CHICAGO (AP) — Only six insurance carriers have told Illinois that they want to sell health coverage through the state’s new Patient Protection and Affordable Care Act (PPACA).
The carriers hope to sell 165 policies — or “qualified health plans” (QHPs) — through the exchange, but the numbers are far lower than expected.
PPACA calls for the U.S. Department of Health and Human Services (HHS) and states to set up exchanges, or Web-based health insurance supermarkets, for individuals and small groups by Oct. 1.
HHS originally asked carriers that want to sell QHPs through the state exchanges HHS will run to submit applications by Tuesday. HHS has pushed the deadline back to Friday.
States that are running their own exchanges have set a variety of different insurer application deadlines. Vermont, for example, already has posted rate proposals from two carriers that hope to sell coverage through its exchange.
If many exchanges attract fewer health plans than organizers expect, that could mean less competition and higher premium prices for exchange users.
Illinois officials had been estimating that 16 different carriers would offer 260 health plans through their state’s exchange. The officials based that estimate on a survey the Illinois Department of Insurance conducted last fall.
The Illinois numbers are an early indicator that insurers are backing away from full participation in the online marketplaces, said Robert Laszewski, a former insurance executive turned industry consultant.
“I’m hearing that from other carriers in other parts of the country as well,” Laszewski said. “They are terribly fearful that if there’s a poor launch (of the marketplaces) they’re going to get blamed for a mess.”
The carriers may participate in the marketplaces in their core customer states, bypassing other states in the first year, he said.
Insurers are concerned, in part, that people who have expensive medical conditions will sign up immediately for coverage through the exchanges, while healthier customers will wait. That could leave an insurer, at least initially, without enough premium revenue to handle the medical bills it receives. They’re also concerned about how fees and coverage restrictions mandated by the law will affect the profitability of their plans.
Gov. Pat Quinn, D, expressed optimism in a statement released Wednesday, saying he’s “very encouraged” multiple plans are being offered.
Mike Claffey, a Quinn spokesman on health care, said the prediction of higher numbers “included multiple subsidiaries of several different insurers” and plans “the federal government later ruled out for states not operating their own (marketplaces). The Department of Insurance is confident that the number of plans filed will allow for robust competition between insurers and broad choice for consumers across the state.”
The national health law requires most Americans to have health insurance beginning Jan. 1. Many people who are now uninsured will buy health insurance through the government online marketplace because they’ll be able to get tax credits to help pay for it. The online marketplaces — one in every state — are scheduled to be up and running by Oct. 1.