Anybody want to sell some health insurance?
It’s a question that consumers, health policy pundits and even some regulators are asking as concerns grow about the number of competitors on government-run exchanges that were established under the federal health law.
Last week, Minnesota regulators issued a request for proposals from groups that might be willing to step in and sell coverage on the state’s MNsure exchange, particularly in counties outside the Twin Cities metro. It came after Blue Cross and Blue Shield of Minnesota announced in June a pullback that could cut options in 11 rural counties.
The request came on the same day that Connecticut-based health insurance giant Aetna announced it would stop selling next year coverage on 11 of 15 state exchanges where it currently competes. In announcing the pullback, Aetna joined national competitors Humana and Minnetonka-based UnitedHealthcare, which first signaled it had cooled on the exchanges in November.
Some observers say the growing pains inevitably will get worked out, since the federal health law that created the exchanges also requires people to buy coverage and provides large subsidies for many of those customers.
“You have some insurance companies that say they’ve either figured it out, or they’re on track to figuring out how to make this a successful line of business,” said Sabrina Corlette, senior research professor at the Center on Health Insurance Reforms at Georgetown University. “With any new market, you’re going to get a lot of volatility.”
Others stress the need for more fundamental changes with the federal Affordable Care Act, including a reduction in regulatory burdens that the law imposes on insurers.
“The vast majority of insurance companies operating in Obamacare right now are losing money. ... This can’t go on forever,” said Robert Laszewski, president of Health Policy and Strategy Associates, a health care consulting firm in Virginia. “The solution starts with having a risk pool where you have enough healthy people to pay for the sick people.”
The market disruption comes in a small slice of the health insurance world that’s been a focus of changes with the federal Affordable Care Act.
The exchanges are part of what’s called the “individual market,” where self-employed people and those who don’t get coverage from an employer buy insurance. The moves don’t apply to the much-larger markets for people covered by Medicare, Medicaid or employer plans.
In Minnesota, about 5 percent of state residents buy coverage in the individual market.
The exchanges are government-run online marketplaces where the number of competitors is key for both providing choices, and containing costs.
For individual consumers at certain income levels, less competition won’t necessarily impact their out-of-pocket health insurance costs due to federal subsidies for those buying on exchanges, said Cynthia Cox, a researcher at the Kaiser Family Foundation. Any premium hikes would hit those with higher incomes and the federal government.
When insurers scale back operations, the impact varies by county and consumer. While UnitedHealthcare, for example, will leave 30 state exchanges entirely, the geographic impact from the pullback at Blue Cross of Minnesota is more limited since its HMO products will still be options in all but 11 counties.
In a subset of those counties, consumers in Minnesota could be facing just two options next year, said Cox, who maintains a nationwide database of health plan options.
“Generally speaking, there’s some agreement that you need at least three plans for there to be competition in the market,” Cox said.
Blue Cross says it will only offer plans with tighter networks of doctors and hospitals that are available through the health plans with lower cost-sharing. Such plans work well for some consumers and not others.
Narrow networks have been offered by insurers that are doing relatively well on the exchanges, Cox said, as opposed to carriers with more experience selling broad-network coverage to employer groups.
“The pattern that’s starting to emerge is that companies that have experience serving lower income populations may have had a more effective strategy when they entered into the exchange,” Cox said. “They offered low-premium plans and they may have been able to contain their costs by offering a narrower network of providers.”
In response to the Aetna news this week, the U.S. Department of Health and Humans Services issued a statement saying the exchanges are working for the more than 11 million people who currently have coverage.
“It’s no surprise that companies are adapting at different rates to a market where they compete for business on cost and quality rather than by denying coverage to people with preexisting conditions,” Kevin Counihan, chief executive for the federal government’s exchange, said in a prepared statement referring to one of the health law’s most popular provisions.
What’s surprising is that in 2016 carriers are dropping out in so many cases, said Stephen Parente, a health insurance expert at the University of Minnesota.
Parente said he understood why health plans might have trouble figuring out how to price policies when the exchanges kicked in during 2014.
The newness of the market is part of the story with Golden Valley-based PreferredOne, which dropped out of MNsure for 2015 after setting very low premiums and suffering very large losses.
But even now, insurers seem to be having trouble with setting prices.
“What’s frustrating is, there really is not sufficient public research to know what’s going on,” Parente said. “It’s a mystery that could be solved, but we still don’t have enough data.”