Blue Cross and Blue Shield of Minnesota is cutting back its participation in the state's Affordable Care Act insurance exchange next year after losing nearly $300 million in the individual market in 2015.
However, the large Blues insurer is not completely exiting the state-based marketplace. Fully withdrawing has its consequences: Federal law bars insurers from re-entering the marketplaces for five years, assuming they discontinue all types of individual policies.
Instead, Blue Cross and Blue Shield of Minnesota is dropping health plans with the broadest networks sold on and off the exchange and will push people toward its narrower HMO option called Blue Plus, according to the Star Tribune.
Plans with more limited networks usually offer cheaper monthly premiums, which appeal to the price-sensitive exchange crowd, but they've also created some confusion for members unfamiliar with the products.
“The premiums will be lower, but (consumers) may not get the same choice of doctors and hospitals that they had before,” said Roger Feldman, a health economist at the University of Minnesota. “It's one of the hard choices that's being increasingly faced in health insurance more generally.”
The health plan's decision is not unprecedented and has been embraced by other insurers around the country. Blues plans in Illinois, New Mexico and Texas—all of which are owned by Health Care Service Corp., a giant Chicago-based company that has lost billions of dollars on ACA plans—abandoned their broad-network exchange plans in favor of the narrow-network HMOs.
“Some of these Blue plans are not able to tolerate these significant losses,” said Cynthia Cox, an associate director and health insurance researcher at the Kaiser Family Foundation.
Dropping broad-network plans can be seen as a controversial risk dump for insurers. The sickest people who cost the most to insure often choose plans with higher monthly premiums to gain access to broader provider networks and fewer out-of-pocket costs. In Minnesota next year, those people may opt to buy those plans with other carriers, benefiting the Blues' bottom line while redirecting the insurance risk elsewhere.
Feldman said what the Blues insurer and other insurers are doing reminds him of when HMOs became the default health policy a couple decades ago, and when individuals and employees revolted at the restricted choice of providers.
“Almost everything has been tried at least once,” Feldman said. “This does represent a return to the model we had in the 1990s, and we went away from it because people were not willing to make the trade-off at that point.” He sees the employer market eventually making its way down this path as well, considering the ACA's “Cadillac” tax on high-cost plans goes into effect in 2020.
The Minnesota Blues ended 2015 with a $178 million net loss on $3.76 billion of revenue from its fully insured lines of business, according to financial documents. Those totals don't include business from self-insured employers. The company's underwriting losses just on individual-market plans—which don't include administrative expenses or taxes—totaled $280 million.
However, its Blue Choice subsidiary posted a $52 million net surplus on $895 million of revenue in 2015, according to separate financial filings. The unit offers narrow-network HMO plans. Blue Cross and Blue Shield of Minnesota did not respond to interview requests.
