SALT LAKE CITY -- Ana and Oswaldo Demoura got their letter last month: a notice from their health care provider that thousands will soon receive in the mail.
“I thought that was a mistake. I think it’s obscene,” said Oswaldo Demoura.
Addressed to Mrs. Demoura, it outlines a new coverage plan from Arches Mutual Insurance, putting their monthly premium, with tax credits, at $416.59.
The problem with that is they are currently paying $126.22. That means their insurance is going up about 300 percent.
“I don’t know, how can any company justify such an obscene increase? I would like to know," Oswaldo Demoura said.
The explanation is complicated, according to Shaun Greene of Arches.
“Early 2014, when we had to build 2015 plans, what we’re in right now, we had three months of data,” Greene explained, “Which was pretty much worthless.”
The data Greene is talking about is the number of patients who enrolled and the state of their health. Within the last couple years, insurers discovered that they underestimated how sick some of their customers were when they signed up for a plan. Upon getting better information, companies determined they were facing higher risks, which meant customers would need to face higher prices.
“What all of the insurers basically found out is the risk was a lot worse than anyone had projected,” Green said. “The whole industry made the best guesses they could, and for the most part we guessed low.”
As a result, most of the six insurers in Utah’s federal exchange are seeing increases in their premiums ranging from about 16 percent to 45 percent. Here is a look at the increases:
• Altius Health Plans (Aetna) +18.46 percent.
• Arches Mutual Insurance +45.36 percent.
• BridgeSpan Health HMO: +28.30 percent and PPO: +19.70 percent.
• Humana Medical Plan of Utah +24.00 percent.
• Molina - 0.35 percent.
• SelectHealth + 16.70 percent.
Some of those costs are associated with customers Greene believes would be covered under a Medicaid expansion plan, something Utah has yet to do.
“Since those people came into the commercial market, it certainly drove a lot of bad risk and a lot of costs that we weren’t anticipating,” Greene said.
The Demoura family’s new plan is the result of those costs. Theirs is a Silver, multi-state coverage option. Under the Affordable Care Act, Greene explained that Arches was required to create a plan that provides a customer coverage in other states. While helpful, it’s more expensive. However, Greene said they will be able to shop for another option that is significantly cheaper.
“Nobody can afford that, absolutely,” Oswaldo Demoura said.
Details of the new costs and plans are expected to be unveiled Thursday.