Florida: Well whaddya know? Carriers CAN make money on the exchanges!
The Affordable Care Act's exchanges have not been a bust for every health insurer. Florida's Blue Cross and Blue Shield affiliate made a profit of almost a half-billion dollars on the ACA's new individual plans last year.
The substantial ACA exchange losses exhibited by large health insurers—such as Health Care Service Corp., Highmark, Humana and UnitedHealth Group—have emboldened the law's critics and worried investors about whether the new marketplaces will ever achieve sustainability.
Yet many other companies, including Medicaid insurers Centene Corp. andMolina Healthcare and now Florida Blue, have had no difficulties making money on the new ACA plans, which often have narrow networks of hospitals and doctors as well as high deductibles.
The Florida Blues recorded a $471 million gross profit on ACA-compliant individual plans in 2015, compared with a $124 million gross profit from those policies in 2014, according to the insurer's financial filings. Those figures represent the underwriting profit and don't subtract the administrative expenses associated with those plans. The Florida Blues enrolled approximately 500,000 people in ACA plans by the end of 2015.
I'm not sure how many of those 500K are exchange-based vs. off-exchange, but Florida had 1.74 million people select QHPs during open enrollment last winter, and as of over a year ago, had only 628,000 off-exchange enrollees total (including both grandfathered and transitional enrollees). Assuming around 13% net attrition since January, that's around 1.5 million still currently enrolled. I should also note that FL's transitional enrollment has been cut by more than half over the past year, from 165,459 on 3/31/15 to 82,468 at most today. Their grandfathered number has certainly dropped to negligible numbers as well (it was only 87,340 over a year ago). That means there shouldn't be more than half a million off-exchange enrollees in Florida total.
The point of all this is that exchange-based enrollees should make up at least 75% of FL's total individual market today. Subtract around 120,000 grandfathered/transitional enrollees (which belong to different risk pools anyway) and BCBS should hold at least 27% of the market share.
Now, here's where the importance of a proper Effective Rate Review program (as well as the 80/20 MLR requirement) come into play:
Despite the massive surplus for Florida Blue, which sells individual plans in a competitive ACA exchange, the insurer is requesting somewhat high premium rate increases for 2017, although its requests fall well below the higher proposals of other insurers. The Florida Blues asked for rate hikes of 9.8% for individual plans and 8.7% for small-group plans that have the broadest provider networks. Rate hikes for the insurer's HMO network products range from 9.5% to 16.5%.
It's conceivable that the Florida regulators will approve the 9.8% hike if they're convinced that BCBS's claims per enrollee are likely to jump up that much. If not, they might slash that increase down to size.