Insurers Face Uncertain Landscape -- WSJ

By Anna Wilde Mathews and Louise Radnofsky Features Dow Jones Newswires

Insurers are sending mounting signals of trouble next year for the marketplaces where consumers buy insurance, a looming issue not eased by House passage of the Republican health bill.

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Regulatory filings in two states with early deadlines, Virginia and Maryland, showed several insurers seeking major premium increases for their 2018 Affordable Care Act exchange plans.

Some insurers indicated that they could seek even larger increases, or potentially pull back, without guarantees that they will keep getting federal payments that help with costs for low-income enrollees.

Major exchange player Anthem Inc. said in a filing that it was seeking an average boost of 37.7% in Virginia. CareFirst BlueCross BlueShield is proposing a 52% average increase in Maryland and a 35% average rise in Virginia.

"These are obviously very high increases," said Chet Burrell, chief executive of CareFirst.

He said the insurer needed them because of the Trump administration's expected lack of enforcement of the ACA's coverage mandate, as well as previous underpricing and an increasingly sick and high-cost pool of enrollees. He warned that the company fears it is seeing the "early stages" of a so-called insurance death spiral, which involve a cycle of increasing rates and declining enrollment.

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The rate disclosures came as other insurers were warning about exchange pullbacks. Medica, a nonprofit insurer, said Wednesday it was considering withdrawing from Iowa's exchange next year, a move that would likely leave much of the state with no marketplace plans, after earlier-announced departures by other insurers. Medica, which has to file 2018 rates next month, can't make any decisions based on the Republican bill, said Geoff Bartsh, a Medica vice president: "It's an hour-by-hour change."

Mr. Bartsh said Medica was looking for programs that would help siphon off the costs of the sickest consumers, such as a high-risk pool and/or a reinsurance setup, as well as more certainty around the future of the marketplaces' rules and structures. Also, if the federal cost-sharing payments aren't locked in, "it's going to be pretty tough," Mr. Bartsh said. The House Republican bill doesn't appropriate money for the cost-sharing payments, leaving them uncertain.

Aetna Inc. said Wednesday it would pull out of Virginia's exchange in 2018, after saying Tuesday it was going to substantially scale back its already-limited marketplace offerings. Aetna pointed to "financial risk, and growing uncertainty in the marketplace" in its Virginia decision.

The new developments added to the signs of strain in exchanges around the country, kicked off by Humana Inc.'s announcement in February that it will next year withdraw from all marketplaces, leaving an area of Tennessee at risk of having no exchange insurers. Other insurers, including Anthem and Molina Healthcare Inc., have said they are weighing pullbacks.

Several insurers that disclosed exchange-plan moves Wednesday nodded to the uncertainty around the future of the ACA and key federal payments that help reduce costs for low-income enrollees.

Virginia so far has a number of insurers remaining in for next year, despite Aetna's announcement and an earlier disclosure by UnitedHealth Group Inc. that it will stop selling exchange plans in the state in 2018.

Still, some Virginia and Maryland consumers may see big boosts in their premiums next year.

Cigna Corp. sought an increase in rates on its individual Virginia plans that would amount to 44.7% on average, while in Maryland it asked for 37%. Kaiser Permanente's proposed average increase would be 15% in Virginia and 18% in Maryland.

Several insurers included warnings in their rate filings that they may need to change their plans, reflecting the uncertainty around the future of the ACA. Cigna noted that its "participation in Virginia's individual health insurance market in 2018 is contingent upon market conditions" and said it "reserves the right to withdraw plans at any time" before open enrollment starts next fall. Anthem, reiterating a stance it has made public, said in its Virginia filing that if the federal cost-sharing payments aren't locked in for 2018 by early June, it would consider tweaking its filing to shrink in, or exit completely, certain markets, or bolster its rate proposal.

CareFirst noted that its proposed rates were pushed up because it expects that the individual coverage mandate included in the ACA won't be enforced next year, "and this will have the same impact as repeal."

A Cigna spokesman said "pricing reflects market conditions and underlying economics."

Anthem said, "recognizing the dynamics and level of volatility in the Individual ACA-compliant product offerings, our rate filings reflect the increases in the cost of delivering medical services coupled with pharmacy expenses and overall increased use of health-care services by members in ACA plans."

Kaiser said in a statement that its rates "reflect our efforts to sustain and deliver high-quality health care for all our members over the long term" and it plans to continue offering exchange plans in every region where it operates.

Write to Anna Wilde Mathews at anna.mathews@wsj.com and Louise Radnofsky at louise.radnofsky@wsj.com

(END) Dow Jones Newswires

May 05, 2017 02:47 ET (06:47 GMT)