With providers fleeing and rates rising, the individual marketplace for ‘Obamacare’ policies is ‘a looming catastrophe of astronomical proportions’
With losses mounting, providers leaving the market and no legislative remedies on the horizon, health insurance companies—specifically, the state’s largest private provider, Blue Cross and Blue Shield of Louisiana—may have to rethink their participation in the Affordable Care Act federal exchange for individual policies.
UnitedHealthcare plans to leave the ACA, or “Obamacare,” marketplace at the end of the year, following last year’s exit of Louisiana Health Cooperative, a nonprofit insurer created with federal funds under the ACA.
That leaves just Blue Cross and Vantage Health Plan offering individual policies statewide. But staying in the market is costing them a whole lot of money, and it may not be financially sustainable in the long term.
Blue Cross expects to lose $200 million on individual ACA policies in Louisiana over a three-year period ending this year, says new president and CEO Dr. I. Steven Udvarhelyi. The loss is due to flaws in ACA rules, many of which are unclear, constantly changing or not enforced, he says. As a result, people are able to jump into a policy during special enrollment periods, receive costly treatment and then drop the policy.
Louisiana insurers have sought to raise rates an average of 16% to 30% next year to fill budget shortfalls. Blue Cross plans to hike rates an average of 20.5% to 28.3% for individual plans covering more than 134,000 people. Future increases will likely be even higher.
Meanwhile, it’s unlikely any major legislative changes will be made to the ACA anytime soon, says Udvarhelyi, who recently met with congressional leaders in Washington, D.C. Even if changes are made in late 2017 or early 2018, he says it won’t be until 2019 that Blue Cross can predict how much money it will gain or lose on individual policies.
“The question is can we hold on until 2019 and thereafter,” Udvarhelyi says. “We plan to be in the individual [market] into 2017, but we have to re-evaluate this every year.”
UnitedHealthcare, the nation’s largest insurer, announced in April it’s pulling out of Obamacare exchanges in most states, including Louisiana, citing losses exceeding $1 billion over a two-year period. About 29,000 people covered by UnitedHealthcare in Louisiana will have to find new plans in 2017.
Udvarhelyi says Blue Cross is committed to expanding health care access in Louisiana but 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.”
The ACA problems are obviously systemic, says Louisiana Insurance Commissioner Jim Donelon. Several states are experiencing individual rate hikes, some even higher than those seen here. As of now, Louisiana is better off than many states that are already down to one provider. If Louisiana were to lose another provider, Donelon says, a dangerous situation could arise in the individual market. Only one major health insurer would remain, creating a monopoly.
What we can hope for, Donelon says, is that the next president will amend the ACA to correct the issues playing out today.
“I think the next president, whoever is elected, will be willing to [make changes] because it is a looming catastrophe of astronomical proportions to all 50 states.”