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The Journal Gazette

  • Cahill

Wednesday, August 24, 2016 10:13 am

PHP drops individual ACA plans

Brian Francisco | The Journal Gazette

Physicians Health Plan of Northern Indiana announced Tuesday that it will quit selling individual insurance coverage next year through the federal Affordable Care Act.

The nonprofit PHP becomes the second insurer to announce it is leaving the HealthCare.gov insurance marketplace that serves residents of northeast Indiana. UnitedHealthcare said last spring it would drop out of the exchange in most states, including Indiana.

Four other insurers offered individual policies through HealthCare.gov this year in the Fort Wayne area and apparently will continue to do so in 2017. Insurers had until Tuesday to notify the state of their plans, and all four are among federal marketplace filings the Indiana Department of Insurance submitted Tuesday to the Department of Health and Human Services.

Fort Wayne-based PHP said it is paying $1.20 in medical expenses for every dollar it receives in premium payments from HealthCare.gov customers and has lost millions of dollars on the policies. 

Michael Cahill, chief executive officer of PHP, said the insurer’s board of directors "really did wrestle with" the decision to exit HealthCare.gov. The exchange aims to offer affordable medical insurance to people who lack access to employer-provided coverage.

"As the local not-for-profit health plan, we kind of feel a need to be in the individual market. But the losses were just so severe, and we could not see any way around it, at least for a couple of years with the national election coming up and all that uncertainty," Cahill said in a telephone interview.

Republicans in Congress have tried repeatedly to repeal the Affordable Care Act, and GOP presidential candidate Donald Trump has vowed to do likewise.

Cahill said PHP has roughly 6,500 HealthCare.gov customers in a 40-county area, most of them residents of northeast Indiana. HHS said in February that there were 22,630 people enrolled in the exchange in the Fort Wayne-media market, which consists of northeast Indiana and northwest Ohio.

PHP will continue to sell small group insurance plans through the Affordable Care Act.

Asked for comment about PHP’s pending departure from the individual insurance marketplace, Majorie Connolly, press secretary for HHS, said in an email: "We are confident that consumers in Indiana will continue to have affordable options for coverage next year. As in past years, a wide range of resources will be available to help Indiana consumers find a 2017 plan that works for them and their families when Open Enrollment begins November 1st."

HHS has scheduled a conference call today with reporters to discuss insurance affordability in Indiana. The conference call had originally been slated for Monday.

HealthCare.gov insurers have blamed their financial losses on a shortage of younger, healthier customers, whose premiums help offset the medical expense claims of older, less-healthy customers.

"The people that buy insurance are the ones that need it. The younger, healthier population doesn’t need it, so they don’t want to spend that extra money," Cahill said.

"The other thing that happened is the economy picked up," he said. "A lot of the younger, healthier workforce has come into the group (insurance) product through their employer."

He said some employers that previously had not offered insurance to workers have begun doing so to attract workers.

Cahill said HealthCare.gov insurers also have been hurt by insufficient funding available through the Risk Corridor Program, in which HHS collects money from highly profitable insurance plans and in turn reimburses those suffering large losses. Insurers paid $362 million to the program in 2014 but sought nearly $2.8 billion, resulting in the reimbursement of just 12.6 percent of loss claims, according to federal data.

HHS said last October that the price of a benchmark insurance plan was expected to drop by 12.6 percent in Indiana but would increase by 7.5 percent nationwide. Cahill said at the time that insurers were still guessing at their rate structures for the federal marketplace, which was then two years old.

PHP had sought a 25 percent average rate increase for 2017 before withdrawing from the marketplace. Three other insurers serving northeast Indiana have proposed double-digit average rate increases: Anthem Insurance Companies, 29 percent; CareSource Indiana, 16 percent; and MDwise Marketplace, 11.5 percent.

A fourth insurer serving the area, Celtic Insurance Co.’s Ambetter from MHS, seeks to reduce its rates by an average of 5.3 percent, according to its filing with the state insurance department.

PHP said in a news release that individual insurance plans make up a small percentage of their business.

bfrancisco@jg.net