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Payers Continue to Drop Out of the Health Insurance Exchanges

Five payers have been struggling to maintain profit selling health plans on the health insurance exchanges.

By Vera Gruessner

Healthcare payers have seen significant obstacles when it comes to operating on the public health insurance exchanges with large, national insurance companies losing money through this marketplace. Below we outline some key insurers that have dropped out of the health insurance exchanges and the challenges they faced.

UnitedHealthcare

health insurance marketplace

At the end of 2015, UnitedHealthcare announced in an earnings update that serving on the health insurance exchanges led to significant profit losses and predicted a loss of $275 million in 2016. The health insurance company had trouble remaining profitable while serving older, sicker patient populations on the exchanges. The payer faced a higher risk pool and had to cover more costly procedures, which led to a decline in their profit margin.

The Affordable Care Act was unable to incentivize enough younger and healthier consumers to purchase coverage on the public health insurance marketplace, which led to a higher risk pool. As such, UnitedHealthcare announced last year that it was going to pull back from serving consumers on the health insurance exchanges.

Merrill Matthews, a resident scholar at the Institute for Policy Innovation, discussed with HealthPayerIntelligence.com last December how UnitedHealthcare’s actions to drop out of the health insurance exchanges may impact other payers.

“UnitedHealthcare doesn’t feel like it can stay profitable in that group of business and it would indicate that others might be struggling as well,” said Matthews. “Several insurers came out and said that they’re still committed to being here, but it might indicate the death spiral that we’re concerned about in the exchanges. There’s been a long-running concern that what the exchanges will ultimately be is the place where the people who are the sickest and need subsidies from the federal government will reside.”

Aetna

READ MORE: Medical Loss Ratio Provision Led to $2.4 Billion in Rebates

This past August, Aetna announced that it expects significant financial losses on the exchanges totalling a $300 million deficit in 2016. Aetna has also faced a lawsuit blocking its merger with Humana began by the Department of Justice. Due to these obstacles, Aetna decided it would be cancelling its expansion throughout the public marketplace.

The payer also stated that it would be re-evaluating its future service in the health insurance exchanges. Mark T. Bertolini, Chief Executive of Aetna, has stated that the payer may fix its issues selling plans through the exchanges or may leave the marketplace altogether.

Blue Cross Blue Shield of Minnesota

The health insurance company Blue Cross Blue Shield of Minnesota announced in July that it would be dropping out of the health insurance exchanges. The payer has gone through some large transformations, which are causing major price hikes for consumers and the insurer as well.

The number of members purchasing plans has been far from steady and played a role in Blue Cross Blue Shield of Minnesota deciding to cut back on selling any health plans through the public marketplace.

Blue Cross Blue Shield of North Carolina

While Blue Cross Blue Shield of North Carolina has decided not to drop out of the public health insurance marketplace, the payer did face significant financial losses over the last few years and did consider whether or not to stop serving members through the exchanges.

READ MORE: Will Health Insurance Exchange Remain Intact Despite Hurdles?

Forbes reported that Blue Cross Blue Shield of North Carolina lost $405 million in two years selling health plans on the exchanges. One of the reasons that the payer was able to remain in this marketplace is due to the state insurance commissioner allowing a 32.5 percent increase in rates for the policies it is currently selling via the ACA marketplace.

Humana

This past summer, the national payer Humana also announced its plan to significantly cut back on serving consumers through the public health insurance exchanges, according to a Humana earnings report. Humana sustained almost $1 billion in financial losses selling health plans through the exchanges over the last several years.

As such, the payer will be pulling out of nearly half of the states it has been selling health plans previously. In 2017, Humana will be selling plans in no more than 11 states, which dropped from the 19 states it served this year.

The Henry J. Kaiser Family Foundation released a report earlier this year that finds 19 percent of marketplace consumers may have only health plan available to them next year. Additionally, the report found that 62 percent of consumers will have the ability to choose between three or more health plan issuers in 2017. This would be a decrease of 23 percent from 2016.

With the uncertainty of the ACA’s future and the instability in the public marketplace, more consumers are likely to face fewer options in the coming years on the exchanges as additional payers continue leaving the market. With higher financial losses looming, many payers are unable to keep selling health plans through the ACA marketplace.

READ MORE: Public Health Insurance Marketplace Still Benefits Consumers

 

Dig Deeper:

How Payers Could Succeed in ACA Health Insurance Exchanges

How the Affordable Care Act Changed the Face of Health Insurance

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