Dive Brief:
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Despite claims of market instability, some individual health plans are making money, Politico reported after reviewing financial filings for 29 regional Blue Cross Blue Shield (BCBS) plans.
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Politico found that the major reason the plans are now making money in the exchanges is that they increased premiums by more than 25% on average in 2017. This is likely because the plans figured out the actual cost of covering people in the Affordable Care Act (ACA) market after years of losing money there.
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Despite the positive 2017, the plans still face an uncertain future over the next two years and beyond, according to a new Robert Wood Johnson Foundation report.
Dive Insight:
Unlike other major payers, BCBS plans have largely remained in the individual market and ACA exchanges. Chris Sloan, senior manager at Avalere, told Healthcare Dive recently that the Blues "are holding up the market.”
They were in the individual market well before the ACA. “The Blues have been in this market and, in general, have been interested in making it work,” Chiquita Brooks-LaSure, a managing director at Manatt Health, told Healthcare Dive late last year.
Though the Blues found a way to make the individual plans profitable, a Robert Wood Johnson Foundation report said federal government actions could still wound the ACA exchanges. The report conducted by the Urban Institute and Georgetown University’s Health Policy Institute-Center on Health Insurance Reforms pointed to a few causes of uncertainty, including ending the individual mandate penalty and expanding short-term health plans and association health plans (AHPs).
The researchers interviewed 10 payers participating in ACA marketplaces in 28 states.
“In general, insurers are confident that given greater certainty about the direction of federal policy, they can continue to offer marketplace coverage and set premiums that accurately reflect their risk. However, they note that several of the policy actions discussed have led to significant insurer retrenchment and premium increases and will likely contribute to even higher premiums in 2019,” according to the report.
Facing likely more competition from short-term catastrophic plans and AHPs, some of the payers interviewed said they may enter those markets in order to retain healthy members interested in jumping to those plans. Critics of the Trump administration’s plans to expand short-term plans and AHPs charge that healthy people may flee the ACA marketplace for cheaper plans, which will destabilize the exchanges and increase premiums for those who are left.
For now, payers are watching Congress and seeing how the end of the individual mandate penalty may affect the exchanges in next year.
“Going forward, insurers will be watching closely how consumers respond to the lack of an individual mandate and the availability of new coverage options; a worsening of the marketplace risk pool will likely cause many insurers to reduce their market presence, will cause all to increase premiums and may lead to more exits,” according to the report.