New Orleans Advocate,
The (LA)
April 24, 2018
Blue Cross and Blue Shield of Louisiana, the state's
largest health insurer, made $59 million in the individual health insurance
market last year, a crucial milestone for the insurer that marks its first
profit in the "Obamacare" exchange.
The profit in 2017 in the market comes after three years
of losses for Blue Cross totaling $200 million, along with double-digit premium
increases for policyholders, as the market saw other insurers continually pull
out. Only Blue Cross, with two companies; Vantage Health Plan; and a firm with
two policyholders remain in the individual market, and Vantage said it posted
its first gain in the exchange in 2017 as well.
"Had we not been able to make that line of business
profitable, we would have had to pull out," said Brian Keller, senior vice
president and chief marketing officer at Blue Cross.
The biggest reason for the gain in the market last year
was because of repeated premium increases, said Bryan Camerlinck, executive
vice president and chief financial officer. But the insurer also has benefited
by incentivizing doctors to make patients healthier, which helps the pool
become less risky. Medicaid expansion, which covers nearly half a million
Louisianians, also pulled some sicker patients from the individual market.
"It's making a dent in the losses we had prior to
that," Camerlinck said of the profit. "We look at the long-term
perspective; that's how we can stay in a market and keep losing money."
The individual exchange, part of former President Barack
Obama's signature health law, the Affordable Care Act, is where more than
100,000 Louisianians who do not get health insurance from their employers buy
health insurance on the private market. Many of the people in the individual
exchange are self-employed, independent contractors, small business owners or
employees of smaller companies that are not required to offer their employees
health insurance. Most get federal subsidies that offset the costs of premiums.
The market is smaller, and generally sicker, than the
group market, which has been much more stable and profitable for insurers.
While 16 insurers offered plans in the individual exchange in Louisiana in
2014, the first year of the exchange, Blue Cross and Vantage stayed, even
despite millions in losses.
The profit marks a significant moment for the market,
which was approaching a point of zero insurers if it remained unprofitable.
Still, uncertainties abound as Blue Cross approaches its
rate filings for next year.
Congress repealed the individual mandate, a provision of
the ACA that required people to have health insurance or face a penalty. That
is expected to drive some healthier people out of the individual market, making
it more expensive for insurers like Blue Cross.
"The healthy ones are going to drop out," Keller
said.
And President Donald Trump's administration last year
decided to stop funding cost-sharing reductions, or payments designed to offset
costs for lower-income people. Blue Cross took a $10 million hit from that move
last year, and it was a major factor in the insurer's decision to raise
premiums by 18.5 percent in 2018.
However, a reinsurance proposal making its way through the
Louisiana Legislature is working in Blue Cross' favor. The program would tack a
relatively small fee on each insured life in the state, and the money would go
to insure Blue Cross and Vantage against high-cost patients. The program would
cover costs above $45,000 per patient, up to a $250,000 cap. It also would draw
down federal dollars.
Camerlinck said it is too early to tell what will happen
to rates in 2018. Aside from policy forces, health care is simply expensive,
and new technology and pharmaceuticals are constantly increasing in costs. Blue
Cross has been adding clinical programs designed to make people healthier,
Keller noted, which helps tamp down costs.
The insurer will file rates later this year for 2019.
"It's going to take us a little while to get back to
where we were," Camerlinck said.
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