State’s Deputy Insurance Commissioner Weighs in on WINhealth Decision to Leave Individual Marketplace
By Tom Lacock, WMS Communications Director
CHEYENNE – Wyoming’s Deputy Insurance Commissioner Jeffrey Rude met with The Wyoming Medical Society’s Board of Directors Saturday in Cheyenne to discuss the impact of WINhealth’s decision not to participate in the Individual Marketplace in 2016.
The Individual Marketplace is an exchange on healthcare.gov, which allows those without insurance coverage to shop for and purchase health insurance from companies which offer their own policies directly to consumers. In Wyoming there are only two companies currently offering policies on the individual marketplace – Blue Cross/Blue Shield and WINhealth. This month WINhealth announced it would not take part in the individual marketplace in 2016.
According to Caitlin Rooney of WINhealth, those purchasing WINhealth products independent of group health insurance sales represent nearly 60 percent of WINhealth’s membership.
WINhealth struggles with risk corridor
According to a WINhealth news release, the decision not to participate stems from a recent announcement from the federal government regarding the risk corridor program and its decision to significantly reduce the reimbursement WINhealth would receive under the risk corridor program. WINhealth estimates the change would cost it $4.4 million.
Rude said the concept behind risk corridors was to mitigate the risk for insurance companies who were no longer allowed to choose who they would take as clients. Rude said some companies were stuck with those clients who were very sick and very expensive to care for and these risk corridors would take cash from companies whose claims were lower than expected and give it to those whose claims were higher than expected.
Politically, Rude explained, there were complaints that the risk corridors constituted a bailout of health insurance companies. In Dec. of 2014 there was a budget amendment at the federal level, passed by a Republican congress and signed by a Democratic president, requiring risk corridors to be budget neutral, meaning companies were paid out what they paid in. The insurance industry asked the federal government for $2.8 billion and received $362 million. Insurance companies got just 12.6 percent of what they had claimed to the risk corridor.
“The ACA is hard on small insurance companies,” Rude said. “When the announcement with risk corridors came out, it was no surprise that WIN couldn’t make it.”
Rude said the Insurance Commission is required to monitor the solvency of insurance carriers in the state and had concerns with WINhealth as early as 2014. He said the Insurance Commissioner started watching WINhealth and has been working with them on a monthly basis since then. Rude went on to say insurance companies receive reimbursements from the government in arrears which means it could take the government up to six months to reimburse insurance companies forcing them to have large reserves.
Those who have purchased WINhealth policies on the individual market will have to purchase insurance through another firm on the marketplace during the next enrollment period in November in order to get subsidies, or obtain insurance through other means. Those who have WINhealth individual plans will see no change in their coverage until Jan. 1, 2016. Rude said providers won’t see any changes, but speculated that payments from WINhealth will come in, but might be slower than expected.
The good news, according to Rude, is that WIN’s announcement could not have come at a better time for consumers. There is time for those with WINhealth individual plans to research other plans and make purchases through the marketplace. He added that had this happened four months ago it is likely those who have been a part of WINhealth’s individual market would have been forced to re-start their deductibles.
Rude added that the Centers for Medicaid and Medicare (CMS) have already forced insurers to set their rates for the 2016, as well as their intent to enter a new market. There will be no new insurers in Wyoming for the 2016 year, though he said there is interest from “larger companies,” considering taking part in the Wyoming insurance marketplace for the 2017 year.
“The CEO of healthcare.gov has talked to us a dozen times or so and he said he would personally contact any companies that Wyoming is interested in having in its marketplace for 2017,” Rude said.
With little competition in the Wyoming marketplace, Rude was asked whether he thought WINhealth’s primary competition in Wyoming, Blue Cross/Blue Shield, would raise its rates and he said the 2016 Blue Cross/Blue Shield rates have already been set with CMS and insurers are required to spend 80 cents on every dollar spent with the insurer on care for its clients or return that cash to its consumers. Rude said Blue Cross Blue Shield’s rates were set to be less than WINhealth this year in many of its plans.
Rude also said under the ACA if a company chooses to raise its rates more than 10 percent in a year, it is made public. He said Blue Cross/Blue Shield has not done that, though WINhealth had made that information public about its rates in some markets, such as Natrona County.