After three years, UPMC Health Plan, Highmark see reversal in marketplace fortunes
For Highmark, it has meant crippling losses and a retreat from outlying counties, while
Both insurers have been enrolling or renewing members since
Many of the early problems may look like minor inconveniences compared with the threat the landmark legislation now faces. But they also may have set a course for its demise.
Early pricing strategies
In autumn 2013, just weeks before the Affordable Care Act's health insurance marketplace website would stumble out of the starting gate,
A few blocks west, Highmark had moved aggressively price-wise into the marketplace, offering its silver plan for
Today, the picture looks much different.
Highmark has been hit with losses exceeding
The insurer had calculated the potential for other risks, too, but misjudged those risks. Enrollees -- perhaps after years without coverage -- swarmed to the health care system to address long-neglected, often chronic, medical issues. Meanwhile, young, healthy individuals whose premiums could have offset the cost of caring for the other group stayed out of the risk pool, undeterred by the threat of financial penalty.
By Highmark's estimation, it was incurring
Not that it was evident at the time. "We didn't know if Highmark was going to make money or lose money," said
Now everyone knows and, with the fourth round of open enrollment underway through
For 2017,
Highmark now plans to maintain a marketplace presence in only 12 of those counties:
Younger, healthier, not participating
Roughly speaking, Highmark's
The first was a miscalculation about how much enrollees would use their newly acquired health coverage, even as younger, healthier people stayed away. The second was counting on early assurances by the
"We didn't know how people would react to the mandate [to buy insurance], whether it would be strong enough to get the younger, healthier risk group into the pool," said
"We didn't know that people would not pay premiums, that they could utilize the service and not pay the premium, only to return [to the marketplace] the following year."
Highmark was far from alone in finding claim costs outpacing premium revenue, and
The dearth of healthy folks heeding the individual mandate was "equally if not more critical" than the high use by those who did enroll,
Then there was the now much-discussed issue of "risk corridors" payments, meant to protect insurers in the individual and small group markets against major claims costs during the first three years. Those are the same payments Highmark and a handful of others are now suing the federal government to collect.
The idea was simple: To help stabilize the marketplace in its early years, plans that profited above a certain amount would return some money to a pool, from which payments would be made to plans with higher-than-expected costs.
In an
But that sentence was immediately followed by this: "However, if risk corridor collections are insufficient to make risk corridors payments for a year, all risk corridor payments for that year will be reduced pro rata to the extent of any shortfall."
Said Highmark's
That's how
Meanwhile, all across the country, participating insurers were making calculations and forecasts effectively blindfolded.
"If you think about how an insurance company looks at trends, you have to have some steady member participation,"
No payments coming
As for risk corridors payments, the first concrete sign of trouble from CMS didn't come until
For 2014, CMS said in the
But, the agency said, those with unexpectedly high costs had submitted
Only 12.6 percent of the insurers' losses would be covered. For Highmark, that meant
That forced some recalibrating. "If the risk corridor is not going to help stabilize the market, then we need to turn to other things to consider,"
In October, the
The previous year,
"Committed to this population"
"We are used to a population that needs help and support,"
The insurer takes "a very, very aggressive" approach, making sure members see a primary care physician on a regular basis, offering gift cards arranging for transportation if necessary, and helping them manage chronic conditions, such as diabetes or high blood pressure.
His choice for incoming health and human services secretary, Georgia Rep.
Whatever changes are coming,
"There has been a lot of good that has come out of the ACA, and I hope what happens is that they keep what's good and fix the things that are bumpy."
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