Two new federal programs that are supposed to protect health insurers against upheaval related to the Patient Protection and Affordable Care Act (PPACA) may do more for the market giants than for smaller, newer players.
This possibility emerges from a LifeHealthPro.com analysis of a giant batch of PPACA reinsurance and PPACA risk-adjustment program data that the Centers for Medicare & Medicaid Services (CMS) released June 30.
PPACA revamped commercial health insurance underwriting and product design rules which started on Jan. 1, 2014. To compensate for the effects of the changes, a temporary PPACA reinsurance program is supposed to protect eligible health insurers against part of the cost of catastrophic claims filed by enrollees in 2014, 2015 and 2016.
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The risk-adjustment program is supposed to shift cash from health insurers that have low-risk enrollees in PPACA-compliant individual and small-group plans to insurers with high-risk enrollees.
A third component of the “three R’s” PPACA risk-management system is a temporary risk corridors program that’s supposed to shift cash from insurers with especially good underwriting results in 2014, 2015 and 2016 to insurers that have especially poor underwriting results during those years.
CMS put preliminary reinsurance and risk-adjustment program payable and receivable estimates for 2014 in the report that came out June 30. Officials arranged the data by state and did not make any effort to provide totals for related groups of insurers.
Members of the public who wanted to look for insurers getting especially large or small amounts from the programs had to page through the report manually. CMS did not provide any revenue, enrollment or per-enrollee figures that members of the public can use to put the data in context.
CMS had one risk program application process for insurers with more comprehensive data and another process for insurers with less data. We fed the data for the issuers that used the standard application process into a spreadsheet.
We found, for example, that Blue Cross Blue Shield of Texas, a unit of Health Care Service Corp., is on track to get more PPACA reinsurance program money than any of the 481 other individually listed issuers that’s eligible to get reinsurance money through the standard application process. Texas Blue could get $549 million in reinsurance money.
Because of the way the reinsurance program is set up, every carrier in the program pays a flat fee per enrollee to participate. The median payout for an individually listed issuer that’s eligible to get reinsurance money through the standard process appears to be about $3.2 million.
In the risk adjustment program, the top recipient of PPACA risk-adjustment money could be Blue Cross and Blue Shield of Florida. The preliminary report shows it could get about $222 million in individual insurance risk-adjustment money from other carriers through the standard application process.