Blue Cross Of Louisiana Posts $59M Profit In ACA Exchange

Blue Cross and Blue Shield of Louisiana, the state's largest health insurer, made $59 million in the individual health insurance market last year, a crucial milestone for the insurer that marks its first profit in the "Obamacare" exchange.

The profit in 2017 in the market comes after three years of losses for Blue Cross totaling $200 million, along with double-digit premium increases for policyholders, as the market saw other insurers continually pull out. Only Blue Cross, with two companies; Vantage Health Plan; and a firm with two policyholders remain in the individual market, and Vantage said it posted its first gain in the exchange in 2017 as well.

"Had we not been able to make that line of business profitable, we would have had to pull out," said Brian Keller, senior vice president and chief marketing officer at Blue Cross.

The biggest reason for the gain in the market last year was because of repeated premium increases, said Bryan Camerlinck, executive vice president and chief financial officer. But the insurer also has benefited by incentivizing doctors to make patients healthier, which helps the pool become less risky. Medicaid expansion, which covers nearly half a million Louisianians, also pulled some sicker patients from the individual market.

"It's making a dent in the losses we had prior to that," Camerlinck said of the profit. "We look at the long-term perspective; that's how we can stay in a market and keep losing money."

The individual exchange, part of former President Barack Obama's signature health law, the Affordable Care Act, is where more than 100,000 Louisianians who do not get health insurance from their employers buy health insurance on the private market. Many of the people in the individual exchange are self-employed, independent contractors, small business owners or employees of smaller companies that are not required to offer their employees health insurance. Most get federal subsidies that offset the costs of premiums.

The market is smaller, and generally sicker, than the group market, which has been much more stable and profitable for insurers. While 16 insurers offered plans in the individual exchange in Louisiana in 2014, the first year of the exchange, Blue Cross and Vantage stayed, even despite millions in losses.

The profit marks a significant moment for the market, which was approaching a point of zero insurers if it remained unprofitable.

Still, uncertainties abound as Blue Cross approaches its rate filings for next year.

Congress repealed the individual mandate, a provision of the ACA that required people to have health insurance or face a penalty. That is expected to drive some healthier people out of the individual market, making it more expensive for insurers like Blue Cross.

"The healthy ones are going to drop out," Keller said.

And President Donald Trump's administration last year decided to stop funding cost-sharing reductions, or payments designed to offset costs for lower-income people. Blue Cross took a $10 million hit from that move last year, and it was a major factor in the insurer's decision to raise premiums by 18.5 percent in 2018.

However, a reinsurance proposal making its way through the Louisiana Legislature is working in Blue Cross' favor. The program would tack a relatively small fee on each insured life in the state, and the money would go to insure Blue Cross and Vantage against high-cost patients. The program would cover costs above $45,000 per patient, up to a $250,000 cap. It also would draw down federal dollars.

Camerlinck said it is too early to tell what will happen to rates in 2018. Aside from policy forces, health care is simply expensive, and new technology and pharmaceuticals are constantly increasing in costs. Blue Cross has been adding clinical programs designed to make people healthier, Keller noted, which helps tamp down costs.

The insurer will file rates later this year for 2019.

"It's going to take us a little while to get back to where we were," Camerlinck said.