average of 52%

These rising premiums — an average of 52 percent for the 24,000 in the Obamacare exchange that don’t get federal subsidies — is particularly frustrating for small business owners because health care costs for low-income and lower middle-income with subsidies in 2018 will be the same or even slightly lower.

“That’s a hard pill for a lot of people to swallow right now,” said Senate Majority Leader Jeb Bradley, R-Wolfeboro, who recently finished chairing a bipartisan commission on how to frame the future of the state’s Medicaid expansion program.

The so-called New Hampshire Health Protection Program expires without further action at the end of 2018.

Lisabritt Solsky is executive director of Well Sense, one of the two companies providing managed care services to those in the traditional Medicaid program.

It’s indisputable that higher-than-expected costs to treat those low-income adults in the Medicaid expansion population has contributed to the price spike hitting middle-class wage earners in the exchange, she said.

That’s because New Hampshire approved Medicaid expansion only if the insurance was offered by commercial carriers, not by the government. Therefore, these commercial companies have to offset losses insuring low-income citizens by raising rates higher on the middle class.

Medicaid expansion

According to recent analysis conducted for the state Insurance Department, the average medical costs for residents under Medicaid expansion were 24 percent higher than others in the individual market in 2016, the hospital admission rate was 72 percent higher and emergency department visits were 300 percent higher.

“The profile of someone eligible for Medicaid is very different than someone not in the program who is buying coverage in the exchange,” Solsky said.

“Their needs are higher and more complicated than most of the people in the individual market. This has had a big impact and a contributing factor for the rates being charged in 2018.”

The New Hampshire commission is recommending putting those in Medicaid expansion into managed care programs such as the one Solsky runs.

Legislative leaders from both parties conclude this move, if lawmakers adopt it, could produce savings and help stabilize future rates.

“I do think this model preserves that great federal revenue that keeps coming to the state north of 90 percent,” Solsky said.

“Hopefully this is going to help the individual market. I think it is a great way forward under the circumstances.”

Cash to be king?

Studies have also shown this sticker shock is also the product of commercial insurers pricing their products relatively cheaply when the ACA first began and having to adjust with higher rates in future years to remain profitable.

That’s what Minuteman Health of Massachusetts executives said in July when the company exited the market.

This forced 27,000 having to find another insurer as of Jan. 1, 2018 from the three options that remain — Anthem, Harvard Pilgrim and Ambetter.

“You really have to find that sweet spot for that very price-sensitive consumer,” Solsky said. “You can’t be priced so high nobody is going to pick you or price yourself so low that everybody is going to pick you. That’s tricky.”

Insurance Commissioner Roger Sevigny recently admonished Anthem executives for a mailing to Minuteman customers that suggested they had no choice but to sign up with Anthem next year.

“We understand that there is a lot of confusion for Granite Staters during this open enrollment period,” Sevigny said. “The department is here as a resource for anyone in the state who has questions or concerns about their insurance coverage.”

Anthem officials have apologized for the mailing.

Jean Matthieu believes that along with healthy individuals exiting the market, more middle and upper-class residents will start negotiating with health care providers on their own.

“That’s what Canada has seen with its system — that people are using cash to get to the head of the line and also to reduce the cost because doctors would love to have the money free of all the federal regulation,” Jean Matthieu said.

“The longer Obamacare goes on, the more likely cash becomes king when it comes to getting the health care you need at the price you want.”

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