Rob Hillman, president of Indianapolis-based health insurer Anthem Blue Cross and Blue Shield of Indiana, expects the Obamacare exchanges will eventually change everything for Hoosiers and small employers around the state.
But he doesn’t expect much of anything to happen Tuesday, the day the online marketplaces for buying health insurance officially open around the nation. And in fact, he doesn’t expect even one-third of the uninsured in Indiana to buy a health insurance policy next year.
“I really think that crickets are going to be chirping on Oct. 1,” Hillman said Sept. 25 during a panel discussion that was part of the IBJ Health Care Power Breakfast at the JW Marriott hotel downtown.
Hillman does expect activity to ramp up as Hoosiers start chattering about the Obamacare exchange on social media. But even then, he expects most uninsured Hoosiers to elect to pay a tax for failing to buy health insurance rather than to jump into the new marketplace.
Out of more than 800,000 Hoosiers that are uninsured during any given year, Hillman expects only about 250,000 or 260,000 to actually buy coverage next year. Some of that number are already eligible for Medicaid, and will likely sign up for that state- and federal-funded program, rather than pay Obamacare’s tax, or penalty, for not obtaining coverage.
“Although the other [insurers] are going to participate on the exchange, they are not Anthem's competition,” Hillman said. “The competition is the penalty.”
Those taxes start at $95 per adult next year and can go no higher than 1 percent of a household’s income. That initial low level of the penalty is why Anthem believes the penalty will win the competition for customers in the exchanges next year.
Even for a 21-year-old, the very cheapest catastrophic plan available anywhere in Indiana will cost $1,564 for the year, according to data released last week by the U.S. Department of Health and Human Services.
In the Indianapolis area, the cheapest rate for a 21-year-old to obtain a high-deductible bronze plan is $2,341, and the cheapest rate for a gold plan with generous coverage policies will be $3,984. Of course, for Hoosiers with incomes up to 400 percent of the federal poverty limit, these premiums will be lessened and in some cases eliminated by Obamacare's tax credits.
The Obamacare penalties for being uninsured will get stiffer, but will not approach the cost of buying insurance. By 2016, Hoosiers who don’t obtain health insurance will have to pay a tax of $695 per adult or as much as 2.5 percent of household income, whichever is greater.
Also, to try to hold premiums low, Anthem and other insurance companies have created so-called “narrow networks” of hospitals and doctors. This is an especially big change for Anthem, which has made the widest choice of providers one of its signature selling points for decades.
In the Indianapolis area, Anthem’s network will include Community Health Network, Wishard Health Services, and most of the members of the Suburban Health Organization, which includes the county-owned hospitals around Indianapolis.
Anthem’s network will not include the state’s three largest hospital systems—Indiana University Health, St. Vincent Health and Franciscan Alliance. Those three hospitals have all decided to participate in a narrow network health plan that will be sold on the exchanges by Indianapolis-based MDwise Inc.
“Our approach to the exchanges this year is to take a pretty cautious step into that and just participate in one plan,” said Julie Carmichael, chief strategy officer at St. Vincent, during the IBJ breakfast panel discussion. “I think one of the things I'm most interested to find out from the exchange is whether or not the concept of a narrower network is going to appeal to consumers. I think that's something we tried off and on in this market for years. It's never really been a very attractive product and I think this will be an opportunity over the next 12 months or so to see whether or not individuals are willing to have less choice in exchange for some better pricing.”