Thousands of Virginians are hoping next year will bring better rates for health insurance. They’ll get a preview this spring when companies begin filing their plans with the State Bureau of Insurance. Last year saw a shocking increase in premiums for customers who bought policies through the Affordable Care Act and made too much money to qualify for federal subsidies.
38-year-old Ian Dixon left his corporate job in 2016 to start his own business designing software. He did well enough to afford health insurance for himself, his wife and two young kids, but last year the monthly premium for coverage thru Charlottesville’s only seller of individual insurance policies more than tripled.
“My premiums rose from $988 per month to over $3,100 for a lesser plan,” he says.
Sara Stovall was also alarmed by a massive increase in the cost of her family’s coverage.
“We would have been spending $36,000 in premiums over the course of the year, " she recalls. "There was a $14,000 deductible on top of that.”
Rates were lower for small businesses, so she convinced her employer to offer coverage, and Ian Dixon hired another person so he could qualify.
“Even with that person on my payroll I save over $1,000 a month,” he concludes.
Those were not options for others who joined a Facebook group formed by Stovall and Dixon when the sole provider of individual policies – Optima – raised rates.
“There are people in our group who have someone in their family who’s really sick, and they have a choice between Optima and bankruptcy,” she says.
So she and Dixon went to Washington for talks with their Congressman.
“Tom Garrett has continued to blame our price hikes on just an inevitable outcome of the Affordable Care Act," Dixon says. "He doesn’t want to acknowledge that the Trump Administration sabotages anything to do with it, so we can’t even get an acknowledgement of what is causing it, and he’s certainly not proposing any fixes.”
For years, Garrett and other Republicans threatened to repeal the Affordable Care Act, and when one of their own, Donald Trump, was elected president, some insurance companies panicked, raising premiums nationwide. Carolyn Engelhard, who heads the Health Policy program at the University of Virginia, was not surprised.
"What the insurance industry hates the most other than losing money is uncertainty, and all of a sudden the landscape became so completely uncertain," she explains.
But that did not explain why Albemarle and surrounding counties were so much more expensive. Again, ratepayer Ian Dixon.
“We are by far the worst in the nation – 23% higher than the next outlier,” Dixon says.
Nor did it account for increases of 70% in Norfolk and Halifax, 170% in Fluvanna and Louisa Counties or a rise of 117% in Rockingham. Was it possible those areas had more sick people than other parts of the state? Dr. Rick Shannon, Executive Vice President of Health Affairs at the University of Virginia looked at the numbers and concluded that was not the case.
“The county health ratings show that Albemarle County is the fourth healthiest community in Virginia, and Virginia is actually in the top third nationwide in terms of overall community health,” he says.
Sentara, Optima’s parent company, declined our request for an interview, but in a written statement it claimed the company had lost millions providing health insurance through the Affordable Care Act exchange. It did not say how much the company made through its local hospitals, which bill its insurance company for services.
UVA administrator Rick Shannon says companies that provide both insurance and healthcare can actually lower premiums.
“Because they say, ‘We’ll manage patients effectively within our system, and that means our costs are less, and we can charge less.’”
But, he says, that’s not what’s happening in Virginia. After a thorough examination of spiking premiums, Shannon offers a clear diagnosis.
PART TWO ...
Last year, some Virginians who got their insurance through Optima Health, a company owned by Sentara Healthcare, saw a massive spike in premiums. They’re still trying to figure out why their rates rose up to 170%.
Dr. Rick Shannon sits at his desk at the University of Virginia, studying a map of the state that appeared in the local paper.
As head of Health Affairs at UVA, he’s concerned about a dramatic increase in premiums for individual and single family coverage in communities served by Sentara. That’s the parent company of insurer Optima Health and hospitals in five different parts of the state.
“The darker colors on this map are the highest rates," he explains. "There is Albemarle County, where the rates were projected to go up 170%. Next to it is Fluvanna County, up 170%. Then you move to Rockingham, another home of Sentara – 117%. Look here. Norfolk, their major base, 70%. Halifax, where they have their other hospitals, 70%. Now watch this.”
He moves his cursor to Prince William County – home to another Sentara hospital and a place where Optima Health had competition. There, rates rose just 15%. Shannon concludes the lack of competition in other markets is the reason why Optima’s rates are so high – a belief shared by Charlottesville Delegate David Toscano.
“Right now Optima is the only game in town, and when that happens they can charge rates that are pretty much out of sight for people,” Toscano says.
Last spring it looked like two companies would be selling insurance in markets where Sentara had hospitals according to Ken Schrad, a spokesman for the state’s Bureau of Insurance.
“But the market changed drastically in the September time frame when Anthem decided to pull out of the individual market in almost all of Virginia,” Schrad recalls.
When that happened, only Optima Health remained, and it went back to the Bureau to ask for higher rates. Did the state worry about possible price gouging? Schrad seemed perplexed by that question. Regulators, he said, are not concerned about that. Their job is to check insurance company calculations.
“The Bureau has that back and forth exchange with the company, and as long as the Bureau is satisfied that the company is using reasonable estimates then the Bureau will accept that filing,” he says.
An angry group of consumers made an appointment with the governor’s office in Richmond, but that meeting was canceled without explanation. It turned out Ralph Northam was at a ground-breaking ceremony for Sentara’s new cancer center in Norfolk.
The group did meet with regulators who promised an investigation. This week the bureau concluded Sentara’s rates were justified.
That was no surprise to UVA’s Rick Shannon or to Professor Carolyn Engelhard, director of the university’s Health Policy program.
“California, by contrast, has a very strong insurance regulator," Engelhard explains. "If Wellpoint, for example, comes to them and says, ‘We want to raise our rates 30%, the insurance regulator says, ‘No! Go back. Refigure.”
“The Virginia insurance regulations are far too lax.," agrees Shannon. "In a state like Massachusetts, a payer could never get away with this.”
Consumers did get one bit of positive news this week when Governor Northam signed a bill they had proposed. It should allow one-person companies to qualify for small business insurance, which is cheaper than individual policies. That won’t help people who are not incorporated, and there’s no guarantee that Optima or other insurers will accept the state’s definition of small business.