Charles Gaba has a round-up of the states where Humana is pulling out of the individual markets in some states:
There are a fewof points to make. The biggest loss is in Alabama as that is down to a single issuer state. Situations like this is when a public option would have been extremely valuable as a means of keeping an insurer honest.
Next, excluding Alabama, most of the policies being terminated are either off-Exchange or grandmothered/grandfathered policies that were never ACA compliant. The transitional plans were either live before PPACA was signed or sold between 2010 and 2013 and their lives extended as part of the “If you like it, you keep it” tempest in a teapot.
The final point is that size matters.
Being an insurer covering only a couple thousand lives on a commercial market with strict MLR restrictions is tough.
I quipped on Twitter last night that if I worked for Humana in my old position where I had QHP compliance responsibilities, my salary would have eaten up a decent fraction of the allowable administrative costs in a few states. My work in my previous position minimally scaled with enrollment. Large membership pools spread my costs out from being dollars per member per month (PMPM) to nickels PMPM as I had to do roughly the same amount of work to get a new plan approved that we sold to seven members or an approved plan that we sold to 72,000 members. This is especially true on the grandfathered and grandmothered policies that Humana is phasing out as those policies have lower premiums because the people are healthier as they were medically underwritten out of the general pool and into the grandparent policies. Compliance costs including future plan year qualification costs for Humana in Kansas and Virginia would have been very high as a proportion of total revenue.
Alabama is the bad news from a policy perspective. Everything else is effectively background noise. The important questions is what does Humana do in the states where they have significant membership (excluding Alabama). If they stay in most of those states while cutting lose states with under 10,000 members then this is a mild course change. If they pull out of states where they have 30,000, 40,000, 50,000 or more members than that news is far more valuable and disturbing.