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Blue Cross Carrier to End Iowa Individual Sales in 2018

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At least one big health insurer has officially decided against trying to offer individual major medical coverage in its home state in 2018.

Wellmark Blue Cross and Blue Shield announced Monday that it will not keep any individual or family coverage written under the Affordable Care Act rules in force in Iowa after Jan. 1, 2018.

(Related on ThinkAdvisor: 7 threats to supplemental health in the major medical storm)

The decision applies both to individual coverage sold through the ACA public exchange system and to coverage sold through the off-exchange market, according to Traci McBee, a Wellmark corporate communications team leader.

Customers can keep any “grandfathered” or “grandmothered” individual or family coverage they own.

Insurers use the term “grandfathered” to refer to coverage sold under the rules in effect before March 23, 2010, when President Barack Obama signed the two bills that created the ACA into law. The ACA itself gives consumers the right to keep grandfathered coverage in effect as long as the issuers are willing to provide the coverage.

The term “grandmothered” refers to coverage sold from March 24, 2010, to Dec. 31, 2013. That’s the period after the ACA became law but before most ACA major medical requirements took effect. The U.S. Department of Health and Human Services lets states decide whether insurers can continue to keep grandmothered coverage in effect.

Wellmark’s decision to leave the individual market will affect 21,400 of Wellmark’s 1.7 million enrollees in Iowa, the company said.

The decision will have no effect on Wellmark’s group health coverage, or on holders of Wellmark’s Medicare supplement insurance coverage.

Wellmark generated $2.9 billion of its $3.6 billion in 2015 accident and health insurance premium revenue in Iowa, according to the National Association of Insurance Commissioners. Wellmark accounted for 50% of all 2015 Iowa accident and health premium revenue.

Wellmark lost $90 million on individual ACA-compliant coverage from 2014 through 2016, the company said. The company did not say how much individual major medical premium revenue it generated in Iowa over that period.

Wellmark reported in a 2016 actuarial filing that it had spent $18 million on claims for one patient with a severe, complicated genetic disorder in 2015 and expected to spend about $10.5 million on claims for that patient this year.

John Forsyth, Wellmark’s chairman, said in a statement that the individual major medical insurance needs to be stabilized.

“No one really benefits from rising costs,” Forsyth said in the statement. “While there are many potential solutions, the timing and relative impact of those solutions is currently unclear. This makes it difficult to establish plans for 2018.”

Wellmark Blue, a unit of Des Moines, Iowa-based Wellmark Inc., now competes in Iowa’s individual market against plans offered by units of four other carriers: Aetna Inc., Anthem Inc., Medica and UnitedHealth Group Inc.

Wellmark has been cautious about the ACA individual market from the beginning. In 2014, it sat out of Iowa’s ACA exchange market because of concerns about program stability.

Executives from all of those other carriers have suggested that they are reducing their participation in the individual major medical market in 2018 because of concerns about past losses and uncertainty about 2018 market rules.

The ACA, and federal regulations based on the ACA, are still in effect for 2018.

Republican leaders in Congress are trying to change the ACA, but they have been having trouble coming up with a bill that can attract majority support in the House, according to press reports.

— Read House GOP Cools to Revised Health Measure Pushed by White House on ThinkAdvisor.

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