Nearly 100,000 Nebraskans apparently will have only one choice for individual health insurance next year.
And even that choice isn’t certain: Medica Health hasn’t decided whether to offer plans next year that meet the Affordable Care Act’s standards.
If Medica joins the ranks of health insurance companies leaving the individual marketplace because they have been losing millions of dollars, Nebraskans seeking individual policies may not be able to find health plans at any price.
“Things are still changing daily,” said Geoff Bartsh, vice president for Medica’s individual and family business. “We’re still looking at changes and will continue to evaluate things. We are still planning to participate in the Nebraska market for 2018. We haven’t made any final decisions on that yet.”
The discussion about 2018 was triggered by an announcement Thursday that Blue Cross Blue Shield of Nebraska will drop its last two individual health plans that meet ACA standards, standards that include accepting all applicants and providing a broad range of health benefits.
Losses from the two plans, called Bronze and Catastrophic, could reach $12 million this year and would continue next year even if premiums would increase by 50 percent or more, said Dale Mackel, executive vice president.
The 12,500 people covered by those plans will have to seek another insurer for 2018.
(The pullout doesn’t affect Blue Cross’s employer group plans, Medicare-related plans or other products. Also not affected are individual Blue Cross plans that predate the Affordable Care Act and have been renewed each year. They cover about 20,000 people.)
If Medica also pulls out of the individual health insurance market, Nebraskans looking for insurance that isn’t connected to an employer or a government-sponsored plan might find themselves with no options for insurance that is compliant with the ACA, also known as Obamacare. That means they would be subject to federal penalties for not carrying health insurance.
Nebraska Gov. Pete Ricketts said Blue Cross’s decision “demonstrates the failure of Obamacare and how the system was so poorly designed that great companies like Blue Cross Blue Shield can’t stay in the marketplace. It highlights that Congress needs to act to make the health care system sustainable.”
An additional 86,000 people in Nebraska have ACA plans this year, about 50,000 of those from Aetna Health, which decided last month it wouldn’t offer the plans in 2018 because of financial losses. That will leave only Medica, which covers about 36,000 people this year.
Medica’s Bartsh said the company has the financial strength to absorb the additional members.
“The marketplace has been difficult for the past few years with the ACA, but we feel good about where we are in 2017,” he said.
First-quarter results for Nebraska are “on target for us” and “promising,” he said, but he declined to be specific about whether premiums exceeded claims during the three months.
“A lot can change,” he said. “As we look at this year compared with last year, we’re much closer to our projections for 2017 than we were in 2016.”
But it’s too early to tell what the company will decide for 2018, he said. “There’s always the potential that someone in Congress does something that could change the landscape.”
Cynthia Cox, a deputy director of the Kaiser Family Foundation, a health care policy think tank, said Nebraska and Iowa apparently will be among the few states with only one individual ACA insurer. In most of the others, the only insurer is a Blue Cross affiliate.
Cox said it’s possible that a single company — like Medica — could assume the risk for all individual ACA plans in a state. State regulators would decide whether a company would have the financial backing to pay the claims it would owe, even if premiums were outstripped by claims.
“Medica doesn’t have the same kind of presence or history that the Blue Cross Blue Shield affiliates have,” Cox said. “It would be difficult,” but not impossible, for Medica to be the state’s sole provider of individual health plans that meet the Affordable Care Act’s standards.
If no individual ACA plans are available in Nebraska next year, people losing their plans could try to join group plans or seek short-term plans, which provide fewer benefits and cost less than ACA plans, she said.
Medica also would be subject to the same difficulties that prompted Blue Cross to drop its plans.
Mackel, the Blue Cross executive, said the decision was difficult because Blue Cross’s mission is to make health plans available to all Nebraskans.
Blue Cross remains financially strong and is on track to break even or have a 1 percent gain this year, its standard financial goal, he said.
But it wouldn’t be fair or good business practice to raise prices for people on other health plans to subsidize the losses expected in the Bronze and Catastrophic plans, he said. Blue Cross also lost about $150 million on ACA plans in past years.
The Omaha-based company discontinued most of its ACA plans for this year but kept two to provide some access to the plans, hoping that they would at least break even, Mackel said. But instead, “we just continue to see the claims costs outpace premiums,” despite doubling premiums since the ACA took effect.
“It’s just left us at a point where we feel like the best decision for our members, to remain stable and secure for all of our members, is to exit that portion of the business,” he said.
The two plans didn’t have enough healthy people, with low health claims, to make up for the high claims by other people on the plans, which Mackel said has become typical of ACA plans in many states.
On the Bronze plan, 5 percent of the members had 74 percent of the claims. On the Catastrophic plan, 2 percent of the members had 59 percent of the claims.
Other factors in the decision included the instability of the health insurance market and uncertainty over possible changes to the federal law, he said. Congress is debating possible changes, but no consensus has emerged.
In total, Blue Cross Nebraska provides health insurance to about 700,000 people, collecting about $1.7 billion in annual premiums and holding $380 million in reserves for unexpected expenses.
If Blue Cross tried to continue the two ACA plans, Mackel said, its premiums would increase by more than 50 percent next year, on top of 50 percent increases already in place this year.
But those premium increases probably would not stop the losses, he said, because the plans’ healthier members would drop out, leaving sicker people who would have more expensive claims.
Blue Cross announced its decision early in the year so state and federal regulators could work on “contingency plans,” he said.
Bruce Ramge, director of the Nebraska Department of Insurance, said the state remains in contact with Medica Health and “continues to monitor the situation.”
Mackel said it seems unlikely that Congress would take actions this year that would cause it to resume selling the plans.
“There’s so much that needs to be done,” he said. Blue Cross is advocating several changes in the law, including:
» Separate high-risk insurance pools supported by federal funding to cover claims by high-needs people.
» Controls to prevent people from signing up for insurance when they face expensive medical treatments and then dropping coverage soon after.
» Repeal of the ACA’s health insurance taxes, which he said raise premiums by about 3 percent.
» Return of regulatory authority over health insurance to the states.