Connecticut’s health insurance marketplace shrank by 50 percent, but Access Health CT CEO James Wadleigh said he’s not panicking.
Two of the four private insurance companies participating in Connecticut’s insurance exchange will be exiting by the end of the year.
“We still have two very strong carriers,” Wadleigh said Monday.
Anthem and ConnectiCare, the two remaining plans on the exchange, already had a bulk of the customers in Connecticut’s marketplace. ConnectiCare has about 53 percent of the business and Anthem has about 33 percent.
Last week, HealthyCT, one of 23 co-ops created as part of the Affordable Care Act, was put under an order of supervision by the Insurance Department and prohibited from selling any new policies or renewing the ones it currently offers. HealthyCT had about 11.8 percent of the business on the exchange.
Insurance Department Commissioner Katharine Wade said the fiscal health of HealthyCT was jeopardized by a federal requirement that will force it to pay $13.4 million to the U.S. Department of Health and Human Services, Centers for Medicare and Medicaid Services as part of the ACA’s risk adjustment program.
Wadleigh said the risk adjustment program, which is intended to transfer funds from plans with low claims costs to those with higher claims costs to stabilize the marketplaces, is a hurdle for new companies like HealthyCT.
Wadleigh said there’s a growing body of data that shows the calculation could be detrimental to new carriers getting into the market. Discussions about what to do about it are ongoing.
Wade and several other state insurance regulators have expressed concern to federal authorities over the risk adjustment formula and its potential damaging effects on the market, particularly its impact on small insurers like HealthyCT. Wade even met with Health and Human Services Secretary Sylvia Burwell earlier this year to urge for change to the risk adjustment formula, according to an Insurance Department spokeswoman.
But it may be too late for HealthyCT.
The Connecticut State Medical Society, which was a founding sponsor of HealthyCT, said it’s unfortunate that the ACA made it difficult for these member-driven nonprofit plans to survive.
“As a result, Connecticut consumers and employers will have fewer health insurance choices for the foreseeable future,” the organization said.
In addition to HealthyCT, UnitedHealthcare, which sold plans in 34 state exchanges, announced in April that it would leave most of the marketplaces in 2017 due to an anticipated $650 million in losses.
Wadleigh said UnitedHealthcare, which only had about 1,500 customers or about 1.6 percent of Access Health’s total enrollment, has focused most of its business on large employers so it’s not surprising they would want to leave the exchange.
So even though Wadleigh sees the loss of HealthyCT and UnitedHealthcare as two different stories, he’s acutely aware of the need to make sure the marketplace increases competition and keeps rates down.
Wadleigh said he is concerned about proposed rate hikes and at the same time as he doesn’t want to lose any more carriers.
Anthem and ConnectiCare are asking the Insurance Department to approve 26.8 percent and 14.3 percent average increases in their rates for 2017 for plans on the exchange.
The Insurance Department will hold public hearings on Anthem’s rate request Aug. 3. Public hearings for ConnectiCare will be held Aug. 4. Regulators will set a final rate after the hearings.
In 2017 the bulk of funding for the exchange — 94 percent — will come from assessments on private insurers and just 6 percent will come from grants, according to a presentation to the board. So the loss of two of the four carriers doesn’t threaten the existence of the exchange, but Wadleigh said it was a “great wakeup call.”
He said a lot of work and creative thinking will have to be done in order to resolve some of the concerns and costs insurance carriers have when participating in the exchange.
Wadleigh doesn’t believe the exit of the two insurance companies will threaten the existence of Connecticut’s exchange, which was one of 16 state-based exchanges.
He said the pool of customers participating on the exchange will likely remain the same so he doesn’t anticipate a drop in the assessment on insurance carriers who financially support the quasi-public agency.
Wadleigh said he’s not sure he has all the answers yet, but will keep working hard to find them.
In the meantime, Access Health CT is doing everything it can to keep its costs down by renegotiating contracts with vendors and lowering expenses. In May, it approved a $34.6 million budget for 2017, which is a $2 million increase over 2016.
