CHRISTOPHER BOOKER: Of all the things sisters Caitlin Lyon and Michelle Novosel had to consider before they opened their chocolate store in Huntsville, Alabama, healthcare carried particular weight. Caitlin would be giving up a full-time government contracting job with good benefits.
CAITLIN LYON: That was one of the huge considerations in leaving that job, was not only, you know, was I gonna make less money. But suddenly the whole landscape for insurance was changing. I have to have insurance. I have several chronic illnesses that I have to have lab work every couple of months. And I see, like, three different specialists every three to six months.
CHRISTOPHER BOOKER: As their store, “Pizzelle’s Confections,” opened in 2013, Obamacare became an option. They shopped for a plan on the federal insurance marketplace established as part of the Affordable Care Act.
The sisters were among the 98,000 people in Alabama who signed up. Caitlin opted to enroll with Blue Cross Blue Shield, Michelle with Humana.
MICHELLE NOVOSEL: It was, you know, a little bit of a headache to begin with. But I got a good subsidy. It turned out to be really good at the beginning.
CHRISTOPHER BOOKER: Like 81 percent of Obamacare enrollees nationwide, the cost of their plans was offset by federal government subsides determined by their income.
As recently as last year, Alabama residents enrolled in Obamacare had three providers to choose from – Humana, UnitedHealthcare and Blue Cross Blue Shield. But this year only Blue Cross remained, and it already controlled more than 90 percent of Alabama’s private insurance market.
Both UnitedHealthcare and Humana, cited the high costs of individuals enrolled in the marketplace as the reason for their departure.
MICHELLE NOVOSEL: That’s when everyone saw that huge jump in premiums, and that’s when everyone kinda got scared as to are we gonna have health insurance are we not?
CHRISTOPHER BOOKER: Blue Cross Blue Shield declined our request for an interview, but in a previous statement said rising premium costs are in response to the greater use of medical services and diminished health of Obamacare enrollees.
This year premiums increased by an average of 39 percent.
For Michelle, who had been with Humana, having to switch to a Blue Cross plan, meant her monthly premium rose slightly from $157 to $167 a month.
Caitlin, who was already on Blue Cross, was facing a much steeper increase. She says plan that covers her and her husband went from about $800 to $1200 a month.
CAITLIN LYON: It was more than our mortgage payment and there was no way to fit that into our budget. I don’t know a lot of people who have an extra 1200 dollars a month to spend on just the premium. That doesn’t even count any of the copays and the rest of it that you’re gonna pay when you see the doctor.
CHRISTOPHER BOOKER: Alabama is one of five states now with a single insurance provider through Obamacare. And like Alabama, that provider is Blue Cross Blue Shield, which was already each state’s largest insurer before Obamacare.
Since the beginning of the Affordable Care Act, subsidies from the federal government have played a role in the cost of insurance plans.
Determined by individual or household income, it helps offset monthly premiums.
So, as Caitlin and Michelle’s income rose, the level of their subsidy declined.
Alabama Hospital Association president Don Williamson led the state’s department of public health as the Affordable Care Act took effect.
CHRISTOPHER BOOKER: What does healthcare look like in Alabama within the public exchange market?
DON WILLIAMSON: Blue Cross has been our dominant insurance for a long time. Where it really comes into play is when you look at what the premiums and what the subsidies are. For Alabama, we now have 178,000 people on our exchange. Of those 178,000, 90 plus percent of them get a subsidy in the marketplace, and that’s extraordinarily important
CHRISTOPHER BOOKER: Williamson says the Obamacare subsidies have kept pace with the rise in premiums. The average out of pocket cost per enrollee in Alabama is now is $111 a month.
DON WILLIAMSON: For the 90 percent that are getting a subsidy, the fact that our premium cost is higher is really not a particular issue. Where it becomes an issue is for that 10 percent that don’t get a subsidy.
CHRISTOPHER BOOKER: Leaving people like Caitlin lyon feeling the squeeze.
The subsidy is the only way peach farmer Hank Adcock can afford Obamacare.
We visited Adcock one evening on his Birmingham area farm started by his grandfather. The 62-year-old, had never had health insurance before Obamacare.
HANK ADCOCK: We couldn’t afford it. For me and my wife, it was like $1,600 a month.
CHRISTOPHER BOOKER: But with the government subsidy, insurance for him and his wife costs them under $200 a month.
HANK ADCOCK: It’s this wonderful thing that, to know that if something major happen to me, I can go to the hospital, they can work on me and fix, you know, try to fix me.
CHRISTOPHER BOOKER: Something major did happen to Adcock a few months after enrolling. His hand got stuck in a hay baler, cutting off two of his fingers. The medivac helicopter and hospital bill was $111,000. But his insurance plan covered it.
HANK ADCOCK: I was insured. If I hadn’t, I mean, I’d’ve lost the farm. I couldn’t’ve paid the bills, you know. I don’t know what they would’ve done. I can’t complain about Blue Cross Blue shield. You can’t beat it.
CHRISTOPHER BOOKER: Adcock also represents another complicated piece of alabama’s insurance puzzle. The state’s decision to not expand Medicaid during the adoption of the Affordable Care Act.
Alabama is one of 19 states that rejected the Medicaid expansion.
How much do think Alabama’s decision to not expand Medicaid has influenced the current playing field?
DON WILLIAMSON: What you’ve done is you’ve now put people on the exchange in Alabama who in a state that expanded Medicaid would not be on the exchange. And to the extent that because they have a lower income and they may have higher underlying conditions, you’ve created a less healthy pool over which you have to spread risk, which may contribute to some of the higher premiums.
CHRISTOPHER BOOKER: And those that have neither Obamacare nor Medicaid directly affect Alabama’s hospitals.
David Spillers is CEO of the Huntsville Hospital Health System, which runs several different hospitals across northern Alabama.
From the hospital’s perspective, were you distressed when Alabama decided not to expand Medicaid?
DAVID SPILLERS: Clearly, I was disappointed. The block of people who would have qualified for some type of insurance under the expansion is a large number of people in the state of Alabama. Those people having insurance would significantly help providers like us who are providing healthcare but not getting paid for it.
CHRISTOPHER BOOKER: How much of a hit was that for the hospital?
DAVID SPILLERS: Well, it, the hit was, last year, our cost of free care was about $65 million. Now, not all of that would’ve been covered had we expanded Medicaid. But a portion of that would’ve been covered. I mean, every, every bit helps.
CHRISTOPHER BOOKER: There’s long been a discussion that if the number of insurers were to increase, costs could come down. Do you think that’s a fair assessment?
DAVID SPILLERS: I don’t think that having two or three more insurance companies in the state alabama is immediately gonna change the landscape. And the reason is Blue Cross of Alabama is so large, and they negotiate rates so low with us, it’s hard for us to go give those rates to somebody else.
CHRISTOPHER BOOKER: Sonja Smith helps residents sign up for Obamacare as a project coordinator for “Enroll Alabama.” She agrees with Spillers that having a single insurer on the public exchange has not drastically changed the insurance marketplace.
SONJA SMITH: I never heard anyone say, “oh, I wish I had more options.” Having a limited number of plans, we actually found it easier, because we were better able to do a side by side comparison for people for them to really see, “okay, well, this is what works for me and this is what doesn’t.”
CHRISTOPHER BOOKER: Do you think that if there were more options, if there were more plans, because there were more insurers, that the prices would, would come down?
SONJA SMITH: I can’t necessarily say that it would make that much of a difference.
CHRISTOPHER BOOKER: In the end, Caitlin and Michelle found work arounds. Michelle, a newlywed as of this past month, is now on her husband’s plan offered through his employer, while Caitlin, purchased a group plan with two employees bringing her and her husband’s monthly premium down to $645 a month.
CHRISTOPHER BOOKER: I feel like your story encapsulates healthcare in America. You’ve got a growing small business. And this headwind that Affordable Care and insurance has put on you is tremendous.
CAITLIN LYON: Healthcare seems overly complicated in the United States right now. It’s not okay that people should have to make decisions about jobs, or their business, or these big decisions based on whether or not they’re going to be able to afford to go to the doctor. Many of our employees, most of them get subsidies through the marketplace, because it’s a better deal even than getting a group rate through our business. And these are real people with real problems who have to think about insurance, like, every day.