Virginia: Optima tried gaming the system. The system is about to game them back, bigtime.

MLR rebate payments for 2018 are being sent out to enrollees even as I type this. The data for 2018 MLR rebates won't be officially posted for another month or so, but I've managed to acquire it early, and after a lot of number-crunching the data, I've recompiled it into an easy-to-read format.

But that's not all! In addition to the actual 2018 MLR rebates, I've gone one step further and have taken an early crack at trying to figure out what 2019 MLR rebates might end up looking like next year (for the Individual Market only). In order to do this, I had to make several very large assumptions:

• First, I assumed total enrollment for each carrier remains exactly the same year over year.
• Second, I assume the average 2019 rate changes I recorded for each carrier last fall are accurate.
• Third, I assume 2019 is seeing a 5% medical trendline on average...that is, that total 2019 claims per enrollee will be 5% higher than 2018's.

All three of these are very questionable, of course, but they at least provide a baseline.

All that being said, here's what the payments for 2018 going out this month look like in Virginia:

Virginia joins Pennsylvania and Texas in the "Holy Crap that's a ton of money being rebated!" category. The primary source here is Optima Health Plan, which I've written about extensively in the past. The short version is that they tried to take massive advantage of their monopoly market position in 2018, jacking their premium rates up massively...an astonishing 81.8%, to be precise. This came back to bite them on the ass a year later, however, as a competitor swept in and underbid them, bigtime. Optima scrambled to lower their prices, but waited too long to do so and...well, it turned into a big mess, let's just put it that way.

In any event, as a result of their trying to play games with the market, they ended up seeing their MLR percentage drop from a money-losing 103% in 2016 and 94.4% in 2017...to just 49.8% in 2018. Since their 2018 premium revenue was also 2.5x as much as 2016 & 2017 combined, that means that they ended up with a 3-year rolling average of just 64.1%...thus, a whopping $99 million MLR payout. Ouch, that's gotta hurt.

Throw in another $12 million plus from other carriers and Virginia carriers are rebating over $111 million to their Individual Market enrollees this year. Then you have to include the Small and Large Group markets, for a grand total of a stunning $149.5 million in MLR rebates from Virginia alone.

But wait, there's more! Optima's comeuppance for their market/pricing shenanigans may not be over yet...check out my projections for next year: It's conceivable that they'll have to pay back as much as another $137 million. Along with other potentially huge numbers from several other carriers, it's possible that Virginia Individual Market enrollees could end up getting as much as $179 million next year.

AGAIN: There's absolutely no guarantee that things will play out this way. It's possible that none of these carriers will make MLR payments next year, or only some of them will, or the amounts will be smaller. These 2019 projections are pure speculation on my part based on a number of big assumptions.