Blue Cross Blue Shield of Nebraska announced today that it will stop selling individual plans on the state’s Obamacare exchange. The decision will impact about 20,000 BCBS customers. The Omaha World Herald reports:
Blue Cross’ departure removes the state’s largest health insurer from the individual marketplace, leaving only Aetna and Medica Health to offer individual policies on the Nebraska’s exchange for 2017.
Steve Martin, the chief executive of Blue Cross, told The World-Herald that the company has lost $140 million on the exchange policies since 2014. If the trend continued, losses could total $250 million by the end of 2017, he said…
Martin said too often federal officials let people buy insurance just before they are due to receive an expensive health treatment and then drop their coverage immediately afterward. As a result, many of them pay no premiums when they are well, only when they are sick.
In other words, too many people are gaming the system. This is a problem insurers around the country have been complaining about for months. Earlier this month the Obama administration announced some changes aimed at cracking down on cheaters (and also probably aimed at keeping insurers like BCBS of Nebraska from jumping ship).
BCBS of Nebraska had already been approved for 30+% rate hikes but decided recently it would not be enough to allow them to cover their costs. Martin, the BCBS spokesman, tells the Lincoln Journal Star another year of losses could become “a hole we will never get out of.”
As a mutual insurer owned by members, he said the company operates on 1 percent margins, aiming to pay out 99 cents or less for every dollar of premiums it brings in. On the exchange policies, it has averaged a payout of $1.56 for every $1 brought in.
Another year of those kinds of losses, and “we would be digging a hole we will never get out of.”
BCBS posted an explanation for the decision on its website which labels the ACA marketplace “unstable.”
Serious issues with the health care law have made the public Marketplace unstable, which is driving increased costs and decreased competition and consumer choice.
In fact, since we began selling our individual plans on the ACA’s public Marketplace, we have lost approximately $140 million. We have a responsibility to all our members to remain stable and secure, and that responsibility will be at risk if we continue to sustain losses due to our participation in the ACA Marketplace.
The statement goes on to say that Blue Cross Blue Shield could return to the individual market in 2018 if they believe it has stabilized by then.
This is not the first BCBS to pull out of a state exchange. BCBS of Minnesota announced it was pulling out of that state’s exchange because of steep losses back in June. And last month a spokesman for BCBS in Tennessee agreed with the state’s insurance commissioner who said, “I would characterize the exchange market in Tennessee as very near collapse….” BCBST spokesman Roy Vaughn told the Tennessean his company expected to lose $500 million on the exchanges by the end of this year and said, “We agree with the assessment of the ACA marketplace in Tennessee.”