High health insurance premiums are walloping Wyoming’s middle class.
A new Kaiser Family Foundation report shows that the Cowboy State has the highest average premiums in the nation for individuals who do not qualify for subsidies. For example, a 40-year-old in the state who makes $50,000 would pay about 14 percent of that yearly income in premiums for the cheapest plan.
The problem worsens with age. The Affordable Care Act allows premiums for older adults to be three times those for their younger peers. In Teton County a 60-year-old with the same annual income of $50,000 could end up paying as much as $1,237 a month for the lowest-cost plan — 30 percent of that annual income.
That’s not affordable, according to the Affordable Care Act.
“At least in the law, between 8 and 10 percent is approximately what is considered the upper end of affordability,” said Cynthia Cox, who researches the ACA and is one of the report’s four authors.
“In some ways, this information isn’t breaking news,” Cox said. “I think people know there are affordability challenges with the ACA if you don’t qualify for subsidies. We wanted to show who those people are and put a face on it in a way.”
The majority of people who purchase health coverage through Affordable Care Act exchanges receive tax credits to help them afford their monthly premiums. The subsidies often rise with premium increases. But those who make just a little too much — anything over 400 percent of the federal poverty line, which is $48,560 for an individual and $100,400 for a family of four in 2019 — aren’t eligible.
“The whole 401 percent of poverty thing is just a result of the ACA and how it works in a small, rural state,” said Wendy Curran, vice president of care delivery and provider affairs at Blue Cross Blue Shield of Wyoming. “It is hard. I feel greatly … the percent of income is just boggling.”
It is often referred to as a “cliff” because subsidy eligibility isn’t phased out. Healthcare navigator Joe Albright helps people wade through the enrollment process and has seen those teetering on the proverbial cliff.
“I’ve talked to dozens of people who face this exact problem,” Albright said. “Most people who are right on the borderline have to think about whether there’s a way they could work a little bit less so they could qualify … that might mean the horrible choice of having to earn less in order to be able to get affordable health insurance.”
The report looked only at premiums for plans available through the ACA marketplace, although other plans are available. Bronze premiums (the lowest-cost plans available) for people who are not eligible for subsidies are generally similar whether an enrollee buys through the marketplace or not.
Rural areas are hit hard
Another state with similarly staggering premiums for those who fall off the cliff, so to speak, is neighboring Nebraska. Cox said several factors affect rural states, whose residents often have higher premiums and then, in a double whammy, people have to pay the amount themselves. Small-business owners, farmers and ranchers are unlikely to receive coverage in the same way an employee for a large business in a city would.
“Part of it is people who live in rural areas might be older and sicker on average than people who live in urban areas,” Cox said. “They also just tend to be more dependent on buying their own coverage as opposed to getting coverage from an employer.”
Cox said the lack of competition, both for insurers and hospitals, drives up health care costs in remote areas.
Despite also being a large rural state, neighbors in Idaho across Teton Pass pay much less in premiums. A 60-year-old in the same situation described earlier pays 17 percent of their income in Teton County, Idaho. That’s because sparsely populated states with urban centers like Boise usually have more insurers participating in the exchange. Counties in Idaho have access to either three or four insurers that participate in the ACA, not just one like Wyoming.
Cox said that even states like Nevada, where most counties have only one provider but counties near Las Vegas have two, have more leverage than Wyoming.
Solutions have pros, cons
Released last week, the Kaiser report lists a multitude of potential solutions to the crushing premiums, including more loosely regulated short-term plans, creating a state-based reinsurance program, extending and tapering subsidies past 400 percent of the poverty line and expanding Medicaid (which failed this year in the Legislature) or Medicare.
“I don’t know there’s a one-size-fits-all approach to this,” Cox said. “But we wanted to highlight the pros and cons of the different options that are available.”
Wyoming Republican Sen. Mike Enzi’s press secretary, Rachel Vliem, said he supports lowering health care costs through a competition-oriented, market-based approach.
“Sen. Enzi supports proposals that could improve access to affordable, high-quality health care and offer new protections so that consumers, including folks with pre-existing conditions, can afford quality health insurance coverage,” she said. “He doesn’t believe the Affordable Care Act has helped achieve those goals and is working with his colleagues to bring about a better system.”
His Republican counterpart Sen. John Barrasso also expressed discontent with the Affordable Care Act and the individual mandate tax, which has been eliminated.
Looking at the options
“The high cost of health insurance in Wyoming and across the country is unacceptable,” Barrasso said in a statement through his deputy communications director, Laura Mengelkamp. “It’s clear that Obamacare has failed terribly. Americans have seen fewer choices, higher premiums — and, in several states, including Wyoming — only one option for insurance.”
He introduced a bill in Congress on March 7, the Improving Choices in Health Care Coverage Act, that would expand access to short-term, limited-duration health plans.
Demographics and state politics can limit what solutions are feasible in the West. Some states have considered rearranging their rating areas, merging high-cost areas with low-cost ones to average premiums. But every county in Wyoming is high.
Short-term plans can give people cheaper options but can deny people based on pre-existing conditions or charge based on health status. Generally speaking, they attract healthier people — therefore having an upward effect on premiums in the ACA-compliant market as the sicker patients remain.
Association health plans are another choice. The population risk and therefore the premiums would depend on what kind of groups got together — anything from religious organizations to ranchers. But association plans can be “robust and comprehensive,” according to Cox, and there’s been discussion in Teton County of larger organizations banding together to offer insurance.
Barrasso said that he supported President Donald Trump’s executive order in 2017 that promoted more choice in association health care plans, short-term health plans and health reimbursement arrangements. Enzi has also supported allowing small businesses to pool together to provide health insurance for the last two decades.
Reinsurance is an option that Cox has seen receive bipartisan support across the country — Alaska, Maine, Maryland, Minnesota, New Jersey, Oregon and Wisconsin have created their own programs. Reinsurance is essentially insurance for insurers that allows a portion of health care expenses for high-cost patients to be covered by another party, allowing premiums to be reduced.
Blue Cross Blue Shield of Wyoming likes the concept, but it hasn’t taken hold in the state yet. Efforts in Cheyenne to create a reinsurance plan with Legislative approval passed the House but failed a Senate vote this year.
“We’re very aware of this problem, and that’s one of the reasons we had supported legislation this year about a state reinsurance plan, which was designed to provide some relief for individuals who are in the unsubsidized category,” the insurer’s Curran said.
She said her organization would continue to work with the insurance community and the government to “see what else we might be able to do.”
This story has been updated to correct the name of one of the report's authors. — Eds.