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Short form for federal Affordable Care Act

The short form for the federal Affordable Care Act application. 

HELENA – Blue Cross and Blue Shield of Montana, the state’s largest private health insurer, told thousands of customers this week it is raising premiums 3.5 percent in January because of “Obamacare” fees and taxes.

The notice, dated Thursday, went to nearly 3,000 holders of group policies, which insure tens of thousands of Montanans. Blue Cross said it didn’t have an exact count of how many people are covered by the affected plans.

Some of those policyholders signed yearlong contracts earlier this year and are getting a midyear increase, which Montana law generally forbids.

But the law has an exception that says an insurer can increase premiums in the middle of a contract year if costs are affected by a change in state or federal law.

Blue Cross linked the increase to fees taking effect Jan. 1 – although insurers have known for some time about the charges.

“We are following the law,” said John Doran, director of strategic marketing services for Blue Cross Montana. “We made that decision feeling it was in the best interest of our members. … We waited until the last available minute to assess these fees.”

Other major health insurers in Montana aren’t invoking the law, saying they already built any costs from the Affordable Care Act – also known as Obamacare – into their current premiums.

“We’re honoring our current rates,” said Todd Lovshin of PacificSource, which insures about 19,000 people in Montana. “We’ve known about the (fees) for a long time and we knew they were going to be collected.”

The Blue Cross notice referenced two ACA charges effective Jan. 1: A flat-rate federal tax on all health insurers, to raise $8 billion nationwide to help pay costs of the overall act, and an annual “reinsurance fee” of $63 per person insured.

The reinsurance fee was created to provide a financial backstop to insurance firms selling policies on the new Internet marketplace, including Blue Cross.

It creates a national fund that will pay portions of high-cost claims for people who buy insurance through the state-based, Internet marketplaces. Insurers lobbied for the reinsurance pool, saying they’ll be exposed to more risk because starting in 2014, they aren’t allowed to adjust the cost of coverage for people with pre-existing health conditions.

Some Montana employers who recently arranged yearlong contracts with Blue Cross aren’t happy about getting a rate increase a few months into their contract.

“There are more thoughtful ways of doing this,” said Richard Miltenberger of Mountain West Benefits, a Helena firm that helps arrange health coverage for a variety of employers. “(Blue Cross) could just absorb this out of their reserves until their policies renew.

“It’s only the people who thought they had a 12-month rate who are getting screwed here.”

Jesse Laslovich, chief counsel for the state insurance commissioner’s office, said he thought initially Blue Cross couldn’t do a mid-contract increase – but that the law does allow for increases in response to a change in state or federal law.

Doran said Blue Cross felt it was better to wait until the fee was actually imposed before passing the cost onto customers.

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Missoulian State Bureau reporter Mike Dennison can be reached at 1-800-525-4920 or by email at

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