Financial strain imposed by the Affordable Care Act (ACA) may force North Carolina’s largest health insurer to quit the ACA market by 2017.
Ramping up to the release of its 2015 financials report in March, Blue Cross Blue Shield of North Carolina (BCBSNC) projected its second consecutive yearly loss. The combined hit on ACA-related business in 2014 and 2015 for the company could total $400 million and has prompted CEO Brad Wilson to consider pulling BCBSNC from the ACA market in 2017, The News and Observer reported.
Big Loss of Service
BCBSNC is the only qualified health plan insurer offering ACA plans in all 100 North Carolina counties. The company’s losses brought on changes in its service and operations in 2016. In addition to hiking premiums 32.5 percent, company officials issued a statement on January 24, 2016, announcing sales agents could no longer earn commissions on plans with start dates of April through December of 2016.
North Carolina Commissioner of Insurance Wayne Goodwin says the reduction of plan offerings could harm consumers.
“North Carolina’s largest health insurer, Blue Cross and Blue Shield of North Carolina, chose to reduce its plan offerings in several areas of the state for the 2016 plan year after experiencing a $123 million operating loss in 2014 and continued poor emerging experience in 2015,” Goodwin wrote to U.S. Secretary of State Sylvia Burwell on February 2. “The insurer also eliminated the availability of its broadest network plans in those areas, relegating thousands of North Carolina consumers to narrow-network plans.”
Statewide Insurance Problems
Goodwin wrote BCBSNC’s troubles are representative of problems facing other health insurers in North Carolina.
“The reduction in plan availability is not unique to our largest insurer or to the individual market,” Goodwin wrote. “From 2015 to 2016, the total number of plans available from insurers in the two markets went from approximately 1,700 plans to 683 plans. All three of North Carolina’s qualified health plan insurers reduced the number and types of plans offered on the exchange, as well as the areas in which they are available, for 2016.”
Goodwin says he is “highly concerned” insurers might withdraw from North Carolina’s individual health coverage market. Some North Carolinians seeking individual health coverage already have access to only one insurer.
“If that insurer stops offering coverage in those counties, some North Carolinians will have no access to health insurance at all,” Goodwin said.
Medicaid Not the Answer
North Carolina is one of 19 states that has not expanded Medicaid under the ACA, a decision some critics blame for BCBSNC’s financial shortfalls. Others blame market disruption caused by the ACA.
“North Carolina exercised its freedom to not expand Medicaid,” said Katherine Restrepo, health and human services policy analyst at the John Locke Foundation. “Medicaid expansion is not the way to solve the health insurance market disruption imposed by the federal health law. A heavier caseload on Medicaid creates a cost-shifting phenomenon in which private coverage will be even more expensive.”
‘Eliminate the Mandates’
Restrepo says less regulation of insurance products is the way to increase access and lower premiums.
“The way in which this can be remedied is to relax government price controls on health insurance premiums,” Restrepo said. “Eliminate the mandates for coverage for individuals and employers, the 10 essential health benefits, and North Carolina’s state health benefits mandates, and instead give the insurance companies the flexibility to offer products that tailor to individuals’ needs.”
Dr. Chris Conover, a research scholar at Duke University’s Center for Health Policy and Inequalities Research, agrees BCBSNC’s hardships extend well beyond North Carolina.
“In North Carolina, for the 2014 sign-up period, 28 percent of exchange enrollees were in the desirable ‘young’ age category of 18 to 34, versus 24 percent who were age 55 to 64,” said Conover. “Those figures are nearly identical to the national averages: 28 percent age 18 to 34 and 25 percent age 55 to 64. That tells us North Carolina’s situation is far from unique.”
Restrepo says ultimately, “it will take an act of Congress to fix the mess the ACA has created. A lot of that depends on who our nation’s leader will be next year.”
Michael McGrady ([email protected]) writes from Colorado Springs, Colorado.
Wayne Goodwin, “Letter to HHS Secretary Sylvia Burwell from North Carolina Insurance Commissioner,” February 2, 2016: https://heartland.org/policy-documents/letter-hhs-secretary-sylvia-burwell-north-carolina-insurance-commissioner
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