Another large not-for-profit health insurer, UPMC Health Plan, has said it has no intentions of quitting the Affordable Care Act's insurance marketplaces.
The provider-owned plan, which is part of the giant UPMC health system in Pittsburgh, also expects its ACA enrollment will continue to grow next year, UPMC Health Plan CEO Diane Holder said. UPMC has almost 122,000 on- and off-exchange ACA members this year.
“We are definitely committed to this marketplace,” Holder said. “It has been part of our mission and our strategy to offer broadly across the spectrum of people.”
Her comments come a few weeks after Kaiser Permanente CEO Bernard Tyson told Modern Healthcare his integrated delivery system was “absolutely” sticking with the exchanges for the long term. Kaiser has about 860,000 total ACA members.
However, Aetna, Humana and UnitedHealth Group—all investor-owned, national carriers—have trimmed their ACA exchange presence significantly for 2017, citing steep financial losses.
Other insurers and co-ops have expressed concerns heading into the next open enrollment, which starts Nov. 1. The not-for-profit Blue Cross and Blue Shield of Arizona reluctantly stayed in a county that faced the prospect of zero ACA insurers for 2017. ConnectiCare—a subsidiary of EmblemHealth, an insurer led by Karen Ignagni, former chief of America's Health Insurance Plans—sued Connecticut this month to approve its ACA premium rate requests and threatened to leave the marketplace.
UPMC sells plans on and off Pennsylvania's exchange. Its primary plan, which lost $26.6 million in 2015 before taxes, requested an average rate hike of 16.2%. Holder expects the insurer will be profitable on the ACA plans soon. The first three years have been difficult because companies did not fully understand how sick its targeted populations were, and they were unsure if the individual mandate penalty would be heavy enough to push younger, healthier people to buy coverage.
“Nobody knew for sure who was coming into the market,” Holder said. “If you don't get the healthier people, then you can't possibly support a balanced market.”
UPMC's initial ACA membership was only about 12,000 in 2014 because its primary competitor and rival, Highmark Health, significantly undercut the market by offering cheaper plans, Holder said. UPMC, like Kaiser, did not want to set premium rates too low in the chase for members. Nationwide, ACA premiums in the first two years were set a lot lower than analysts expected.
“We weren't the cheapest, so we didn't get a lot of market share that year,” she said.
Highmark has requested average ACA rate increases ranging from 25% to 48% for 2017, depending on the health plan product—a result of the large losses the Blue Cross and Blue Shield affiliate incurred over the first few years.
Highmark and several other insurers are suing the federal government to receive money promised through the risk-corridor program, a temporary measure to cushion losses in the early years of the ACA. UPMC has no immediate plans to join those lawsuits because the plan barely budgeted for those payments.
“It just felt speculative to our actuaries,” Holder said. Overall, she believes the marketplaces will stabilize, pending some federal changes, and she compared the choppy ACA rollout to the Medicare Part D prescription drug program.
On a consolidated basis, UPMC now earns more of its revenue from the health plan side than from its hospitals and doctors. Insurance revenue will increase by even more starting next year, as UPMC was recently selected as one of the winners of contracts for Pennsylvania's long-term-care Medicaid program. But Holder said the organization, which has faced scrutiny over its tax-exempt status, is still defined by the care of its clinicians.
“That just doesn't sound psychologically right to me,” she said. “We will always use the word provider before we use the word insurer.”