High Country cost of health care, Part 3: To insure or not to insure?
November 5, 2013
Connect for Health Colorado marketplace
Insurance premiums offered through the Connect for Health Colorado marketplace (connectforhealthco.com) are much higher in the mountain resort region, which includes Eagle, Summit, Garfield and Pitkin Counties.
Insurance carriers can offer four levels of plans in the individual Marketplace: bronze, silver, gold, and platinum.
• Bronze Plan: You pay 40% and the plan pays 60%.
• Silver Plan: You pay 30% and the plan pays 70%.
• Gold Plan: You pay 20% and the plan pays 80%.
• Platinum Plan: You pay 10% and the plan pays 90%.
There are 150 plans offered from 10 companies for individuals and families, and 92 plans offered from six companies for small businesses with up to 50 employees.
Editor's note: This is the final part of a three-part series examining health care costs and reform in the mountain-resort region.
As regional hospitals gear up for the effects of health care reform, individuals and businesses now required to buy health insurance under Obamacare are navigating a system of confusion and uncertainty.
The headlines haven't been good on the national scale. From a government shutdown to website failures and government expenses coming in way over budget, the Affordable Care Act's insurance marketplace is off to a rocky start.
In Colorado's mountain-resort region, which includes Eagle, Pitkin, Garfield and Summit counties, website crashes are the least of the concerns residents have. Here the issue is more about the claim that new plans would be affordable.
"Insurance rates are 30 percent more expensive up here than the Front Range," said Keith Thom, an insurance broker who works with businesses in the Vail Valley and Roaring Fork Valley. "Insurance companies can't drive the same negotiation prices they can down in the Front Range."
The problem Edwards resident Chris Neuswanger is experiencing is that his current individual plan, which saw a premium increase of 14 percent from 2013 to 2014, isn't going to be offered for 2015. Neuswanger remembers hearing that Americans could keep their current coverage if they wanted to, but that's not the case.
"All existing policies have to go away by 2015," he said, adding that his calculations are showing a 300 percent increase in his monthly premium under new health care reform coverage.
Neuswanger, 59, is a mortgage loan originator and wants to retire someday. His escalating insurance costs are likely going to get in the way of his dream.
"It's probably going to impact what I'm trying to save for retirement," he said. "Because it's so catastrophic if you do have a stroke or a heart attack or cancer or whatever, you could be wiped out financially. They can come take your house — everything you've got."
That's why Neuswanger won't choose to risk it and forgo insurance coverage, but he understands why many mountain residents might go that route.
"At my point in life, I don't want to have to go bankrupt over medical bills," he said. "At the same time, I can see how a family of four can't pay 40 percent of their pre-tax income for insurance."
Neuswanger has spent a lot of time researching his options, but not everyone has enough time or energy to figure it out on their own. That's why Connect for Health Colorado, the state's Affordable Care Act marketplace, has trained so-called health-coverage guides across the state. In the mountain region, Mili Vazquez is in charge of making sure residents in Eagle, Garfield and Pitkin counties get all of the information they need.
Vazquez, the manager of the West Mountain Region Health Assistance Network, started her job July 25. She's working a region that has one of the highest rates of uninsured populations in the state, which is part of the reason the network received one of the largest grants in the state — $750,000 — from Connect for Health Colorado.
In addition to undocumented residents — who aren't required to buy insurance under the Affordable Care Act — the region also has a lot of so-called young invincibles, young adults who are generally healthy and feel they could skip getting health insurance.
The costs of going uninsured
In Summit County, the Family and Intercultural Resource Center also received funding from Connect for Health Colorado to hire two exchange guides. The nonprofit's executive director, Tamara Drangstveit, said that of the dozen or so people who have inquired so far, none has opted to enroll in a plan.
"The one piece of good news in this is that a number of people we've seen actually did qualify for Medicaid, so we could get them enrolled in that," she said, adding that staff at the Family and Intercultural Resource Center, which helps Summit County families in need, is still excited about the potential of the state's insurance marketplace.
In Colorado, roughly 50,000 residents have created online accounts through Connect for Health Colorado, but the number of actual sign-ups since Oct. 1 is about 3,100, according to Connect for Health CEO Patty Fontneau. Affordable Care Act coverage is supposed to work when everyone who is required to sign up for coverage actually signs up. The volume of newly insured Americans is supposed to bring rates down.
And what happens when mountain-region residents choose to pay the tax penalty, which is just $95 in 2014, rather than buy coverage is that the already high rate of uninsured residents could increase, burdening the local health care system.
Vail Valley Medical Center CEO Doris Kirchner is concerned that employers with 50 or fewer employees will consider dropping the health plans they once offered, forcing employees to buy insurance individually. That means previously insured local residents might choose to pay the tax penalty and risk being uninsured. For a hospital that wrote off $15 million in bad debt last year, that's a problem.
Vail Valley Medical Center Chief Financial Officer Charlie Crevling expects an increase in uninsured patients walking through the doors.
"With narrow networks, insurers are looking for the lowest-cost providers and lower premiums for employers, which equal lower benefits and could lead to higher write-offs in the hospitals. And with price pressure pushing reimbursements down, it could push providers to make more and more choices on what services they can afford to provide," he said. "We're doing everything we can to find efficiencies in the system without cutting quality of care."
Finding efficiencies is a common theme for all businesses. Even for large businesses that aren't required to do anything different under the Affordable Care Act, insurance premiums have continued to rise steadily for years. Vail Summit Orthopaedics Chief Executive Officer Chip Webb has a unique view of the problem as someone who both runs a business and works in the health care industry.
If young, healthy people choose to pay the tax penalty over buying coverage, it will have huge effects, he said.
"That's scary because the whole concept of this is it works if people participate and buy the coverage like they're supposed to. It's designed so that younger, healthy people's premiums subsidize the cash flow," Webb said. "If insurance companies don't see it's worth their while to play in a market, they don't play."
The same goes for businesses that can't make health-benefits numbers work. Webb said he's fortunate enough to work for a company with nine doctors who care deeply about their employees, so cutting coverage isn't an option.
"As a health care provider, we see it from both ends. What we're seeing, too, is our insurance company came back to us for renewal, and the quote is that it's going to cost 28 percent higher in 2014 over 2013," Webb said. "You can imagine, for a small business, the impact that has."
So much uncertainty
Paul Dioguardi, owner of Aspen's Hickory House, is in a tough spot because he has two separate restaurant locations — the other is in Parker — under two separate LLCs. He's the common owner, so it's counted as one company, and he has roughly 80 employees total at the two locations. A business with more than 50 employees is required to offer health insurance to employees. Dioguardi said he has hired someone to sort it all out for him, but based on what he understands of the law now, he's expecting major financial impacts.
"The answer is it's going to cost the costumer more money. I have no choice — I'm going to have to pass down that cost," he said. "It's a big hit when you go from not offering (any health benefits) to offering it to everyone."
The hospitals have been doing this very practice, known as cost sharing, for decades. St. Anthony Summit Medical Center in Frisco, for example, gets about 20 to 30 cents on the dollar in Medicare and Medicaid reimbursements, which CEO Paul Chadkowski said doesn't cover the cost of providing those services. And because of Medicaid expansion, hospitals will likely be providing more care to Medicaid and Medicare patients than ever before. It is in those shortfalls that Stacey Gavrell, executive director of community relations and development for Valley View Hospital in Glenwood Springs, sees potential for negative impacts.
Aspen Valley Hospital is investing resources into the community's newly formed Valley Health Alliance, a collaboration between Pitkin County government, city of Aspen government, the Aspen School District, Aspen Skiing Co. and Aspen Valley Hospital. The employer-based health care model includes goals such as achieving the highest quality of care, improving overall community health and reducing health care costs, said Ginny Dyche, spokeswoman for the hospital.
The program is "essentially moving away from a volume-based system to a value-based system," she said.
But with a volume-based system as the only system that makes the Affordable Care Act work, and with sign-up numbers well below state and federal expectations a month into the open-enrollment period, the only certainty about health care reform right now is that there isn't any.
The frustration is summed up well on a recent conversation on Avon resident Chris Anthony's Facebook page. A simple remark about health insurance turned into a heated debate, with more than 140 comments from friends across the mountain-resort region. Most of the frustration centered around letters being sent out by health-insurance companies telling the insured that their premiums, deductibles and out-of-pocket maximums are increasing. Some letters were notices of coverage termination in order to offer new, more expensive plans that comply with Obamacare.
Not to worry, commented Eagle County Realtor Josh Lautenberg — "it's a new program with a learning period and there are kinks to work out."
According to health care providers, business owners, insurance brokers, hospital leaders and individuals looking for reasonable, affordable health coverage, those kinks are so entangled that some estimate that it will be years before the mountain region's struggles are fully recognized.
Lauren Glendenning is the editorial projects manager for Colorado Mountain News Media. She can be reached at 970-777-3125 or email@example.com.