By Deena Winter | Nebraska Watchdog
LINCOLN, Neb. – Allan Douglas has been selling insurance since the 1980s, and as the owner of an independent insurance agency in Omaha he had a front row view of the rollout of the Affordable Care Act.
Not only because he helps clients navigate the health care law, commonly called Obamacare, but because he also had to navigate it himself, since he buys his own insurance. As enrollment began Saturday for the second year of the program, people on Obamacare plans began getting letters from their insurance companies explaining rate changes.
OBAMACARE 2.0: Rural Nebraskans will see the biggest increases in premiums in the second year of Obamacare.
“Our phones are starting to light up,” said Douglas, who owns Pioneer Interstate Insurance. “Most (rates) are doubling.”
He also got a letter from his insurance company informing him his premium will double next year, from $594 to $1,204 per month, if he qualifies for a $260 monthly federal tax credit again.
He’s 50 years old and has a healthy family of six, with four children under the age of 16. He’s not sure he’ll qualify for the tax credit this year, in which case he’d pay $1,464 per month — or $17,568 per year — with a $2,000 deductible. His premium and deductible would chew up almost 20 percent of his household income.
“That’s pretty standard,” he said of his big premium increase. Douglas has shopped around for better rates on the federal insurance exchange, but has had problems with the Healthcare.gov website crashing.
That’s a hefty hike, higher than the average 10 percent increase among all Obamacare plans reported by the state Insurance Department earlier this year. BCBS of Nebraska, the largest insurer in the state, has said its rates will go up nearly 20 percent on average in 2015.
County-by-county data released by the Obama administration Friday show bigger premium increases in rural Nebraska. The smallest increase is in Douglas and Sarpy counties, home to Omaha and its suburbs, at 1 percent. Meanwhile, many rural counties in western Nebraska will see 17 percent increases, most in central Nebraska will see 12 percent hikes, 7.5 percent for southeast Nebraska counties and 21 percent in three counties bordering Douglas and Sarpy counties.
Matt Leonard, manager of consumer sales for Blue Cross, said his company charges standard rates statewide, but he assumes some other providers on the health exchange are charging higher rates in rural Nebraska, where the cost of care is higher due to a lack of competition.
Why is Nebraska taking such big hits to rates? Leonard said the cost of care in Nebraska was lower than in much of the nation, so when Obamacare mandated those “10 essential benefits” be added to all plans, that drove up costs considerably.
Blue Cross has said its losses on individual plans this year were “some of the highest we have seen in years.”
If a child turns 19 and becomes an adult dependent, that can have a major effect on rates. Blue Cross also started charging more for older tobacco users, as its competitors were.
Douglas blames the big rate increases on a lack of competition in Nebraska — only four companies sell insurance on the Obamacare exchange — and heavy use of insurance last year by people who were previously uninsured or underinsured. Those people with pent-up medical needs were “desperate” to get health insurance last year, and likely generated big claims. So he wasn’t surprised by the premium hikes.
“In my opinion it’s just not working,” he said of Obamacare. “The only thing I like is everybody can get insurance.”
Although not everyone can afford Obamacare. Even with federal subsidies, some clients couldn’t afford to pay even $16 per month, Douglas said.
Lynn Alford would like health insurance but can’t afford Obamacare plans. Trained as a nurse, the 63-year-old now works as a cashier at a Lincoln grocery store. Last year, she plugged her information into Healthcare.gov, but the cheapest plan she could get would cost $300 to $400 per month, with a $5,000 deductible.
She lives on $900 per month in Social Security, a $570 pension and earns about $900 per month working part time at the grocery store — not enough to afford Obamacare, she said. If Alford could afford that kind of premium, she’d be going to the doctor now.
She pays $485 in rent for a one-bedroom apartment and drives a rusty 1993 car with a broken door.
“I’m living pay day to pay day,” she said.
Alford pieces together health care from free services in the community, but wishes she could afford to go to the doctor for ailments like colitis and periodontal disease.
“I can’t afford to go to the doctor,” she said. “It didn’t solve my problem.”
Many other young cashiers in their 20s and 30s are in the same boat, Alford said, unable to afford Obamacare plans. Even if they get a federal subsidy to lower their premiums, $5,000 deductibles are unrealistic for low-income workers, she said.
Rather than get on Obamacare, she will pay the federal penalty for not having insurance — $95 or 1 percent of her income (whichever is higher), which rises to $325 or 2 percent of income next year.
“I’m just going to take my chances,” Alford said. “I’m sure there’s a lot of people like me.”
Leonard said about 87 percent of those seeking an Obamacare plan qualify for subsidies, but there are outliers, like Alford.
For those frustrated by double-digit rate hikes, Leonard said it’s going to take time for prices to level off. The ACA has a lot of taxes, fees and expanded benefits driving up the cost, so people can expect these kinds of rate increases the first few years, he said.
“It’s probably going to take a few years for the dust to settle,” Leonard said. “It’s going to take a few years for the market to stabilize.”
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