NEWS

Wellmark spurns Obamacare exchange, but two competitors don't

Tony Leys
tleys@dmreg.com

Moderate-income Iowans who want to use Affordable Care Act subsidies to purchase health insurance still won't be able to choose policies from Wellmark Blue Cross & Blue Shield next year. But they should be offered policies from at least two competitors.

UnitedHealthcare, the nation's largest health-insurer, confirmed Monday evening that it plans to start selling policies to Iowans this fall on the online public marketplace, known as HealthCare.gov. Coventry Health Care, which this year is most Iowans' sole choice on the system, said it will continue marketing plans on the public marketplace. The online system, also known as an exchange, is the only place where Americans can buy policies that qualify for the Obamacare subsidies.

The addition of UnitedHealthcare means Iowans who want subsidized insurance could choose from plans offered by at least two companies. That allows consumers to compare prices, benefits and the networks of doctors and hospitals enrolled in each plan.

Insurance Commissioner Nick Gerhart said he expects a third, unidentified company to file an application this week to sell policies to Iowans on the exchange. Companies must declare this week whether they will be selling plans to Iowans on the public exchange.

"It's good news. People are going to have some choices," he said.

Wellmark, which dominates the state's health insurance market, disclosed Monday that it has decided for the third straight year not to offer policies on the online public marketplace.

"It's not a matter of if we will participate, it is really a matter of when," Wellmark Vice President Laura Jackson said in a conference call. She said the decision was made to protect the 1.8 million Iowans who already have Wellmark insurance.

UnitedHealthcare spokeswoman Jessica Kostner said her Minnesota-based company expects "to have a competitive product available for Iowa consumers that will be valuable in terms of quality, access, affordability, innovative design and service excellence."

Most Iowans who make less than 400 percent of the poverty level — or about $47,000 for a single person — can qualify for Affordable Care Act subsidies to help pay for premiums. But only about 38,000 Iowans — about 1 percent of the population — have received such subsidies, averaging $260 per month. Iowa has one of the lowest participation rates in the country, and a national expert said that's partly because the state's main insurer is not participating.

Larry Levitt, senior vice president of the Kaiser Family Foundation, said Iowa, South Dakota and Mississippi are the only states where the major Blue Cross insurance plan is declining to participate in the Obamacare marketplace. Wellmark also is the main Blue Cross carrier in South Dakota.

A Kaiser Foundation analysis found that just 20 percent of Iowans who could have qualified for premium subsidies last year took advantage of them, which was the lowest level in the country. South Dakotans, at 21 percent, were the second-least likely. "That seems like more than a coincidence," Levitt said. The national average was 42 percent. Mississippi's rate was 37 percent.

Levitt said some Iowans probably made a rational choice to maintain their unsubsidized Wellmark plans rather than accept a small public subsidy to switch to an unfamiliar carrier. But he said other consumers might not be aware of their options because the main insurer in the state is not using its marketing muscle to promote the subsidies.

Levitt said competition from multiple insurance carriers helps keep costs down and gives customers options of networks of enrolled health care providers. "More choice means consumers have a better chance of being able to go to the doctors and hospitals that they want," he said.

Consumers can still purchase Wellmark's individual insurance policies off the public marketplace, but those plans don't qualify for subsidies. However, the new plans must meet all new federal rules, including that they don't ask whether applicants have pre-existing health problems.

Jackson also disclosed Monday that her company is seeking to raise premiums by an average of 28 percent for about 30,000 individual customers who bought Wellmark policies since the Affordable Care Act took full effect in 2014. She said her company lost money on that group of customers, mainly because they used more health care, including prescription medications, than expected.

She said Wellmark and other insurers had expected the new customers would use relatively large amounts of health care, because many of them were previously uninsured. But the demand for services was even greater than predicted, Jackson said. The company also had to pay bills for 135 people who bought policies, used services and then canceled their policies, she said. A few of those people died, but many of them simply canceled after receiving pricey care, such as having a baby or undergoing hip-replacement surgery, she said.

The rate increase would not affect most Wellmark customers, who purchase insurance via employers or who bought individual policies before 2014. The premium increase also would not affect people who purchase Medicare supplement policies from Wellmark.

The proposed increase for individual, Affordable Care Act-compliant plans will be the subject of a July 25 hearing organized by the Iowa Insurance Division, a Wellmark spokeswoman said. She added that the company plans to raise premiums on small-employer plans by 5.9 percent to 10.7 percent. The company has until June 8 to propose increases on 110,000 individual policies that predate implementation of the Affordable Care Act.

Levitt, the Kaiser Foundation expert, said it's too soon to tell whether Wellmark's 28 percent proposed increase will be unusual for 2016. However, he said there is reason to think that Wellmark faces especially large costs in the pool of people in its new plans. The carrier retained many relatively healthy people in its old pools of customers, who could pass now-banned inquiries into their health status. And it isn't offering the carrot of public subsidies to attract other relatively healthy people into its new plans, he said. So the people most likely to buy the carrier's new plans are those with serious health problems, he said.

Most Iowans this year only had one carrier to choose from on HealthCare.gov. That carrier, Coventry, told the Register it intends to continue selling policies on the exchange for 2016. Another carrier that sold on the exchange, CoOportunity Health, went belly-up last winter after selling thousands of subsidized policies to Iowans.

Brian Gillette, chief operating officer of the Iowa insurance agency Group Benefits Ltd., said he wasn't surprised to see Wellmark continue to stay out of the Obamacare marketplace, especially as the U.S. Supreme Court is considering a major challenge to the law. That case, known as King v. Burwell, calls into question whether it's legal for the federal government to pay subsidies for policies purchased on the federal version of the exchange, which Iowa and many other states are using. The Supreme Court is expected to rule next month. No one is sure what would happen if the justices declare the subsidies illegal.