Problems with selling individual health insurance products in the new regulatory system have forced a midsize Northwestern carrier to pull out of Washington state, and executives at Aetna (NYSE:AET) to wince.
Moda Health, an arm of a dental insurer in Portland, Ore., announced Wednesday that it will continue to sell health coverage in Oregon and Alaska, but that it will pull out of the Washington state market.
Moda said it will fulfill all individual Washington state contracts signed or renewed before Oct. 31, 2015, until they expire. Similarly, the company will fulfill all existing group contracts in the state that were signed or renewed before Oct. 31, 2015, with an effective date before Jan. 1, 2016, until they expire according to their terms.
The Centers for Medicare & Medicaid Services (CMS) recently said the Patient Protection and Affordable Care Act (PPACA) risk corridors program can pay only about 13 percent of the amount the program owes insurers. The program is supposed to use cash from thriving PPACA exchange plan issuers to help issuers with struggling exchange plans. Too few issuers did well to meet obligations to the issuers that did poorly.
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Moda was hoping to get $89.5 million from the program but will get just $11.3 million, the company said.
“This is a significant disappointment, of course,” the company said.
The company said it will modify some of the products it continues to sell in Oregon and Alaska to incorporate what it has learned about the PPACA marketplace and its implementation.
“We continue to work closely with CMS and state insurance regulators to patiently and prudently sort through the various effects of the 2014 risk corridor payment reduction and to agree on necessary actions,” the company said in a statement.
But Moda has about $3 billion in annual revenue, and diverse sources of revenue, the company noted.
PPACA “is a work in progress, sometimes rewarding, sometimes frustrating, but we are confident that things will settle down in a year or two, and the important goals of the act will be achieved,” the company said.
Meanwhile, Aetna Chairman Mark Bertolini and other Aetna executives seemed apologetic today as they discussed the performance of their exchange plan program with securities analysts.