Some health insurers seem to have acted like Affordable Care Act reinsurance program magnets during the 2015 benefit year.
Ten are on track to collect about $2.3 billion in reinsurance payments from the U.S. Department of Health and Human Services for 2015, or about 29 percent of the $7.8 billion in ACA reinsurance program payments HHS expects to make for 2015.
The Centers for Medicare & Medicaid Services (CMS), an arm HHS, published ACA reinsurance program payment eligibility and ACA risk-adjustment program transfer estimates for 2015 in June.
The temporary program is supposed to pull fees from all U.S. insurers for 2014, 2015 and 2016 and push the cash to insurers with individual coverage enrollees who suffered catastrophic losses in 2014 or 2015, or will suffer catastrophic losses this year.
The members of Congress who wrote the ACA legislation created the temporary reinsurance program, and the permanent ACA risk-adjustment program, in an effort to respond to the fact that many previous efforts to set up health insurance exchanges and group health insurance buying programs have failed, because younger, healthier people tend to try to escape the system, and the sickest people tend to converge on the plans with the best benefits and the best provider networks and smother them with love.
Managing group health insurance programs may be even more complicated for health program officials than creating “artificial suns,” or self-sustaining fusion energy reactors, is for government laboratory scientists: The fusion reactor scientists, and the scientists at the National Aeronautics and Space Administration units that study the sun and other stars, simply have to understand, and control, magnetism, gravity and a few other straightforward forces to keep a fusion reactor humming along, rather than exploding, imploding or sputtering out.
Group health insurance program managers have take many different economic and psychological forces into account, including premium cost, subsidy amounts, tax incentives and penalties, baked-in underwriting risk, consumers’ bad habits, consumers’ efforts to improve their health, advertising and marketing spending (and effectiveness), one-on-one advice from agents and other sources, how well enrollment websites and other enrollment systems are working, and whether the consumers who need health insurance on a particular day are feeling like buying or feeling like saving.
ACA drafters hoped the reinsurance program would give insurers an incentive to sell affordable individual coverage, even though the ACA eliminated most of the traditional measures health insurers have taken to control claim risk, such as refusing to sell coverage to sick people and charging enrollees with health problems higher rates.
The risk-adjustment program is supposed to give insurers in the individual and small-group markets protection against taking more than their fair share of claim risk, by using cash from exchange plan issuers with enrollees below-average health risk scores to compensate the issuers with enrollees with above-average risk scores.
The ACA reinsurance program and the ACA risk-adjustment program are similar to risk-management programs in use in the Medicare products markets.
In theory, the programs should increase insurer confidence in selling major medical coverage and help them hold rates down.
In practice, some insurers have complained that the risk-adjustment program, in particular, has been structured in such a way that smaller, newer, struggle insurers that are good at getting young people covered may end up having to send cash to the health insurance giants.
Here is a list of the 10 insurers with the biggest reinsurance eligibility amounts given in the new CMS report, along with the amounts those insurers expect to get from, or pay into, the risk-adjustment program. Insurers can appeal the preliminary reinsurance and risk-adjustment amounts.
We have not adjusted the amounts for size, and, in many cases, the totals may simply reflect the reality that the insurers getting the reinsurance money are big.
We have used the same definition of “plan” given in the CMS report, and we have not tried to come up with totals or subtotals for different plans in the same corporate family.
Readers who would like to take another approach to crunching the numbers can find the complete CMS report here.
MNsure is the ACA exchange that serves Minnesota. (Image: MNsure)
10. BCBSM (Minnesota)
Preliminary reinsurance amount: $125,694,014.54.
Preliminary individual market risk-adjustment transfer: $29,086,945.86.
Florida has had high ACA public exchange enrollment levels. (Photo: AP)
9. Humana Medical Plan Inc. (Florida)
Preliminary reinsurance amount: $136,763,089.09.
Preliminary individual market risk-adjustment transfer: ($135,056,370.83).
Kaiser has been active on Covered California. (Image: Covered California)
8. Kaiser Foundation Health Plan (California)
Preliminary reinsurance amount: $193,562,111.34.
Preliminary individual market risk-adjustment transfer: ($82,078,859.73).
South Florida has had strong ACA exchange enrollment. (Image: Thinkstock)
7. Blue Cross and Blue Shield of Florida
Preliminary reinsurance amount: $203,599,485.48.
Preliminary individual market risk-adjustment transfer: $368,933,330.53.
Georgia has been another strong ACA public exchange market. (Image: Thinkstock)
6. Humana Employers Health Plan of Georgia Inc.