How Blue Cross North Carolina is bucking rising costs in the ACA market, per its CFO

Health insurers across the country are looking to raise premiums for individual exchange plans in 2024, with many proposing double-digit increases. In contrast, Blue Cross and Blue Shield of North Carolina says its members will see individual rates go down by an average of 4 percent next year.

According to KFF, insurers offering marketplace coverage in 2024 are requesting a median premium increase of 6 percent, with more than 75 plans proposing increases of 10 percent or higher.

Despite rising care costs and inflation, Durham-based Blue Cross NC's rates for an individual ACA plan will be 5 percent lower in 2024 than they were in 2018, collectively saving members an estimated $1.35 billion during that period. Individual premiums will vary, however, depending on a member's location, age, plan or federal subsidies received.

Becker's sat down with Blue Cross of NC's senior vice president and CFO, Mitch Perry, to discuss how the company has bucked the national trend for individual premium costs — and what might come next for the ACA market.

Blue Cross NC serves more than 4.2 million members across the state, including nearly 430,000 individual ACA members. 

Question: Blue Cross NC is lowering individual plan premiums by an average of 4 percent next year. What has your team done to bring costs down?

Mitch Perry: I've been in my position for more than seven years now and have seen the evolution of the ACA. In the early years, it was basically just us operating with the exception of a few counties. That stability has really helped the base that has driven some of the success we've seen.

The biggest thing is our focus on customers at the center and what it is that we need to be doing to make certain that we're driving high quality-care and lowering costs on their behalf. Our partnerships with our providers are critical to this. A real success point is our value-based Blue Premier program, where we have 12 of our largest health systems participating, including a majority of our primary care. We're also very focused on chronic care management and offering innovative solutions to make certain that customers are getting to the right site of care, whether it be telehealth or solutions outside of a hospital.  

Pharmacy, of course, is a major driver of high costs, and we've had a lot of success negotiating strong rates. It's also how we support chronic care management with getting the right prescription to the right place for the right amount of time. And having the right access point is critical, whether it be mail order or pharmacy. All those things have really led to lower costs.

Q: Blue Cross NC is the only insurer that has offered plans in all 100 counties of North Carolina since the ACA market first opened in 2014. How challenging is that to maintain? 

MP: It's part of who we are, but it is a challenge. You have to focus on all members in all counties to ensure broad access. In certain areas, especially urban, you need arrangements with providers to provide low cost options, alongside offering solutions focused on rural markets.

Q: What advice would you extend to insurers looking to expand within the individual market?

MP: This is a very price-sensitive market, especially when you take into account the fact that there's the leverage associated with subsidies. It's important that we as carriers focus on stability — a market that has affordable access. We've seen carriers come in with inadequate networks, or who set their price point to just try and grow. They're not really stable and it just creates disruption in the marketplace when they exit, not just for the state and other carriers, but for members. Anyone who is focused on this market has to understand the underlying dynamics, and for us, we'll see what Medicaid expansion does to that. Also, a lot of product evolution is important, especially with digital capabilities. 

Q: Some industry CEOs say the individual marketplace is going to be the dominant way that consumers shop for health insurance in the long term. Would you agree with that?

MP: It certainly seems like the exchange is here to stay and is a significant marketplace. You can see it by the fact it was basically us in the beginning and now there are many more competitors. I don't know for sure if it will become the dominant way, but I think that will depend a lot on how employer markets continue to evolve and how we continue to support affordable coverage for employers. 

Q: Final thoughts?

MP: I want to double down on the importance of stability. As the CFO of a not-for-profit organization, financial stability is front and center for me. The access to capital isn't there, so we're focused on how to remain financially strong so that we can take actions and make investments that are necessary to support our customers, especially as the marketplace evolves. Our financial decisions are focused on ensuring we're here across the state for the long term.

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