May 5, 2010-Minot Daily News
Hamm: Premiums will likely rise
By JILL SCHRAMM, Staff Writer jschramm@minotdailynews.com
Higher health insurance premiums might be inevitable once health reforms go into full effect in four years, North Dakota’s insurance commissioner told insurance agents in Minot Tuesday.
Commissioner Adam Hamm spoke to members of Independent Insurance Agents of North Dakota and Professional Insurance Agents of North Dakota at their joint convention in Minot this week. He said that his office has been swamped with consumer calls about health reform, and the most common concern is the potential effect on premiums.
“The reality is that health-care spending is likely to continue rising far faster than general inflation well into the future. That’s going to result in higher premiums. While some folks who have health problems may see their premiums decrease, for most Americans, premiums are going to continue to increase from year to year,” he said.
Hamm said what makes health care in this country unsustainable is the affordability. But the reform bill focused on expanding access, which only drives cost up. Once guaranteed coverages promised in the reform bill are are added by 2014, premiums could rise dramatically, he said.
“That’s because you are going to add those layers to a policy, but on the back end you have this mandate that a number of folks consider to be far too low to force people into the pool. So people are going to start putting pencil to paper and start figuring what’s cheaper. Is it cheaper to go and get health insurance coverage in 2014 and pay those premiums until I need the coverage? Or is it cheaper not to buy coverage, wait until I or my family needs it, pay the penalty, then buy my health insurance? That’s going to be the analysis that Americans are going to go through starting in 2014. And that is what is scaring insurance companies because from an actuarial analysis, they are starting to see that this thing just might not exactly add up.”
Blue Cross Blue Shield testified to a legislative interim committee that once reform is in place in 2014, it projects needing rate increases of about 15 percent in its group market and 75 to 100 percent in its individual market. That is on top of regular rate increases averaging 8 to 13 percent,
“Obviously, that’s something that greatly concerns me,” Hamm said. “We have an insurance market in North Dakota that was starting to move in the right direction and we are doing things that I thought were positive, and now I am very troubled with what is going to happen in 2014. If any rate increases like that are sought and are justified meaning they would have to be approved that runs the risk of literally blowing up the insurance market.”
Should that happen, the federal government could increase subsidies to help people afford insurance, which means higher taxes to pay for those subsidies, he said. Or the government could eliminate some reforms. Hamm said his experience is that once reforms are created, it’s difficult to take them away.
Repealing provisions of the law also would be difficult, Hamm said. The bill’s scope and the revenue streams tied into it are so extensive that the entire package would have to be repealed.
“You hear a lot of people say the jury is still out. To me, that’s the wrong analogy. I am not even sure the jury can be deliberating at this point. You have a law that is so immense in scope and so all encompassing in what it is going to cover and so many things are yet to be worked out in how this law is actually going to be implemented and interpreted that I don’t think the jury can start deciding whether or not it is good or bad until 2014, until it is actually up and running and everything is implemented. Then you take a couple years and you figure out success or failure.
“If it’s a failure, then we are really in trouble. Because the system was unsustainable the way it was,” Hamm said. “If this law is a failure and it doesn’t work, then that will only have compounded the problem that we still have.”
Fact Box
Reform could cost N.D.
Federal
The insurance department might need to add about 20 full-time employees at an ongoing biennium cost of about $4 million, not including technology aspects related to computer software that will be needed, Hamm said. The state’s Human Services Department might need about 30 more employees and more than $100 million over 10 years to implement the law, he said.
North Dakota already has notified the federal government that the state will not operate the federal government’s new, temporary high-risk health insurance pool. The reform law creates the pool but gives states authority to run it. If a state declines, the federal government will run the program for that state.
Hamm explained that the money set aside by the federal government to help fund the pools until 2014 is expected to run out in 2011 or 2012. States operating pools then might have to pick up the tab.
“The bottom line is I told the federal government last Friday that the state of North Dakota is not going to participate. If you want to run this high-risk pool, go ahead,” Hamm said. “You are going to make the promise, you are going to pay for it.”
North Dakota’s congressional delegation differs in the assessment of the bill’s costs. Sens. Kent Conrad and Byron Dorgan and Congressman Earl Pomeroy, all D-N.D., voted for the bill.
A fact sheet from the House offered by Pomeroy’s office showed that a typical family of four making $55,500 a year would pay about $100 a week in premiums and have average out-of-pocket costs of $9,650, a $7,600 savings. Savings would be even larger for families earning less. Subsidies would be available for families earning up to $88,800 a year to reduce costs from current levels.
Pomeroy’s office noted the bill also eliminates the
State Rep. Rick Berg, R-Fargo, who is running against Pomeroy for the U.S. House seat, said the bill will increase the deficit because plans to pay for reform through student loans and cuts in doctor reimbursements aren’t materializing as projected. In addition, he said, information presented to legislative committees indicates the 10-year cost of the reform bill on North Dakota could be more than $150 million.
“That’s going to compete with K through 12 (education). It will compete with other human services programs. It’s general fund money,” he said. “We have a pretty good system of health care in North Dakota, and we should be building from that, not having this Washington version of government health care.”
Berg said there is a window of opportunity to modify the bill before it takes full effect in 2014.
“Certainly with a majority vote, changes can be made,” he said.
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Market gets more competitive
North Dakota’s health insurance market will become more competitive in coming months with the entry of a third provider.
Sanford, a non-profit health maintenance organization and the second largest health insurer in South Dakota, obtained permission from the North Dakota Insurance Department in February to operate in North Dakota. It still must present products and rates for approval.
Medica, the second-largest health insurer in North Dakota with 4.6 percent of the market, announced in April that it will be introducing individual health plans. It currently offers only group products.
The state’s largest insurer, Blue Cross Blue Shield of North Dakota, has not increased rates in its individual market in the past two years but raised rates by 12 percent on May 1. In the group market, the North Dakota Insurance Department is allowing the Blues to try quarterly rate increases, which is proving to more accurately reflect what is happening with claims and trends, Insurance Commissioner Adam Hamm said. Over the past three quarters, the overall increase approved for group plans by the department has been 4 percent.
May 1, 2010-Bismarck Tribune
Feds to run high-risk pool for North Dakota
By REBECCA BEITSCH Bismarck Tribune | Posted: Saturday, May 1, 2010 2:00 am
North Dakota is leaving control of a new program required by the health care law in the hands of the federal government.
The law paves the way for a new high risk pool — a government-run plan that offers health insurance for those too sick to get it on their own — to be run either by the states or, if they decline, by the federal government.
Friday was the last day for states to inform the federal Department of Health and Human Services what action they’d be taking, and a letter penned by Insurance Commissioner Adam Hamm said the state will leave responsibility for the high risk pool with the federal government. At least 11 other states took the same action.
“I had serious concerns that the money the feds have allocated would be sufficient to run it until it expires,” Hamm said.
As outlined in the law, $5 billion would be doled out to states to run the temporary program until it expires on the last day of 2013. North Dakota’s share of that money would be about $8 million.
However, Hamm said research from another federal entity, the Centers for Medicare and Medicaid Services, showed that money could run out by 2011 or 2012.
“North Dakota can’t afford to be stuck with an unfunded mandate,” Hamm said.
Regardless of the financial aspect, because of the biennial sessions, the state also would have faced difficulty in creating a high risk pool on a timeline that corresponded with the federal governments.
“It’s just the timing,” said Rep. George Keiser, R-Bismarck, chairman of the committee that held a meeting on the new health care law Wednesday. “We can’t give him (Hamm) any more money to operate the high risk pool. We can’t give him any more staff. He can’t get it up and running. Because it is temporary, we’ll let them have it and sit back and watch them struggle in operating it.”
Although the state already runs its own high risk pool, CHANDS, that program cannot be used as a substitute for the new high risk pool. Those who are already in CHANDS will keep their coverage. To qualify for the new program, a person would have to have a pre-existing condition and have been without insurance for at least six months.
Hamm said it’s not clear how the insurance would be administered. The roughly 1,500 people in CHANDS receive service through Blue Cross Blue Shield.
After 2013, states will be able to chose whether they want to continue running any type of high risk pool program.
“When you look at the big picture, when you analyze it completely, it comes back to what happens if the money runs out,” Hamm said. “And there wasn’t a legitimate answer from the federal government for that.”