When Blue Cross Blue Shielf of Minnesota, the largest Obamacare insurer in the state, announced last week that it was pulling out of the exchange it was a surprise to many observers. The obvious question was whether that decision would be one-of-a-kind or the beginning of a trend.
So far no other BCBS plans have announced they are dropping out. However, a story by Investors Business Daily points out many are losing money and are requesting massive premium increases this year to keep them in the game:
For example, Health Care Services Corp. — which owns Blue Cross affiliates in Illinois, Montana, New Mexico, Oklahoma and Texas — lost $1.5 billion on its ObamaCare-compliant plans last year.
As a result, it’s requesting a nearly 60% rate hike in Texas, and almost 50% in Oklahoma. HCSC pulled out of the New Mexico exchange last year after the state turned down its 50%-plus rate increase.
Blue Cross Blue Shield of Tennessee, meanwhile, lost about $300 million in ObamaCare’s first two years and is likely to lose another $100 million this year. It wants a 62% increase in premiums, on top of the 36% it got last year.
There are several more examples in the article including BCBS plans in Arizona, Alabama, Pennsylvania, Delaware and West Virginia.
State regulators won’t approve all of these big rate hike requests, but that may actually be worse for Obamacare in the long run. As the story notes, Health Care Services Corp. dropped coverage in New Mexico when its 50% rate hike request was denied. As one BCBS CEO pointed out earlier this year, “we can’t offer something for sale in this marketplace that we know every time it’s purchased we’re losing money.”
You also have to wonder what happens to their business if they do get the 50-65% increases they are requesting. That would keep the insurers in the game but what about the people paying those premiums? As insurance industry expert Bob Laszewski keeps pointing out, the Obamacare market may finally stabilize but that doesn’t mean it will be at a level most consumers consider a good deal.