Highmark losing gobs of money, will offer less to insureds

[IIOY]

The original title is almost meaningless, so I jazzed it up a bit.  WSJ:

Highmark Health said it would reduce its range of offerings on the Affordable Care Act marketplaces, becoming the latest insurer to retrench amid steep financial losses.



The big Pittsburgh-based nonprofit company said it would continue to sell plans related to the federal health overhaul in all of the areas it currently serves, which span Pennsylvania, Delaware and West Virginia. But “we will have less products in the market overall,” said David L. Holmberg, the company’s chief executive, who said Highmark had lost $318 million on its individual health-law plans in the first six months of 2015, after rolling out a very broad array of options that had attracted many consumers with chronic conditions who required costly care.



He said the company was still working on the details of its offerings, but it expects a “mix shift” toward plans that offer more limited choices of health-care providers. Such plans typically have lower premiums than versions with broader networks. About Highmark’s offerings for next year, he said, “Is there going to be a trend toward more narrow networks? Yes.”



Highmark’s announcement follows similar moves by some other insurers grappling with the financial fallout of their exchange business, which has also prompted some, including Highmark, to seek double-digit rate increases. Highmark is a substantial player in the individual insurance market related to the health law, with around 380,000 enrollees.



Blue Cross and Blue Shield of Texas, a unit of Health Care Service Corp., said it would no longer sell preferred-provider-organization plans to individual consumers next year. In a notice sent in July to insurance brokers, the company said that about 367,000 people were enrolled in the plans that were being withdrawn. The insurer also said it had paid out more than $400 million more in claims than it collected in premiums on its individual business in 2014. “Losses that high are unsustainable,” the note said.



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Analysts said it is likely that the array of insurers offering products on the exchanges will remain robust next year, though the full picture isn’t yet clear. A Kaiser Family Foundation analysis of 10 states and the District of Columbia found that the number of insurers participating was flat or up in nine of them. “In general, the number of insurers available to consumers is as large if not larger” for next year, said Larry Levitt, senior vice president of the foundation. But some insurers are “narrowing the number of options they offer,” he said.



A spokesman for the Department of Health and Human Services said “consumers will find a range of quality, affordable coverage options on the Marketplace in 2016.”



Analysts said that the changes are the latest sign that the health-law insurance markets aren’t yet stable, with insurers still shifting their strategy and pricing. One way for insurers to manage costs is to offer plans with tighter controls over the health services members use—particularly designs that can limit consumers’ access to higher-cost health-care providers, or to hospitals and doctors outside an insurer’s network.



“The managed-care plan has more control over where the member goes,” said Deep Banerjee, an analyst with Standard & Poor’s Ratings Services. A majority of the insurers that Standard & Poor’s rates lost money on their health-law exchange business, he said. For large insurers, the plans are only a relatively small share of overall business.



In North Carolina, where Blue Cross and Blue Shield of North Carolina said the operating loss on its health-law business in its first year was $123 million, the insurer has said it would no longer offer its broadest-network plans in three of the state’s most populous cities, Charlotte, Raleigh and Durham.



Going further, Blue Cross and Blue Shield of New Mexico, also a unit of Health Care Service Corp., recently said it wouldn’t offer health plans through the state’s health-law exchange next year, after a New Mexico regulator rejected its request for a rate increase that averaged 51.6%. The company said in a statement on its website that it had lost $19.2 million last year on the 35,000 people enrolled in its individual plans. It will continue to sell certain plans to individuals in the state, though off the exchange.



Lisa Reid, an official at the New Mexico regulator, said the company hadn’t shown evidence that justified its requested increase. New Mexico’s exchange will still have four insurers, with “a lot of good choices for people,” she said.



The cost pressures on insurers tied to the ACA may fall hardest on smaller insurers. The Iowa insurance regulator said in January that it would shut down CoOportunity Health, one of the 23 nonprofit cooperative insurers launched by the Affordable Care Act. At least two other co-ops, in Nevada and Louisiana, have said they won’t offer plans next year.

[londoncalling]

What the article fails to mention about Highmark specifically is that they own a physician/hospital network and can take the trend of setting a narrower network and drive the revenue to their physician base. The same for Pittsburgh's largest employer, UPMC, who also has a provider network/insurance company model. Add in the fact that Highmark and UPMC are waging a PR war because neither* insurer wants to agree to a deal to grant in-network access to the other's physician/hospitals - and it's just acrimonious.

If I remember correctly, the health insurance arm of these non-profits is the area where they are usually the least profitable/take a loss, and the other side businesses buoy the loss from the insurance arm. Highmark's subsidiaries offer dental, vision, and business insurance, Visionworks stores, lens manufacturing, the aforementioned provider network, and healthcare IT consulting/management services. Skeptical me sees this public news of the health insurance loss as a way to justify the further narrowing to their own network.


*Highmark says that they want a deal, UPMC says they do not. I'm not so naive to believe that either of them want a deal that breaks their exclusivity.

[scout8]

On the other hand, I had heard that there are actually more insurers planning to enter the market next year which is a sign that they are finding the market profitable. Unfortunately, I heard this on the radio so I can't provide a source. They may have been talking about the Kaiser survey mentioned in the article. In IL, the wider network plans were already quite a bit more expensive than the smaller network plans. So much so that it pushed me into a smaller network to save money. I can report back in a few months about whether they have cut them entirely.