Across the country, Blue Cross and Blue Shield companies are flooding the new insurance marketplaces with a range of plans, trying to protect membership footholds or expand them – but not in Iowa.
Wellmark Blue Cross and Blue Shield of Iowa is declining to sell federally-subsidized plans in the public exchange, opting instead to offer grandfathered, pre-Affordable Care Act health plans for renewal – under the approval of the state insurance commissioner – and sell ACA plans off-exchange. That’s opening up a small opportunity for a two-state start-up plan and other insurers to capture a piece of the new individual market and possibly some of Wellmark’s share of small and large employer plans.
In the first exchange open enrollment period, as Wellmark renewed grandfathered pre-ACA plans and sold ACA-compliant plans off-exchange, CoOportunity Health, a consumer-oriented and -operated plan started with federal loans. It garnered twice its expected enrollment selling on and off the exchanges in Iowa and Nebraska, gaining some 86,000 members in total – more than 15 percent of the collective enrollment for all of the country’s 23 cooperatives.
“The key to success in both is that we were on and off exchange in individuals, small and large group,” said CoOportunity Health Chief Operating Officer Cliff Gold, a former senior vice president at Wellmark.
After leaving Wellmark in 2008 and starting a management consultancy in San Diego, Gold returned to Iowa and co-founded the co-op with David Lyons, a former Iowa insurance commissioner and Iowa Farm Bureau Federation officer.
The co-op plan is focused on retaining membership in both states, including 2,000 small and large employer groups, while preparing to attract newcomers to the exchange in upcoming years, when Wellmark will likely join. Many of the Iowans who choose to renew low-premium pre-ACA plans are likely to be relatively healthier than those who immediately bought comprehensive exchange covers, Gold thinks.
“There are an awful lot of people who are going to come into the market,” he said. “We’re going to use more sub-segmentation in marketing and we’re going to target those we think are under-penetrated, a mix of the uninsured and underinsured.”
To balance the costs of members with chronic conditions and high-cost medication needs, the co-op will be trying to have a varied risk in its membership. Achieving varied risk may be especially challenging with Iowa’s new private Medicaid program. CoOportunity and Aetna’s Coventry plans will be available to individuals earning between 100 percent and 138 percent of the federal poverty level.
And then in the third year of exchanges, the state’s largest insurer is poised to enter the market.
Wellmark expects to participate in Iowa’s exchange in 2016, said Traci McBee, public and media relations manager. “We believe waiting one more year should allow for the continued challenges to improve,” McBee said, noting that even though it was off the exchanges, Wellmark sold the most ACA plans in Iowa and South Dakota.
“Our ACA plan enrollment numbers confirm that among all the confusion with the exchange during the past year, consumers were drawn to a brand they know and trust,” McBee said. “Wellmark's ACA plans were a new option and were just as competitive as those available on the exchange.”
Health plan pricing on the prairie
The next few years will see Wellmark, CoOportunity Health, Coventry and others in Iowa trying to find the right mix of pricing and services to attract and keep customers.
In several parts of Iowa, there will be regional competition from health systems. In northeastern Iowa, Gunderson Health System is selling its plan to individuals and small businesses on the exchange. In the northwestern corner of the state, in greater Sioux City, the hospital network Avera is selling both individual and group plans, while Sanford Health plans, the insurance division of South Dakota-based Sanford Health System, the nation’s largest rural nonprofit system, is selling group plans.
In Nebraska, CoOportunity Health is selling in all four insurance regions, alongside Blue Cross and Blue Shield of Nebraska, Coventry and the insurance arm of health system Alegent Creighton Health. Last year, CoOportunity had Nebraska’s lowest exchange plan premiums in all but the greater Omaha region, while in Iowa, group plans last year were sometimes lowest priced and individual plans were somewhat more expensive than competitor, Gold said.
For this next upcoming enrollment period, CoOportunity’s premiums in Nebraska will be increasing by only a few percentage points. But in Iowa, premiums could go up by as much as 14 percent, Gold said.
“That’s more than we could like, but it’s largely driven by the non-compliant plans” remaining in the market, Gold said, estimating that some 200,000 Iowans, including many farmers, remain in pre-ACA individual policies, many of them from Wellmark. Another big factor in rate increases is the federal reinsurance payments to insurers, which are set to transition from covering 80 percent of claims over $45,000 to 50 percent of claims over $70,000, up to $250,000.
At the same time, Gold noted, CoOportunity Health has gained some administrative efficiencies through its membership growth and now has revenue from premiums to advertise – something the ACA prohibited co-ops from doing with the start-up loans. “We think we were priced just right,” Gold said. “We think we have a better value proposition and good reputation.”