Rep. Jaime Herrera Beutler lauded an announcement Monday by Premera BlueCross, the region’s largest health insurer, that it plans to use a portion of a $390 million tax windfall to help stabilize Washington’s individual health care market.
Premera said Monday that it plans to invest $200 million of a one-time tax benefit under the new federal tax cut bill in improving access to rural health care, behavioral health programs and guaranteeing all counties in Washington have at least one insurer in 2019.
A Premera spokesperson did not respond to a request for comment Monday about what the company plans to do with its remaining $190 million in tax savings.
“Multiple counties in the region I represent were told there would be no affordable health care options last year, so this is welcome and potentially life-saving news and it’s also why I voted to let individuals and communities keep more of their money,” Herrera Beutler said in a press release.
The Clark County Republican, now in her fourth term, voted for the federal tax bill enacted in December that lowers the corporate tax rate from 35 to 21 percent.
But the law also repealed the Affordable Care Act’s tax penalty on individuals who choose not to purchase health insurance, which could lead to 13 million fewer Americans having health insurance over the course of a decade, according to the non-partisan Congressional Budget Office. Repeal of the mandate will likely result in average premiums increasing 10 percent higher in most years over that span compared to estimates from before the law was passed, the CBO said.
Those projections are disputed by many congressional Republicans who argue that the CBO has overestimated the number of people who will forgo coverage without the mandate. They also note that the tax penalty is overwhelmingly paid by lower- and middle-class earners.
Grays Harbor and Klickitat counties were initially considered “bare” counties in 2017 — meaning no insurers initially applied to sell individual health plans there. Premera later agreed to offer coverage to residents in Grays Harbor County, and two smaller insurers agreed to sell plans in Klickitat County.
“In addition to bigger paychecks and employee bonuses benefiting nearly 90 percent of Southwest Washington residents, another advantage of the tax cuts Congress passed is that rural residents won’t be left without health care options next year thanks to Premera’s announcement,” Herrera Beutler said.
Premera lost about $500,000 in Washington’s individual market last year, according to filings with the state insurance commissioner. However, the company also made $85 million in profit on its 26 different employer association health plans, nearly $22 million in the large group market and $8 million in the small group market. (Employers with fewer than 50 workers participate in the small group market.)
With the aid of the new tax law, the company reported more than $450 million in net income for 2017, according to financial records. The company also was sitting on $1.9 billion in capital at the end of 2017.
Premera was one of three insurers to offer health plans in Cowlitz County on Washington Healthplanfinder for this year. Nearly 2,600 residents in Cowlitz County signed up for 2018 coverage through the state-run exchange created by the Affordable Care Act (also called Obamacare).
Cost increases for a 40-year-old non-smoker in Cowlitz County purchasing Premera’s lowest-cost silver plan sold on the exchange jumped 45 percent compared to last year. Premiums for those plans spiked from $382.45 per month in 2017 to $556.43 per month in 2018. Deductibles for the same plan nearly doubled, to $4,500 annually.
Premiums for a similar plan sold by LifeWise Health Plan of Washington, which is under the Premera umbrella, increased from $332.50 per month in 2017 to $450.50 per month in 2018 — a 35 percent increase. (Federal subsidies reduce the true cost of premiums for about 60 percent of the consumers buying coverage through the exchange.)
Premera said Monday in a press release that the company’s tax savings are expected to trigger premium rebates for individual and small group customers under the medical loss ratio provision of the Affordable Care Act. It did not specify how much individual and small group beneficiaries can expect to receive in rebates. Premera said it also expects to return nearly $10 million in taxes charged to large group customers in 2018.
“This refund has given us an unexpected opportunity to reach beyond our own company to further address the critical health care needs of the communities where we live and work,” said Premera President and CEO Jeff Roe.
Roe made $882,000 in base salary last year and received a nearly $3 million bonus, according to financial records. His total compensation in 2017 was just shy of $4 million.