Due to flaws in the Affordable Care Act, Blue Cross and Blue Shield of Louisiana is losing hundreds of millions of dollars on individual policies, and new CEO and president Dr. I. Steven Udvarhelyi says the insurer will have to reevaluate on an annual basis whether it will continue participating in the market.
Udvarhelyi tells Daily Report the problems are many. But in short, there are some ACA rules that remain unclear or are constantly being changed by the federal government. Meanwhile, he says, the government is not enforcing rules meant to keep people from jumping into a policy during a special enrollment period, getting costly treatment and then dropping the policy.
The result is that Blue Cross expects to lose in excess of $200 million in Louisiana on individual plans over a three-year-period ending this year.
“The fragility of the individual marketplace is probably the most pressing policy issue we have that in my opinion is not being adequately addressed,” Udvarhelyi says, adding that he’s not optimistic the law will be cleared up by lawmakers anytime soon.
After having recently met with Louisiana’s delegation as well as House and Senate leadership in Washington D.C, Udvarhelyi says it’s unlikely that major legislative alterations will be made to the ACA before late 2017.
That leaves Blue Cross with massive uncertainty, as it must set policy rates in March of each year for the following year. So if Udvarhelyi’s prediction is right and the ACA is not structurally changed until late 2017 or early 2018, it won’t be until the 2019 policy year that Blue Cross can better predict how much money it will gain or lose on the individual policies.
Until then, rates are likely to skyrocket. This year Blue Cross raised individual rates by about 30%, and Udvarhelyi says it’s likely future increases will be even higher.
“The question is can we hold on until 2019 and thereafter,” he says. “We plan to be in the individual into 2017, but we have to re-evaluate this every year.”
Individual block of business, which are ACA-compliant, can be purchased both on and off the exchange by people not getting insurance through their employer or through Medicaid.
In April, UnitedHealth announced that it will end its participation in public health insurance exchanges in most markets, including Louisiana. The company’s CEO Stephen Hemsley says the insurer expects to lose more $1 billion over a two year period covering 2015 and 2016.
Udvarhelyi says Blue Cross is committed to expanding healthcare access in Louisiana and will have to think “very carefully” about any possible exit from individual ACA policies.
“It’s not out of the realm of possibility,” he says. “If it puts the financial health and future of the company in too much jeopardy, I think we would have no choice.”
—Alexandria Burris
