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Priced out

Fewer insurance companies are providing Affordable Care Act policies for Oregonians, and what is offered is overwhelming to folks like Sam and Deborah Mahoney.

The Mahoneys carefully budgeted their expenses in raising two sons and a daughter in Prospect, but self-discipline isn't enough when it comes to dwindling options.

Sam is a hairstylist and Deborah is a manicurist, fields in which you're often considered self-employed. Prior to institution of the Affordable Care Act, they had a Blue Cross Blue Shield health insurance policy that covered their family for $540 a month.

"It was very good insurance," Sam Mahoney said.

At present, Sam Mahoney's monthly premium is $653 and his wife's premium is nearly $400, with the understanding her premiums would bump to $550 following her birthday. The reality of 2017, however, the rates will go much higher, reaching the $1,600 plateau. A similar anticipated 25 percent increase in  2018 would boost their combined premium to $2,000 a month.

"Where does that leave a family?" Mahoney asked. "Our house payment is $1,100. We will be paying considerably more for insurance than our house and two cars combined. It's extremely frustrating."

In the past three years, Oregon insurers have gone bust, lost money or pulled out of the market, reducing options for the thousands of people who aren't on employer plans, Medicare or Medicaid. No longer able to deny coverage because of pre-existing medical conditions, Oregon's seven largest insurers reportedly lost $171 million during 2015. Earlier this year, the Oregon Department of Consumer and Business Services approved rate raises to allow troubled insurance carriers to recover losses from the influx of high-cost users.

Following the failed launch of Cover Oregon, residents seeking tax credits were shifted to the Federal Marketplace. Credits are available for people making as much as 400 percent of the poverty level, defined in 2016 as $47,080 for a single person and $97,000 for a household of four.

After the demise in July of Oregon Health CO-OP, established specifically for Affordable Care Act clients, co-op options are no longer available. With LifeWise Health Plan of Oregon exiting at the end of 2016, there will be six exchange-based health plans operating in Oregon during 2017, down from 10 this year.

The State Financial Regulation Division lists just three carriers providing coverage for Jackson County — Bridgespan, Moda and Providence Health Plan, with Atrio joining the other three in Josephine County. Spokesperson Stephanie Ficek said HealthNet and Regence Blue Cross Blue Shield continue providing direct coverage for Jackson County, but not through the exchange.

"As a self-employed person, my largest expense is taxes, and the second is insurance," Mahoney said. "What we're looking at is $1,600 a month with a $4,000 deductible."

The plan includes pharmaceutical coverage, as required, but no vision or dental benefits.

"Part of my clientele is the medical field," Sam Mahoney said. "I've had doctors repeatedly tell me about patients who can't afford their premiums and the deductible. I'm just hoping I'm not going to be one of them. If I ever got sick, I'd have to pay the premium and the deductible."

In past years, the Mahoneys contributed to a healthcare savings account, but that's no longer an option.

"We have limited choices," Sam Mahoney said. "We don't fall into any pool, we're self-employed and can't belong to any group, so we get no breaks."

The bottom line is that tough choices have to be made.

"We used to put extra money into our retirement savings account," he said. "We're no longer able to do that; as our premiums go up, we're having to cut back more and more. We're looking at not funding our IRAs and looking at our choice of cars; $550 or $540 is sustainable, but $2,000 isn't."

One alternative is to simply go with catastrophic coverage to satisfy ACA demands, he said. But that would still cost $1,200 monthly with a $10,000 to $15,000 deductible.

"And we wouldn't be able to use it," Mahoney said.

With 237,000 Oregonians seeking private insurance, including 132,000 through the exchange, the Mahoneys are not alone in their struggle.

Ashland resident Bruce Borgerson entered the Affordable Care Act era with high hopes, but out-of-control premiums have blunted his expectations.

"The fact that the premiums went up was not a surprise," said the former Democratic Central Committee member. "But the costs have been certainly difficult to deal with and have left us in an uncomfortable position."

In a letter to Sen. Jeff Merkley, Borgerson wrote that prior to the ACA, his family had a $7,500-deductible catastrophic plan. He went on Medicare, but the monthly cost for his wife and two children was $331 in 2015.

"Last year, after our last extension ran out, we had to go to an ACA plan," Borgerson wrote. "The cheapest available, from Providence, with basically the same coverage as we had before was $549 a month for 2016; a 66 percent increase. That was difficult, but we managed. In July we were notified that our plan would be canceled. The replacement plan, again the cheapest available with a $7,150 deductible, would be $1,069 a month for 2017, a 95 percent increase over this year for the same coverage." 

Borgerson anticipated there would be higher premiums and adjustments as ACA kicked in, but the severity was unexpected.

"I predicted there would be winners and losers with Obamacare," he said. "Low-income people with chronic problems and high health costs are the winners, and people like us, very healthy, middle-class, who don't qualify for subsidies, are the losers."

Borgerson believes the ACA will morph into a single-payer system, which he supports.

"I support single payer not because it's the ultimate solution," he said. "But because it will force us to focus and confront healthcare costs that are spiraling out of control. Something has to be done."

Toni Evans, chief operations officer at Pacific Botanicals outside Grants Pass, said escalating premiums have returned employees to square one.

"We're kind of going backwards to the same place we started," Evans said. "It's great for people with preexisting conditions, but providers are limiting their plans, leaving counties or totally pulling out of Oregon."

Employees earn $14 to $16 at Pacific Botanicals, a certified organic medicinal herb farm who primarily wholesales to manufacturers such as Nature's Way.

"They're getting letters saying their plans are no longer available, and suggesting another plan that's quite expensive," Evans said. "They make too much to be on the Oregon Health Plan, but not enough to absorb the premium increases, even with tax credit increases."

Evans suggests soaring rates are at least partially tied to drug costs, because every ACA policy has a pharmaceutical component.

Prior to ACA implementation, employees had group coverage.

"When Obamacare went into effect, it made sense to drop the plan so employees could take advantage of the tax incentives," she said. "The cool thing was for the first two years everybody thought it would work."

But back-to-back major increases have changed that thinking.

Even with the company paying 50 percent of the premiums, employees can't make up the difference, Evans said.

"The employees will drop their coverage, because they can't afford it," she said. "I can't imagine the IRS going after them because they can't afford the premiums; if so, shame on them. You've got to put food on the table and pay your bills."

Insurance agent Roger Miller of Investment Resources Inc. said many people don't realize the only benefit they stand to gain going to the exchange is a potential tax credit. Even so, those going outside and directly buying plans are slamming into a financial wall.

"These are middle-class people who have been paying the taxes for the subsidies on the exchange and now they can't afford to buy insurance," Miller said. "They've been priced out of the medical plan."

To see charts on rate increases, go to http://dfr.oregon.gov/public-resources/healthrates/Pages/approved-rates-2017.aspx.

Reach reporter Greg Stiles at 541-776-4463 or business@mailtribune.com. Follow him on Twitter at www.twitter.com/GregMTBusiness, on Facebook at www.facebook.com/greg.stiles.31

Hairstylist Sam Mahoney works with client Sue Lilja Thursday at Hair Legends Salon in Medford. The Mahoneys say the high cost of health insurance is forcing them to make tough decisions, such as not saving for retirement. Mail Tribune / Denise Baratta