Insurer withdrawals in Iowa set off alarms for individual market

The exit of two insurers from Iowa's individual market heightens pressure on the Trump administration to decide whether it will support the Affordable Care Act-regulated markets or watch them explode.

Wellmark Blue Cross and Blue Shield was the first to announce it will stop selling ACA-compliant plans in Iowa in 2018, both on and off the federal exchange, though it will continue offering non-compliant plans. That will affect about 21,000 people. Wellmark said it lost $90 million over three years on ACA-compliant plans.

Then last week, Aetna said it will stop selling individual products on and off the exchange in Iowa. The decision, the insurer said, resulted from “financial risk and an uncertain outlook for the marketplace.” Aetna hasn't decided whether to keep selling exchange plans in its three remaining states.

That leaves just two insurers selling ACA-compliant plans in Iowa—Minnesota-based Medica, which sells plans in all 99 counties in Iowa, and Wisconsin-based Gundersen Health Plan, which sells in only five.

Medica hasn't decided whether to continue selling plans in Iowa in 2018, saying it “needs to carefully consider its options.” Gundersen said it would continue selling exchange products in the state. In most states, insurers have until June 21 to decide.

If Medica calls it quits, many Iowans will have no ACA-marketplace insurance options next year, and no plans that will allow them to receive ACA premium subsidies. That's an unprecedented situation with no clear fix.

About 51,000 Iowans enrolled in marketplace coverage this year, with most of them receiving substantial premium subsidies. Medica has about 14,000 members in Iowa, on and off the exchange.

“This is a problem created by the Affordable Care Act and needs to be fixed by Congress,” said Iowa Insurance Commissioner Doug Ommen, who was recently appointed by Republican Gov. Terry Branstad, an opponent of ACA who nevertheless expanded Medicaid.

But experts say Iowa's decision to let healthier consumers keep non-ACA compliant plans has driven up premiums in the ACA-regulated insurance pool.

For months, insurers around the country have threatened to stop offering exchange plans at the end of this year if the Trump administration and Congress don't lay out a clear regulatory framework allowing them to design and price plans without losing money. The uncertainty created by efforts to repeal and replace the ACA hasn't helped.

The administration and Congress so far have failed to resolve insurers' most pressing worries—continued funding of federal payments to carriers for cost-sharing reductions for low-income enrollees, and continued enforcement of the requirement that nearly everyone buy coverage. They'd also like to see risk payments restored to protect insurers from extremely high-cost claims.

Wellmark CEO John Forsyth said his company's exit from the Iowa market for ACA-compliant plans was not a political statement about GOP health policies. But, he added, policymakers need to offer solutions to stabilize the individual market, and “the timing and relative impact of those solutions is currently unclear. This makes it difficult to establish plans for 2018.”

Insurers also need to know the Trump administration will be an active partner in encouraging consumers to sign up for marketplace coverage, said Craig Garthwaite, a health economist at Northwestern University. That would help attract more young, healthy customers to balance out the costs of older, sicker enrollees and keep premiums down.

The CMS is rushing to finalize a market stabilization rule that insurers say would lower premiums.

But the administration undermined the exchanges in January by pulling enrollment advertisements, which was partly blamed for exchange enrollment dropping from 12.7 million last year to 12.2 million this year.

The clock is ticking. Insurers have to decide in the next two months whether to sell 2018 plans on the exchanges. “I don't know why any insurance company would want to participate in the individual market given the policy uncertainty that's flowing around it,” said Sabrina Corlette, a health insurance expert at Georgetown University. “The risks are so high.”