The federal government today published a report that could push some health insurers out of the major medical insurance market by the end of the year.
The report shows how much cash health insurers can hope to get from the Affordable Care Act reinsurance and risk-adjustment programs for 2016 — and how much they might have to pay into the ACA risk-adjustment program.
(Related: 10 Top ACA Individual Risk-Adjustment Bills)
A quick scan of the report shows that the list of carriers that may owe payments of more than $100 million in risk-adjustment payments for either the individual health insurance market or the small-group market includes Molina Healthcare and Kaiser Foundation Health Plan Inc. in California; Celtic Insurance Company, Molina Healthcare and Coventry Health Care in Florida; and Molina Healthcare in Texas.
Many more insurers owe payments in the $50 million to $100 million range.
Others are on track to receive more than $50 million in risk-adjustment program payments. Some of those insurers could suffer if the carriers that are supposed to feed cash into the risk-adjustment program in a given market fail to do so.
A copy of the report is available here.
ACA Risk Management Programs
The ACA reinsurance program is a temporary insurer risk management program that expired at the end of 2016.
ACA reinsurance program managers at the Centers for Medicare and Medicaid Services have been funding that program by collecting a flat fee for just about every health plan enrollee in the country. Managers use the cash to make help pay some of the bills for users of individual major medical coverage who have huge claims.
Insurers have already paid most of their ACA reinsurance bills. The June 30 report lists only the amounts insurers can hope to get from the reinsurance program, not any reinsurance program payment obligations.
A second ACA risk management program, the ACA risk-adjustment program, is supposed to even out health risk levels for issuers of individual and small-group coverage, to help issuers that end up with more than their fair share of older, sicker enrollees.
CMS risk-adjustment program managers give each enrollee a health risk score.
An insurer with low-risk enrollees is supposed to send cash to CMS. CMS then sends risk-adjustment cash to the insurers in a market with high-risk enrollees.
The new risk management program report shows that some insurers that faced huge risk-adjustment bills for 2015 found ways to slash their 2016 risk-adjustment bills.
Humana Inc., for example, cut the risk-adjustment bill for a unit in Florida to less than $1.6 million for 2016, from $135 million for 2015.
Other issuers still have very high bills.