Effective January 1, 2016, Blue Cross of Texas will only offer individual health plans using an HMO network, meaning that those with PPO's will lose their plans. The same parent company also announced last week that in Illinois, it would be eliminating its broad PPO network, offering only a limited PPO network and the HMO plans to individuals. Both carriers, dominant in their respective areas, will be limiting the choices of their members to receive care.
Since the implementation of the Affordable Care Act in 2014, the negative impact to each individual member has been highly specific to his or her state of residence. While California was the poster child of limited access plans in 2014, they were not alone: in the Midwest, Indiana saw the number of available plans and carriers shrink, with some additional choices in 2015 (Assurant and United Healthcare, choices that will shrink in 2016).
Illinois and Texas, two states in which we have a lot of clients, had managed to remain relatively unscathed — but in 2016, that's going to change for individual plan purchasers.
This site, as well as our site for potential and existing customers, is borne out of our belief that it's critically important for consumers to know not only what their choices are, but why they exist. The eponymous "race to the bottom" is occurring between carriers taking actions which seem anti-consumer on their surface, but have their roots in legislation. When the ACA passed, there were components that were designed to mandate that insurers paid more in claims, by setting a minimum payout of 80-85 percent of premiums, depending on the plan type. That 15-20 percent margin included all administration as well as sales commissions to brokers (like our agency).
Seems fair on the surface, right? Only the outcome hasn't favored the consumer.
Under this law, if an insurer had high administrative costs, they would have to refund the customer, eating any losses, which sounds like good news for the consumer. The reality, however, isn't so simple. If an insurer paid out 90, 95 or more than 100 percent of premiums, they would also be limited in what they could do to recoup their losses. As an indirect result of the law, commissions were cut, along with customer service representatives and their salaries.
In an effort to provide fairness to the consumer, the law had actually reduced the level of service they could look to receive.
How does this mean less provider choice? Let's examine it closer.
With profits capped, and insurance carriers unable to ask health questions or turn down applicants, the biggest danger to a healthcare company's profitability would be having an anti-selection number of high-risk health members. There's certainly no shame in insurers wanting to remain profitable, but how can they limit the number of high-risks they have?
We know that those with high needs want the best coverage, including access to a premier list of providers. Again, no shame there — it's a logical choice. The issue is that, unlike a car wreck, predictable losses related to certain member populations can be easily identified. We know that those with cancer, who have had strokes or transplants or are dealing with several other diseases, are going to have higher claims.
Carriers are strongly averse to having that risk on their books, and so will race to slash the number of choices that are attractive to this high-risk population. This entails limiting plan choices, and making low deductibles and broad network coverage outside of the grasp of this group. The unfortunate reality is that to maintain profits, insurers are making their plans unattractive to a certain segment of the population, and in the process reducing choice for everybody else as well.
So what's the solution?
First, as a consumer, you should seek out a qualified agent to help you navigate your choices. I say this independent of any biases I have in this area. You need an advocate explaining your choices and any limitations, because you will want to know about them before there is a catastrophe. Proactivity is your greatest ally when buying insurance.
Second, the ACA should be revised to take high-risk claimants out of the pool. It creates a Catch-22, burdening us all with the unintended consequences of the law in need of revisions. If all carriers could dump or reinsure claims over an industry determined amount each year—let's say $50,000—with a federal system that we all pay into via a premium tax, we could restore benefits. This would allow non-chronic users to cost-effectively manage future risk.
As of this writing, this solution is unlikely, since it would reduce immediate premiums and rankle proponents of additional government oversight. However, a closer look at the issues created by this ruling is still vital. For more information about what these decisions mean for you, or for information related to your health insurance, check back in this space or contact a member of our team.
