ACA Participation Boosts Pressure on Blue Plans

Blue Cross Blue Shield (BCBS) plans saw a 75% drop in net income from 2013 to 2015, according to a report by A.M. Best. BCBS plans faced a higher risk population in the ACA exchanges. The drop in earnings can also be blamed on higher costs of generic prescription drugs and expensive new specialty drugs. BCBS plans saw a 35% drop in underwriting earnings in 2015 and a 35% drop in investment income from 2013 to 2015. Also, the ACA health insurer fee resulted in a 1.3% decline in consolidated earnings in 2015. The fee has a greater effect on net income since is not tax-deductible.

High enrollment morbidity in the ACA exchanges has a large negative financial effect on the whole industry, including BCBS companies. Carriers are trying to attract younger and healthier enrollees through active outreach, technology, and customer engagement. BCBS companies are looking to control the cost of care through narrow networks, disease management programs, better care coordination, and increased provider collaborations. These initiatives are particularly important in saving money by providing appropriate quality care for higher-risk individuals. A.M. Best expects the earnings pressure to continue at BCBS companies. The lower earnings and growth in premiums from increased membership may drive down of risk-adjusted capitalization.

Net-premiums grew 14% over the past three years for BCBS companies. The increase has been greater at publicly traded companies, which tend to be more active in Medicaid managed care and Medicare Advantage. Both of these programs have had stronger enrollment growth form the aging U.S. population and Medicaid expansion through the ACA.

Anthem Increases Discount on Medicare Supplement Plan F

Anthem Blue Cross increased its monthly “New to Medicare” discount in California from $15 a month to $20 a month for the first year members are enrolled in an Anthem Blue Cross Medicare Supplement Plan F. That adds up to a savings of $240 for the year. The discount is available to those who are 65 or older who are within six months of their Part B effective date and have a coverage effective date starting March 1, 2016 or later. Members can also save, each year, if they pay their annual premium up front, have another household member on an Anthem Medicare Supplement plan, or sign up to pay their premiums electronically. Drug, dental, vision, and other benefits are available to accompany the plan for additional costs. Medicare supplement plans provide guaranteed coverage for life as long as the member pays premiums on time and provides accurate information at the time of application.

Commissioner Complains About Blue Cross Rate Increase

Anthem Blue Cross is imposing a 9.8% premium increase on its small group health insurance policies. Insurance Commissioner Dave Jones is calling the increase unreasonable. “This…is the fourth consecutive rate increase by Anthem on small employers that the Department of Insurance found excessive and unreasonable. Over the last 24 months Anthem has raised rates on members in these small group policies an average of 24.9%. The Department of Insurance’s finding that Anthem’s rate increase is unreasonable is based on Anthem’s excessive return on equity or profits, its excessive pre-tax pricing margin, its unjustified high-pricing trend of 8.6 percent, which includes a prescription drug trend of 21.4%, and its failure to adjust the rate for the better health status of its remaining members. Also, last year, Anthem shifted $75.5 million of income to a premium deficiency reserve. This accounting maneuver was unwarranted and unjustified and decreased Anthem’s reported net income for 2013 and masked the fact that the company’s profit was over 20%. In five out of the last six years Anthem has attained a greater than 20% profit,” Jones said.

Blues to Dominate State Exchanges

Blue plans are likely to be among the leaders in the state exchanges where they can leverage their dominance into creating narrow-network plans that offer a price advantage over competitors, according to a report by Decision Resources. Humana is expected to be among  the five largest carriers in enrollment for each exchange it competes in. Centene is poised to capitalize on its position as a leading managed Medicaid carrier and could become a major exchange player nationally through its Ambetter plans. Through its acquisition of Coventry, Aetna is in a prime position to be a top exchange player in several states and is particularly strong in the Southeast.

However, the health plans’ participation in the exchanges is expected to decline along with rising merger and acquisition activity and the continued introduction of narrow network products, said Carolyn McMeekin, vice president of Insight Products for Decision Resources Group. For more information, visitwww.DecisionResourcesGroup.com.

Anthem Will Delay Some Individual Policy Cancellations

Californians have seen 1 million insurance cancellation notices. But a small subset is getting a reprieve. Anthem Blue Cross will delay the December 31 policy cancellations for 104,000 California consumers covered by individual and family (non-grandfathered) policies.

Anthem had informed Insurance Commissioner Dave Jones that, because of a computer glitch, 104,000 policyholders had not received 90 days’ notice of cancellation as required by law. Jones asked Anthem to send out new notices to the policyholders and give them the option to extend their policies with their doctors and hospitals at the same rates until February 28. Anthem will mail out new notices by November 15. If all 104,000 policyholders chose to keep their existing coverage through February 28th, they would save an estimated $23 million from Anthem’s 2014 rates. Policyholders must notify Anthem Blue Cross by December 15 if they want to keep their existing policies through February.

Commissioner Jones said, “Neither state nor federal law allows me to stop the 1 million cancellation notices sent to Californians, despite my opposition to these cancellations. We will, however, do everything within our power to extend existing policies where health insurers are not in full compliance with notice requirements.”

Anthem Blue Cross Bows Out of the Small Business Exchange

Anthem Blue Cross is withdrawing its bid to participate in the small business exchange. California insurance commissioner, Dave Jones had recommended that the company be excluded due to rate increases on California small business plans. Anthem remains in small group market outside the Exchange — giving businesses options and insurance market competition

Jones said, “Last month I recommended that Anthem Blue Cross of California be excluded from California’s small business health insurance exchange because of its pattern of excessive and unjustified rate increases on California small businesses. This recommendation was made pursuant to The Affordable Care Act, which directs insurance commissioners to determine if a pattern of excessive or unjustified rate increases exists such that a health insurer should be denied access to the state health insurance exchange.”

Unlike United Healthcare and Aetna, which pulled out of California’s individual health insurance market entirely, Anthem will continue selling in the small group health insurance market in California outside the exchange, so there is no effect on choice or competition in the small group market overall. It does mean that Anthem will not have access to federal tax credit and taxpayer subsidized business in the small group market exchange.

Anthem Blue Cross to Lower Rate Increases on Individual Plans

Insurance Commissioner Dave Jones announced that Anthem Blue Cross will reduce its recently implemented premium increase in the individual market. The 17.93% average rate increase was effective February 1, but is being lowered to 13.87% on average for Anthem’s health insurance products sold to people and families.

The change affects 630,000 policyholders. Anthem Blue Cross will lower the premiums for these individual market products. Policyholders who switched to a lower cost product can switch back to their former product. Those who dropped coverage because of the rate increase can re-enroll without going through medical underwriting.

Even with this decrease, Anthem Blue Cross policyholders in the individual market will have experienced an average 22% rate increase over the previous 12 months.

Commissioner Jones authored legislation four years in a row while serving in the State Assembly and then sponsored AB 52 (Feuer) in the last legislative session, which would have given the insurance commissioner the authority to reject excessive rate increases and limited health insurance carriers to one rate increase per year.

Today, the Department of Insurance reviews proposed rate increases, but the health insurance carriers can implement rate increases without approval from the insurance commissioner. The bills authored by then Assembly Member Jones and Assembly Member Feuer passed the State Assembly, but failed in the State Senate. For more information, visit www.insurance.ca.gov.

Online Doctor Visits

Anthem Blue Cross members will soon be able to choose a doctor and address their health issues live via two-way video at livehealthonline.com. LiveHealth Online will launch in the first quarter of 2013 initially to small and large-group fully insured customers and self-funded national employers. Doctors will offer live consultations from 7:00 a.m. to 11:00 p.m. daily. Members will be able to initiate online meetings via live audio/video and secure chat. Patients use online care typically to communicate with a doctor about colds, aches, sore throats, allergies, infections as well as wellness and nutrition advice. A complete record of each encounter is created, which can be forwarded to their primary care doctor with the patient’s permission. E-visits using e-mail and electronic patient health records had similar outcomes to in-person visits for treating sinus and urinary tract infections, according to a November 2012 study from the University of Pittsburgh published in the Journal of the American Medical Association.

Anthem Blue Cross, University of California Health Form Alliance

Anthem Blue Cross and University of California Health have formed the California Health Alliance to look at how to improve access to affordable, quality health care for California residents. Among some of the initial areas of focus of this alliance will be the development of accountable care models to better manage costly chronic conditions and the expansion of alternate delivery systems, such as telemedicine to encourage wellness and prevention and, provide access to health care for residents in rural areas. In addition, this new alliance is expected to provide opportunities for research, analysis, literature development and policy recommendations. Visit www.anthem.com.

Last Updated 01/13/2021

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