By Katie Kerwin McCrimmon
The insurance renewal notice arrived and Donna Smith’s heart sank.
A two-time cancer survivor, who had to struggle for weeks last fall to buy a health insurance plan through Colorado’s exchange, Smith received some very bad news.
The tax subsidy that’s supposed to make her plan more affordable is dropping from this year to next by a whopping 83 percent — from about $75 per month to about $12. At the same time, the cost for the Kaiser Permanente plan that she’s on now and likes is going up 12 percent. With the double whammy of a lower subsidy and higher costs, she’ll have to pay 28 percent more next year if she wants to stay in her plan.
Many of the 148,000 people who bought private health insurance this year through Colorado’s exchange, Connect for Health Colorado, are facing similar disheartening news this month and must decide within weeks whether to renew their plans and pay more, switch to lower-cost coverage or opt out altogether.
Consumers can shop now and start buying plans tomorrow at www.ConnectforHealth.com.
Exchange managers issued a warning late last month that customers could see subsidy decreases of as much as 77 percent and should shop carefully before automatically renewing. (Click here to read Consumers squeezed as tax credits, insurance rates drop.)
Smith’s scenario of an 83 percent subsidy plunge, however, is even worse than exchange managers predicted.
“It’s a huge mess for me and a huge mess for lots of people in the state,” said Smith who supports the Affordable Care Act, but wants to see a much broader and more affordable single-payer system.
“You’re at their mercy and if you don’t sign up and (you) get sick, you’re in trouble,” Smith said.
A new nonprofit health cooperative called the ColoradoHealthOP underpriced competitors in all but one county in Colorado for 2015. Subsidies designed to make health insurance more affordable are based on the least expensive plan prices. So decreasing prices overall mean that tax subsides are also dropping.
The HealthOP has branded itself as a disruptive upstart trying to shake up the health industry and provide consumers with much more affordable options. The nonprofit got its start through $69 million in low-interest loans from the federal government. The Denver Business Journal recently reported that the HealthOP had lost $17 million in the first six months of this year. The losses combined with news that the HealthOP’s new, lower prices are triggering dramatic drops in tax subsidies for some lower-income customers has ignited anger from brokers and competitors who accuse the HealthOP of trying to scoop up market share now without a guarantee that the cooperative will be able to pay its bills later.
Top managers at the HealthOP concede they have lost money so far this year, but say they’re financially sound and didn’t expect to break even until their third year of operations.
The net loss through the second quarter was $17 million, but CEO Julia Hutchins said that after receiving revenue adjustments for caring for sicker patients, the losses could decline to about $10 million for the first six months. Hutchins said the HealthOP would soon be reporting its third-quarter losses, but that the start-up is on track.
“We’re on the path we anticipated,” Hutchins said.
While she’s sympathetic with people like Donna Smith who are seeing their subsidies go down, she said the HealthOP’s mission is to dramatically drive down prices for all Coloradans, while giving previously uninsured people access to excellent preventive care.
Hutchins says the grumbling in the industry suits her just fine.
“It’s a sign of success. We’re a nonprofit, member-run organization. We’re not trying to make a buck off this. We try not to get too ruffled (by the criticism). We’re trying to do the best we can in a very uncertain marketplace.”
Hutchins said the HealthOP uses independent actuaries to certify its rates and that the Division of Insurance verified that the lower rates were sound.
“This is why we exist. We know we need to deliver lower costs to consumers.”
When Smith got her renewal plan, she considered switching to a HealthOP plan. But she already changed doctors at the beginning of last year.
“I like my doctor. It has taken us months to get to know each other. I want to be able to keep her. That’s important to me,” Smith said.
During 2014, she endured a year of poor health and had to be hospitalized for a week in January when doctors feared she had lymphoma. It turned out that she had an active Epstein-Barr virus that was mimicking cancer. It’s the same virus that causes mononucleosis in younger people, but the adult version is rare and more serious.
Smith ended up severely anemic, suffering from pneumonia and on oxygen for months. She finally began to feel better in late summer, but still needs ongoing care and iron infusions.
Now, the 59-year-old mother of six and grandmother of 15, faces a lousy choice for health insurance.
If she wants to keep her Kaiser plan, her new premiums will jump from $456 to $584 per month.
“It’s just such a nightmare. When you think you’ve heard the most confusing, ugly thing about all this, then something else happens,” Smith said. “I don’t know what people in my age bracket are supposed to do.
Smith earns a low salary as the director of a small nonprofit that advocates for universal health coverage. She does not get health insurance through her job.
Her husband is retired, so together, their income is low and in fact, she says it declined by about $4,000 this year.
When Smith received her renewal notice from Connect for Health earlier this month, she immediately started hunting for less expensive plans. She considered buying only catastrophic coverage or going without health insurance altogether.
“I’m in remission from cancer right now, thank God,” Smith said.
But she knows that buying too little insurance or none at all is irresponsible.
While Smith supports efforts to drive costs down overall for care, she concedes she’s frustrated with the HealthOP.
“That one company goofed the whole thing up for me,” Smith said. “They underpriced their plans. And the one that looks comparable for me isn’t even comparable.”
As Smith has shopped for alternatives, she found a similar HealthOP plan that would cost less per month in premiums, but would come with slightly higher deductibles and caps on out-of-pocket costs.
“I’d have to change docs. I’m sure their preferred drug list is different and overall, it might cost me more.”
For now, Smith is still considering what to do, and she and her husband Larry — who qualifies for Medicare — are planning a very low-key Christmas.
“It’s all confusing and overwhelming,” Smith said. “It’s 28 percent more out of my pocket,” Smith said. “That’s a huge, huge change.”
Smith has been sharing her struggles to find and afford health insurance for over a year with Health News Colorado. (Click here to read: After 37-day delay, cancer patient gets insurance and click here to read Stuck in Colorado’s black hole.) Smith also appeared in Michael Moore’s movie, “SiCKO,” and updates her situation on her blog. https://donnasicko.blogspot.com/
Smith is considering various options including trying to find a job that comes with health insurance.
“I’m trying to make all these monthly calculations. If I have a year next year like this year, I’ll be sunk,” she said.
This year, because of the hospitalization and severe health problems, even with insurance, Smith owes thousands for her share of her care. She’s on payment plans to chip away at her medical debt.
“No matter what I do, I end up paying between $600 and $1,000 per month. It’s just killing us.”
Adam Fox, director of strategic engagement for the Colorado Consumer Health Initiative, says he hasn’t heard yet of too many cases like Smith’s.
• Now through Feb. 15
• For coverage to begin Jan. 1, you must complete enrollment by Dec. 15.
• Colorado’s exchange is Connect for Health Colorado. Consumers can also buy insurance from brokers outside of the exchange. Tax subsidies are available only through the exchange
Insurance coverage in Colorado
Plans are divided into “metal” tiers based on level of coverage: Bronze (covers 60 percent of medical expenses), Silver (70 percent), Gold (80 percent) and platinum (90 percent). In general, the greater the coverage, the higher the premium.
Penalty for not buying insurance
Under the Affordable Care Act, nearly all Americans are required to buy insurance (exemptions include Native Americans, some religious groups and cases of hardship). Most Americans meet this “mandate” by having workplace insurance or coverage through the Veterans Administration, Medicare or Medicaid.
Those who don’t have insurance are required to buy insurance or pay a penalty. If you don’t have coverage in 2015, you’ll pay the higher of these two amounts: 2 percent your yearly household income (with a maximum of the national average premium for a Bronze plan) or $325 per adult and $162.50 per child under 18 (with a maximum of $975).
• Connect for Health Colorado customer service: 855-752-6749
• To speak for free to a health coverage guide or broker in your area, go to www.connectforhealthco.com/help-center/
Source: compiled by the Bell Policy Center. For more, click here.
But he said it’s absolutely critical for people to carefully consider their options.
“Consumers really need to shop and compare,” Fox said “With all the rate changes and changes in assistance, it’s likely (costs) are changing.”
He said competition that drives down prices is generally positive, but concedes that some consumers could feel the pain.
“We’re seeing some good impacts of the transparency and the competition in Colorado’s marketplace in that some rates are going down. For those people who aren’t in that bucket, and their insurance rates might be going up, it does impact them. Especially if they are using financial assistance, that will be changing,” Fox said.
He said Colorado’s insurance regulators need to carefully review rates and make sure they’re set at the right levels.
“It’s not a good thing for an insurance company to be underpricing their premiums if they’re going to end up putting all consumers at risk,” Fox said.
Dr. Jack Westfall, chief medical officer for the Colorado HealthOP, said it’s pretty common for people to change insurance carriers from year to year and that he wanted to point out that people who buy HealthOP plans won’t get less.
“We offer robust, rich benefits, some of which are broader (than other carriers’ plans),” Westfall said.
He said he understood how hard Smith’s choices are.
“That’s such a difficult place to be, when you’re sick and you have to make a choice between the cost of insurance and the breadth of a network or your providers. That’s a hard decision,” he said.
While some competing carriers accuse the HealthOP of pricing low by offering narrow, limited networks, Westfall pointed out that the HealthOP has some narrow-network plans and others that allow patients to see doctors all across the state.
Said Westfall: “We have a consistent and explicit goal to make sure our members get the right care in the right place at the right time and the best care in the right place at the right time.”