June 24, 2016
Minnesota Blues' decision to alter ACA plans mirrors stampede to narrow networks
By Bob Herman
Blue Cross and Blue Shield of Minnesota is cutting back its participation in the state's Affordable Care Act insurance exchange next year after losing nearly $300 million in the individual market in 2015.
However, the large Blues insurer is not completely exiting the state-based marketplace. Fully withdrawing has its consequences: Federal law bars insurers from re-entering the marketplaces for five years, assuming they discontinue all types of individual policies.
Instead, Blue Cross and Blue Shield of Minnesota is dropping health plans with the broadest networks sold on and off the exchange and will push people toward its narrower HMO option called Blue Plus, according to the Star Tribune.
Blue Cross and Blue Shield of Minnesota's decision is not unprecedented and has been embraced by other insurers around the country. The Blues plans in Illinois, New Mexico and Texas—all of which are owned by Health Care Service Corp., a giant Chicago-based company that has lost billions of dollars on ACA plans—abandoned their broad-network exchange plans in favor of the narrow-network HMOs.
Dropping broad-network plans can also be seen as a controversial risk dump for insurers. The sickest people who cost the most to insure often chose plans with higher monthly premiums to gain access to broader provider networks and fewer out-of-pocket costs. In Minnesota next year, those people may opt to buy those plans with other carriers, immediately benefiting the Blues' bottom line while redirecting the insurance risk elsewhere.
Comment by Don McCanne
The individual insurance market has always been unstable. The struggles insurers face are not only how they can make their products more effective and accessible to more individuals, but especially how they can ensure that revenues exceed expenditures. So what can we learn from the response of Blue Cross and Blue Shield of Minnesota to unfavorable market conditions?
Most importantly, they are dumping risk onto other insurers. That places a burden on the other insurers which then translates to even higher premiums, higher cost sharing, fewer benefits, or any combination of these for individuals already enrolled in the other insurance risk pools. That's not good.
In order to maintain a presence in the market, they are continuing to offer its narrow network HMO option. Those who transfer into that plan will have more limited choices of health care providers, perhaps losing coverage for their current health care professionals and institutions. That's not good.
This instability in coverage is a defining feature of private health insurance plans. The insurers will always continue to introduce innovations as they compete for an advantage in the marketplace. When their products appeal to people who have greater health care needs, their model doesn't work, and they pull out. What is working now is passing more costs onto the patients through greeter cost sharing, and limiting access to care by narrowing the networks of covered providers. That's not good.
What seems obvious is that we have selected the wrong intermediary for financing health care. The private insurers function with a business need requiring costly administrative excesses, and they have a need to conform their products to meet business goals rather than patient service goals. That's not good.
What would work best for patients would be a single payer national health program - an improved Medicare for all. But the Republicans are opposed, and the Democratic platform committee just voted to exclude single payer from their platform, and no other political party has enough traction to prevail in the elections. That's not good.
Even though the Medicare for all concept remains popular, it seems that we will not have single payer in the foreseeable future. Churchill and others have said that a democracy is the worst form of government other than all of the others, but sometimes you wonder.