But dealing with differing state laws isn’t new for insurance companies, though. Laws governing health, home, life and automobile insurance vary widely. If Roe v. Wade falls, additional abortion laws will be one more thing for health insurance companies to monitor, but the effects likely won’t drastically disrupt operations or the bottom line, experts say.
“There’s already a lot of this threading the needle that insurance companies have to do on a state-by-state basis,” says Lee Hasselbacher, a senior policy researcher at the Center for Interdisciplinary Inquiry and Innovation in Sexual and Reproductive Health at the University of Chicago.
Chicago-based Health Care Service Corp. operates Blue Cross & Blue Shield plans across Illinois, Montana, New Mexico, Oklahoma and Texas. Illinois is HCSC’s largest plan, with nearly 9 million members. Texas follows at 6.8 million members, and the remaining states each have fewer than 1 million. With more than $50 billion in 2021 revenue, HCSC employs about 24,000 people across its five operating states.
Illinois is one of six states that currently require private insurers to cover abortion, according to the Guttmacher Institute, an abortion-rights research group. But in HCSC’s other BCBS plans, restrictions on abortion coverage are more common. Neither Montana, Oklahoma nor Texas require private insurers to cover abortion services. Instead, each limit the circumstances under which abortion can be covered, according to the Guttmacher Institute.
If Roe v. Wade is overturned, experts expect a new wave of restrictions in those states, but they doubt compliance with new abortion rules would be too costly or cumbersome for insurers. Abortion represents a relatively small amount of business for most health insurers.
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“They won’t be particularly difficult to navigate,” says Amanda Starc, an associate professor at Northwestern University’s Kellogg School of Management, who studies insurance markets. “I would be shocked if this had a meaningful impact on overall plan costs."
Starc points out that any new coverage restrictions wouldn't apply to plans that HCSC administers for large employers that fund their own employee health insurance. Employer-funded plans are governed by federal law and exempt from state regulation, she says.
In a statement, HCSC declined to discuss the potential impact of new abortion restrictions on its business “The Supreme Court draft opinion that was leaked to the news (media) about Roe v. Wade is not final and we would not want to speculate on the final decision. Once a decision is announced, we will evaluate the implications and impact on our customers/members.”
UnitedHealthcare, which is based in suburban Minneapolis but is the No. 2 health insurer in Illinois behind BCBS of IL, offers insurance plans across the U.S. and will likely face similar issues as HCSC in navigating new abortion-related restrictions. UnitedHealthcare did not respond to a request for comment.
While new regulations may cause more work for insurance companies in the near term, the long-term effects will likely be minimal, Starc says, adding that it’s unlikely private insurers would consider pulling out of certain states.
“There are definitely regulatory reasons you could imagine exiting a market, but this is not one of them,” Starc says. “This would dramatically have to affect the firm’s overall profitability, and I think that’s unlikely to be the case.”
Crain’s Jon Asplund contributed.
This story first appeared in our sister publication, Crain's Chicago Business.