As I mentioned a couple of weeks ago, health insurance co-ops are expanding. Co-ops from Massachusetts, Montana and Kentucky are crossing borders to operate in New Hampshire, Idaho and West Virginia. Idaho has a competive exchange market in 2014. New Hampshire and West Virginia have non-competitive Exchange marketplaces as they each had only a single Blue offering plans.
The Christian Science Monitor reports that it is not just non-profit public good orientated co-ops that are looking to expand their Exchange footprints.
“At this point not very many insurers [are] pulling out,” says Jenna Stento, a senior manager at Avalere Health in Washington, a provider of information and advisory services in the health-care industry. The trend “doesn’t seem to be going in the direction of less competition.”
She says the Blue Cross family of insurers, for example, looks likely to expand its presence from 47 states in the first year of the Affordable Care Act (ACA) exchanges to 49 states when enrollment starts for 2015.
Another straw in the wind: The directors of three state exchanges under the ACA told reporters on a recent conference call that they expect new insurance companies on the playing field for 2015. Those states were California, Kentucky, and Washington.
And in New Hampshire, with only one insurer selling on its exchange for 2014, two more firms are expected to offer coverage in 2015, according to news reports….
Insurers don’t have to disclose their preliminary plans for several more weeks. At the end of April, preliminary networks, plan designs and premiums are due for plans that want to sell on the Federal exchange. State based exchanges have different deadlines. This is a soft deadline. For instance, Mayhew Insurance last year threw seven major configurations at our regulators for approval. We withdrew one configuration because our market research folks figured it would not be worth the set-up costs as it could not sell. We withdrew another because half a dozen groups that had an MOU with us withdrew the understanding, thus blowing up the relevant network and pricing model. We only sold half of what we filed.
A broader example is Aetna. Last year, Aetna filed preliminary plans in most states where it operated. However in September when final filings were required, it withdrew from Exchanges in several large states. It did not think it could make money on Exchanges, so it pulled out.
One of the big questions that the early 2014 experience has raised is whether or not the insurers think they can make long-term money on the Exchanges. There will be a few insurers leaving the market, but there looks like a significant number of new insurers entering the market. This will be especially important in low-competition states and regions. I don’t think insurance competition is a panacea for cost control purposes, as we’re basically pass through entities in a quasi-public regulated entity model now, so there is some area of savings. Some regions will see significant cost savings because new entrants won’t have pre-exisiting relationships with high cost providers whom they have to keep happy. The new entrants can tailor networks based solely on Exchange criteria instead of a multi-objective function of keeping a high cost provider happy for commercial and Medicare Advantage providers.
As long as insurers think they can make money on Exchange, the Exchanges are healthy enough.