High costs and the Affordable Care Act’s still-uncertain-political future have pushed Wellmark Blue Cross and Blue Shield to decide to withdraw from Iowa’s insurance exchange as well as no longer sell ACA-compliant plans come Jan. 1, 2018.
The decision was not an easy one, company officials said in a phone interview with The Gazette Monday. But the Des Moines-based insurer has lost about $90 million through the individual market in Iowa while those enrolled with those plans saw a nearly 43 percent premium increase this year.
“We stayed in as long as we thought it was prudent,” said Wellmark Chairman and Chief Executive Officer John Forsyth. “But we can’t put our company at financial risk for a small number of Iowans.”
The decision affects about 21,400 of the company’s enrollees — or about 1.3 percent of its more than 1.66 million Iowa members. Coverage will remain intact until the end of 2017.
This change does not impact the 76,600 people who purchased individual or family health plan pre-ACA — before Jan. 1, 2014.
This change also does not affect members with plans through their employer, including small group ACA plans, or those with Medicare supplement plans.
Though Wellmark sold ACA-compliant plans — health plans that cover certain “essential benefits” including maternity care and services for mental health and substance abuse — since 2014, it waited three years to enter the Iowa exchange, selling plans through joint ventures with hospital systems for the first time during the 2017 open enrollment season.
“We felt that we really did the right thing not going onto the exchange,” Forsyth said. “We wanted to be successful, and we did what we thought was the right thing to do at that point in time. So we’re not second guessing. If we stayed another year, I’m pretty confident we’d lose an awful lot of money.”
In September, Wellmark announced it would scale back some of its ACA market health plans in Iowa, including dropping gold-tiered plans, and it would stop selling ACA-complaint plans in South Dakota starting Jan. 1, 2017.
Wellmark isn’t the only insurer coming to this conclusion. Last year, UnitedHealth Group announced it would pull out of 30 states, including Iowa, while the Washington Post reported just last week that analysts said Anthem is “leaning toward exiting” many markets.
The remaining insurers selling plans on the Iowa exchange include Minnesota-based Medica, Gundersen Health Plan and Aetna, even though Aetna announced in August in would pull out of most states.
Insurers must submit 2018 forms and rates for ACA-compliant plans on and off the marketplace starting in early May, according to the Iowa Insurance Division.
Forsyth acknowledged choices are becoming more limited for the 50,000 or so Iowans purchasing insurance on the ACA exchange, adding the company was “forced to make difficult decision.”
“My only advice is to see who is in the market still and shop. Make the best decision they can,” he said.
The ACA expanded access to health insurance, Wellmark officials said, but they believe the affordability piece needs to be better addressed through more than just subsidies to enrollees. Insurance for Wellmark’s ACA-compliant plans are on average $560 compared with premiums of $315 for grandfathered plans or transitional plans, despite offering comparable benefits.
That’s partially because individuals purchasing ACA-compliant plans are sicker and more costly. What’s more, President Donald Trump’s decision to not enforce the mandate — financial penalties for those who do not purchase insurance — likely could mean younger and healthier Iowans will be less likely to purchase health insurance plans.
“Our hope is to get back in when the market is sustainable for the longer term,” Forsyth said. “We don’t know if that is two, three or four years from now, but when we think circumstances are right, we’ll be there.”
Those circumstances include a more long-term viable pool of individuals, which Forsyth said can be created through a strong disincentive for not have continuous coverage, and through financial assistance and more effective administration of special enrollment — outside the open enrollment period — through requiring documentation; a way to more broadly share catastrophic expenses, either through high risk pools or reinsurance; and more flexibility within health plan designs.
“How can we have something that’s really good — better than what Iowa used to have and better than under the ACA — but be viable for long term?” he asked. “I’m not trying to be political here, you can repeal and replace or fix the existing legislation. We’re agnostic on it. We’re not trying to make political statements.”