A little healthy optimism
Covered California plans’ insurers move forward
Despite a cloud of uncertainty hanging over federal health care policy, several of the nation’s largest insurers are moving forward with plans to sell insurance on the Covered California exchange in 2018.
Kaiser Permanente, Blue Shield of California and Health Net, which collectively cover two-thirds of the 1.3 million Covered California enrollees, intend to continue selling plans on the California exchange, or marketplace, in 2018. The move is an incremental but important signal of confidence from insurers that they expect the exchange to continue operating next year, at least in California, whose exchange has been one of the most stable in the nation.
“We are planning to participate in each of the marketplaces in which we currently operate ... in 2018 as we have in years past,” Kaiser Permanente CEO Bernard Tyson said in a statement.
Anthem Blue Cross of California, which covers a quarter of the exchange’s enrollees, is the last remaining large insurer on Covered California that has yet to clearly indicate its plans for 2018.
Anthem CEO Joseph Swedish said in an earnings call with investors Wednesday that the insurer “will focus on participating in the markets that are on a visible path toward sustainability,” but he did not specify which states or regions he considers sustainable. A company spokeswoman declined to say whether it views California as a sustainable market.
Anthem plans to file preliminary 2018 rates with the assumption the federal government will continue funding cost-sharing subsidies, billions of dollars that go to insurers — but is prepared to pull out of some exchanges if the funding is not secured by early June, Swedish said.
The White House confirmed Wednesday it will continue funding the subsidies, House
Minority Leader Nancy Pelosi, D-San Francisco, said in a statement. It is unclear how long the payments will continue.
Insurers in California face a May 1 deadline to submit applications to Covered California indicating their plans for 2018. That will kick off a months-long negotiation process to determine rates for consumers.
Kaiser sells health plans on exchanges in Maryland, Virginia, Georgia, Colorado, Washington, Oregon, Hawaii and the District of Columbia. The Affordable Care Act created the exchanges to help consumers shop online for health insurance. Some states, including California, run their own exchanges, while others use the federal exchange, known as Healthcare.gov.
Centene Corp., the St. Louis insurer that last year acquired Health Net — the fourth largest insurer on Covered California — will proceed according to “business as usual” and sell plans on the exchanges in 2018, executives said in a quarterly earnings call with analysts Tuesday.
“It is easy to get caught up in the constant noise, but I believe it is time to move past the unfounded headline volatility,” Centene CEO Michael Neidorff said during the call. “Whether the ACA remains the law of the land or a repeal-and-replace comes to fruition, Centene is well-positioned. As to the exchange, we see nothing at this point to prevent us from proceeding in our 2018 marketplace participation.”
Centene sells on exchanges in 13 states, including California. It saw better-than-expected growth in its exchange business in 2016.
Having multiple insurers on the exchange means consumers have more choices and competitive pricing.
“Those insurers can compete with each other and offer better value,” said Cynthia Cox, a health policy expert at Kaiser Family Foundation, which is unrelated to Kaiser Permanente. “And people who have certain health conditions may need a certain doctor, and might want a choice of picking which provider network is better for them.”
The decision by the insurers to move forward on the exchange comes amid continued talk by Republicans in Washington of upending the Affordable Care Act. However, they have yet to produce viable legislation to achieve that goal. The uncertainty has been enough for some major insurers to exit exchanges in other states: Humana announced in February that it will withdraw from all exchanges created by the act in 2018, leaving some areas of Tennessee with no insurer on the exchange. And Aetna recently said it will pull out of the Iowa marketplace next year. Neither insurer is on the California exchange. But the state did see United Health, the nation’s largest insurer, withdraw from Covered California last year.
Cox noted that of the insurers that have said they’re staying on the California exchange, Kaiser Permanente and Blue Shield of California are nonprofit, while Centene mostly served Medicaid patients before it joined the exchange. As such, they “may be less subject to the same pressures that for-profit companies like Aetna or United Health might be,” she said. “There’s probably still a question about the remaining insurers and whether they’ll stay or not.”
For months, insurance executives have said that they need assurance from Congress or the White House that the federal government would continue funding the subsidies before they could decide whether to remain in the exchanges next year. The apparent White House decision to continue the subsidies may provide that assurance, though how long the administration intends to continue them is unknown.
The subsidies were created under the ACA to help the lowest-income Americans afford health care by lowering their co-pays and out-of-pocket costs. The money, which amounts to $7 billion a year, goes to insurers to defray the cost of providing health plans to those who would not be able to afford them otherwise. Nearly 700,000 low-income Californians have made use of them. Without the subsidies, insurers stand to lose billions in revenue and would have to increase premiums significantly, insurance executives say. Congressional Republicans want to eliminate the subsidies because, they have argued in a pending lawsuit, the Obama administration never had the authority to enact them because Congress did not explicitly allocate the money.
A study released Tuesday by the Kaiser Family Foundation found that cutting off the cost-sharing subsidies would cost the federal government $2.3 billion more next year.
Lauren Bartlett, a spokeswoman for Blue Shield of California, said in an email that the insurer plans to submit its application and “intend(s) to work with Covered California to figure out a successful market in 2018.” The insurer sells only on the California exchange.
Covered California Chief Deputy Executive Director Doug McKeever said Friday that the agency has not heard from insurers planning to exit the marketplace.
“There’s a great deal of angst from insurers as to how they’re going to price the product,” McKeever said at a health care journalism conference in Atlanta. “We’ve not heard from any insurers that they are going to be leaving.”