One of the last remaining health insurers on the Iowa Obamacare exchange is warning it may pull out next year. If it does, tens of thousands of people would be left with no insurer offering subsidized health plans in their area. From the Des Moines Register:
Medica, a Minnesota based health insurer, released a statement suggesting it was close to following two larger carriers in deciding not to sell such policies in Iowa for 2018, due to instability in the market.
“Without swift action by the state or Congress to provide stability to Iowa’s individual insurance market, Medica will not be able to serve the citizens of Iowa in the manner and breadth that we do today. We are examining the potential of limited offerings, but our ability to stay in the Iowa insurance market in any capacity is in question at this point,” the company’s statement said.
As I mentioned yesterday, Aetna announced last month that it was pulling out of the Iowa Obamacare market. Another insurer, Wellmark Blue Cross & Blue Shield, also announced it was leaving last month. That meant tens of thousands of Obamacare customers were already going to be looking for a new insurer next year. Given the losses faced by the two larger insurers, Medica did not think it could handle the influx of sicker-than-expected enrollees:
The two large carriers said they’d lost tens of millions of dollars on the policies, largely because they covered too many older Iowans with chronic health problems and not enough young, healthy people. If Medica remains in the market, it could face the prospect of shouldering all of that risk by itself.
So Medica is looking to get out rather than get hit with losses it is unable to handle. In all, that will leave around 70,000 Iowans looking for subsidized insurance, but the only remaining Obamacare insurer in the state, Gundersen Health Plan, is based in Wisconsin and only offers plans in five counties of Iowa. A Gundersen spokesman tells the Des Moines Register it hasn’t decided whether it will sell plans in Iowa at all next year.
It’s important to note that Medica doesn’t seem to have made a final decision yet. It’s still possible it could remain in the state in some fashion or that Gundersen could decide to expand to pick up all the customers dropped by the other insurers. But it’s also possible Iowa could lose all of its insurers next year, leaving tens of thousands of people with no option for subsidized Obamacare coverage.
Update: An Iowan wrote to me today to point out that the worst case scenario might be quite a bit worse than I suggested. He writes that if all the insurers pull out of the state, “people like me, who have to obtain health insurance through the individual market, and who do not have a pre-Obamacare grandfathered plan…will not be able to buy any health insurance plan, no matter how much we are willing to spend.”
Without saying so directly, I was envisioning people losing their subsidies but being granted some kind of blanket waiver to allow them to buy insurance of some kind. This NY Times piece from last month suggests some plan-of-last-resort should be possible in such a case.
Katherine Hempstead, who studies health insurance markets at the Robert Wood Johnson Foundation, was more confident than former Obama administration officials that a motivated executive branch could devise new policies to help people in bare counties, such as letting them buy a Medicaid plan, or including them in the state employee benefit pool. “I do think there will be solutions,” she said.
So maybe the Trump administration working with the state could work something out, but no one knows for certain if it would be ready in time for 2018. So the real worst case here could be tens of thousands of Iowans losing their plans and having no options at all.