Iowa: Wellmark does Hokie-Pokie, takes whole body out, shakes 21,000 enrollees all about.


April 25, 2016 (less than 1 year ago):

there's some positive news for Iowa, at least; as noted by Cynthia Cox and reported on by Tony Leys of the Des Moines Register, Wellmark is joining the Iowa exchange next year:

Iowa’s dominant health insurer has agreed to start selling policies a year from now that qualify for Obamacare subsidies.

Wellmark Blue Cross & Blue Shield has not participated in the Affordable Care Act’s online health insurance marketplace, which launched in the fall of 2013. The main effect of the company’s decision was that moderate-income Iowans could not choose Wellmark insurance if they wanted to purchase policies that qualified for new federal subsidies to help pay premiums.

Other insurers have participated in the marketplace, also known as an exchange. Three carriers are selling policies statewide for 2016. Wellmark announced Monday that it will start selling policies on the marketplace for 2017, because the online system has become more reliable and because the legality of the federal subsidies has been upheld by the U.S. Supreme Court.

“We’ve said from day one we’d be there, and we meant it,” Wellmark Chairman John Forsyth said in an interview Monday.

The article goes on to note that Iowa is one of the states which allowed insurers to extend "transitional" policies out from 12/31/13 all the way out until 12/31/17. Now that those policies are finally being phased out (along with the other reasons noted above), they're jumping into the exchange. They claim this isn't the reason, but it certainly is nice timing for them (and there's nothing wrong with that).

September 28, 2016 (barely 6 months ago):

In Iowa, Wellmark will no longer offer gold tier plans and will not promote individual under-65 plans that use its Preferred Provider Organization (PPO) network in Iowa. Individual ACA members with a silver or bronze PPO currently may continue on that plan for 2017, however. The changes won't affect people with grandfathered or grandmothered plans (generally those who purchased their individual plans prior to Jan. 1, 2014).

...Wellmark said it will also move forward in 2017 with plans to introduce a new HMO plan for the individual ACA market called Blue Simplicity, which will offer a simplified copay option.

...And as announced in May, Wellmark will also roll out two new individual market health plans in 2017 that partner with health systems in Iowa to provide coverage through those specific networks. Its new Wellmark Value Health Plan is a partnership with Mercy Health Network, while the Wellmark Synergy Health plan will partner with the University of Iowa Health System.

April 3, 2017 (less than 24 hours ago):

Wellmark to halt sales of individual health insurance policies

Iowa’s dominant health insurance company has decided to quit selling individual policies because of tumult in the market stemming from the Affordable Care Act and Republicans’ failed effort to replace it.

Wellmark Blue Cross & Blue Shield’s decision means more than 21,000 Iowans who bought health insurance policies from the company in the past three years will need to find another carrier — and it’s not clear all of those people will have another choice.

Wellmark President John Forsyth said his company's decision was painful but necessary, because the carrier had lost $90 million over three years covering that group of people.

I'm not sure what the breakout is per year, and presumably the 21,000 referred to have had a lot of churn over that time period, but $90M/3 years/21K people = around $1,400 per person per year.

For what it's worth, Wellmark reported one enrollee (not 1,000 or who supposedly was costing a whopping $12 million per year to treat last year:

More importantly are the reasons for the massive hike...and the Des Moines Register article gives one jaw-dropping example:

Wellmark Executive Vice President Laura Jackson said poor health and rising medical costs forced the company to seek state permission to raise premiums so aggressively on the plans in question. She said the company spent $1.27 on health care last year for every dollar in premiums it took in for those customers. The company says it lost $99 million on those customers in the past two years.

She said about 10 percentage points of the increase stem from the costs of a single, extremely complicated patient who is receiving $1 million per month worth of care for a severe genetic disorder.

Note: That's not 10% of the increase (which would be 3.8 - 4.3% of it. It specifies 10 percentage points...that is, 10 out of 38-43, or fully 25% of the statewide increase...for one person's treatments. A million dollars per month...$12 million per year.

As an aside, according to the same article from last year, Wellmark had about 30,000 enrollees in ACA-compliant plans, which means around 9,000 of them moved elsewhere for 2017. In addition, this article claimed they had lost $99 million on the ACA/indy population over a two year period.

So...if they lost $99 million in 2014 & 2015, but $90 million over 2014-2016, doesn't that suggest that they profited by at least $9 million in 2016?? Hmmmm... (update: it's been confirmed that the $99M included South Dakota enrollees, who were dropped by Wellmark last year).

Either way, while $90 (or $99) million is certainly nothing to sneeze at, as Shelby Livingston just pointed out to me, Wellmark brought in $2.7 billion overall in 2016 alone. Considering that they've only been in the exchanges for one year, they seem to be doing a 180 awfully quickly for such a (relatively) small loss.

In any event, as I keep pointing out, if they're bailing next year, they're bailing, and there's not much which can be done about it under current law.

Monday's announcement won’t affect most of the 1.6 million Iowans who have Wellmark insurance, including policies purchased through an employer. It also won’t affect nearly 77,000 Wellmark customers who bought individual policies that took effect before Jan. 1, 2014. But it will mean the company won’t sell any new individual policies for 2018, and those who bought such policies since 2014 will lose them.

This is another noteworthy update regarding the off-exchange, grandfathered/transitional plan enrollees: The 2016 article claimed 90,000 people in those categories, which have dropped by about 13,000 people year over year, or about 15%.

After some valid criticisms of the Obama administration over the setup of the ACA, the Wellmark president added:

Now, President Donald Trump's administration has decided not to enforce the Obamacare penalty for Americans who fail to obtain health insurance. That makes the situation even worse, Forsyth said.

...He noted that Wellmark stopped selling individual health insurance policies in South Dakota last year, when President Barack Obama was still in office. He said his company probably would have decided to pull out of Iowa’s individual market for 2018 even if Republicans in Congress had passed a bill it considered last month.

...Forsyth said the 30 percent surcharge would have been too small to encourage young Americans to purchase coverage before they became sick. Instead, young adults could have figured they’d go without insurance and then pay the higher premiums in the unlikely event that they developed a catastrophic health problem, he said.

...Cox said the carriers already were struggling to accurately set premium rates before Congress waded in last month and considered a bill to repeal and replace Obamacare. U.S. House leaders pulled that bill because of lack of support, but they’re still talking about making major changes to the health-care system. If carriers want to sell individual insurance for 2018, they have to submit proposed rates by June. But they don’t yet know what the rules will be, Cox said. “That uncertainty makes insurers very nervous,” she said.

Plus, Trump has said he wants to let Obamacare “explode,” making insurers doubt his administration would help solve problems as they crop up, Cox said.

No kidding.

The on/off-exchange breakout is also interesting:

The individual Wellmark policies that would be affected by Monday’s decision include 18,900 sold in traditional ways and about 2,500 sold on the Obamacare “exchange,” which is the government’s online marketplace. The exchange plans qualify for federal subsidies that help moderate-income Americans pay their premiums. Wellmark was a late entrant to that system, only beginning to sell such plans for 2017.

Conventional wisdom (and most supporting data) has suggested that a good 60%+ of the individual market has shifted onto the ACA exchanges, but in Iowa, Wellmark's share is more like 12% on-exchange, 88% off. Huh.

...Forsyth said his company hopes to re-enter the individual market in the future, but it has firmly decided to stay out for 2018. He made several recommendations for how government leaders could stabilize the market. One would be to set up a system to help shoulder insurers’ costs once they top $100,000 in a year for a particularly sick consumer. That would only affect a few hundred Iowans per year, but it would do a great deal to stabilize insurers’ risks, he said. Forsyth cited a single Wellmark customer who has a rare genetic disease that is costing more than $1 million per month to treat. I noted above. This refers to the reinsurance programs already established by Alaska and Minnesota, and which Tom Price, surprisingly enough, apparently supports in spite of Trump and Price simultaneously taking any number of other actions to rip apart the ACA exchanges.

Forsyth said he supports the Obamacare rule barring discrimination against people with pre-existing health problems. But he said the government needs to set up strong measures to encourage young, healthy people to buy coverage in order to balance out the costs of older people with more health problems.

Whether he's just saying this to avoid a PR disaster or not, it's noteworthy that the head of a large insurance company is publicly supporting the ACA's guaranteed issue provision. At the same time, he seems to be calling for jacking up the individual mandate penalty (which is absolutely not a good PR move).

Wellmark also wants the government to give young people extra subsidies toward premiums. And he wants the government to let insurers return to their old practice of charging young people as little as one-fifth as much for premiums as older people are charged. The current rule is one-third, meaning insurers have to charge relatively high rates to young consumers, discouraging them from getting in the pool, he said.

Heh. This is a cute spin reversal: "We aren't charging old people five times more...we're charging young people one fifth as much!"

In any event, after dipping their toes in the water for all of one year, Wellmark is out for 2018, both on and off the exchange.