Alaska kicks Moda Health out of individual insurance market

Jan. 29--The Alaska Division of Insurance announced Thursday that it is forcing Portland-based health insurer Moda Health out of the state's individual marketplace for now, leaving Alaskans with only one choice for coverage: Premera Blue Cross Blue Shield.

Lori Wing-Heier, the division's director, said in a statement Thursday afternoon that staff has been closely monitoring Moda's financial status and consumer complaints, determining that Moda has inadequate capital to operate in Alaska in 2016.

* Read a copy of the Alaska press release and order

The announcement followed a day after Oregon regulators put new state controls on Moda, citing ongoing financial losses and giving the company until the end of the day Friday to devise a new business plan, The Oregonian newspaper reported in Portland.

At the end of 2015, Moda reported a net loss of $58 million and lower enrollments than it had projected, according to a letter to Alaska legislators signed by Chris Hladick, commissioner of the state's Department of Commerce, Community and Economic Development.

Paying premiums

Wing-Heier said that Alaskans enrolled in Moda insurance plans through the individual marketplace should continue to pay their premiums and the state will ensure that Moda continues to pay their claims.

However, Moda cannot renew Alaskans' plans once they expire. The company also cannot issue any new plans, Wing-Heier said.

"So for plans that renew in February, they have a very short period to find a new insurer as most plans renew once a year," Wing-Heier said in an email. "However if you renewed in Nov. 15, your plan is good until Nov. 16."

According to Hladick's letter, about 9,800 Alaskans currently have individual insurance plans through Moda. Right now, Premera offers the only other insurance plans on the individual market -- both on and off the federally run healthcare.gov, set up by the Affordable Care Act.

"It's certainly not great news to be down to one insurer because there are no options," Wing-Heier said. "So we're going to have to work hard at trying to get another insurer into the market to provide competition."

Last year, Aetna, State Farm and Assurant Health all decided to stop offering individual health insurance plans in Alaska. At that time, Wing-Heier said that having only one insurer left in the individual market was a scenario "you never want."

Wing-Heier said in an interview Thursday that it was too soon to say how the loss of Moda would affect 2017 health insurance premiums.

The company's departure will not affect this year's premiums, already approved by the Division of Insurance, she said. It will also not affect state employee and retiree dental plans, which are through Moda but based on contracts with another company, Wing-Heier said.

Melanie Coon, Premera spokeswoman, said she couldn't say Thursday how Moda's exit from Alaska's market for individuals would affect next year's premiums. She said the number of new customers Premera gets and their levels of medical needs will factor into the 2017 rates.

"It really depends on the types of members we get from Moda," Coon said. "I know that Moda was hit pretty hard with some sick people."

Alaskans on the individual market have already seen huge increases in their health insurance rates over the past two years. Premera's rate increases averaged 37.2 percent in 2015 and 38.7 percent in 2016, while Moda's increases were 27.4 percent and 39 percent, Hladick said in his letter to legislators.

"Despite these increases, Moda's financial condition has continued to deteriorate," he said.

Coon said that Premera has also lost money in Alaska in 2015 and 2014. She said the company is committed to staying in the state's individual market. Premera also operates in Washington with a subsidiary company in Oregon, she said.

"I think we have some strong reserves to make sure we can continue to serve," she said. About 10,000 people have individual health insurance plans through Premera, she said.

Moda's finances

Alaskans could enroll in new health insurance plans through Moda until Thursday. On healthcare.gov, the company offers the "metallic" health care plans with the lowest monthly premiums, compared to plans offered by Premera.

For instance, Moda's cheapest bronze plan in Anchorage has an estimated $566 monthly premium this year and $4,500 deductible. Premera's cheapest bronze plan has a $620 monthly premium and a $6,350 deductible, according to the website. (Those totals are without federal subsidies for low-income Alaskans.)

As Alaskans enrolled in 2016 health insurance plans, Moda battled ongoing financial problems.

In the fall, Moda pulled out of Washington and California. It also learned that it would not get all of the money it expected from the "risk corridor" provisions of the Affordable Care Act.

The provisions were supposed to help insurance companies if they had too many sick people and not enough money from premiums to pay medical bills. But Republican lawmakers inserted a provision into a 2014 federal spending bill that limited the risk corridor payments, The New York Times reported.

Moda expected to get $82 million from the risk corridor payments in 2014 and $69 million in 2015. "To date, they have received approximately $10.5 million," Hladick said in the letter, dated Thursday.

Coon said Moda appeared more optimistic than Premera about the payments.

Aimee Crocker, vice president at Enroll Alaska, said she noticed during this year's open enrollment period that Moda had some delays in processing applications. The company also stopped accepting credit cards as a means of payment to save money, she said.

Wing-Heier said that this month she requested Moda's year-end financial documents and enrollment numbers for testimony she had to give in Juneau. The results were grim.

"I ended up calling Oregon myself," she said, alerting regulators there this week.

Oregon has given Moda seven days to raise its capital, Wing-Heier said. She said she couldn't say how much Oregon had asked the company to raise its capital by, just saying it was a "huge number."

Robert Gootee, chief executive officer of Moda, Inc., the parent company of Moda Health, said in a brief statement Thursday that "bringing tens of thousands of people into the ACA marketplace, many of them with acute healthcare needs, has been a difficult process to manage."

"The cost of providing this level of care, with all its attendant uncertainties, has put an unprecedented financial strain upon our health plan," Gootee said. "So, at the direction of the Insurance Commissioners in both Oregon and Alaska, we have resolved to exit the Individual ACA marketplace in both states."

Gootee said Moda will make sure individuals have no interruption in their coverage as they transition to new carriers.

Wing-Heier said in the statement that Moda's insurance policies may still appear on Alaska's federally-run health insurance marketplace through the end of open enrollment on Jan. 31. However, she said the division is advising consumers to not buy Moda plans.

Alaskans already enrolled in Moda plans on the individual marketplace will have to switch once their policies end, she said. There will be a special enrollment period for that transition.

Wing-Heier said the state made the decision to restrict Moda's ability to issue health insurance plans to protect Alaska consumers.

The state's Division of Insurance has advised people with questions to contact their staff at 269-7900. The division has also published an online list of questions and answers about Thursday's announcement.

___

(c)2016 the Alaska Dispatch News (Anchorage, Alaska)

Visit the Alaska Dispatch News (Anchorage, Alaska) at www.adn.com

Distributed by Tribune Content Agency, LLC.