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Highmark sticks with federal health insurance marketplace despite challenges

Wes Venteicher
| Friday, Sept. 23, 2016, 4:00 p.m.
The Highmark sign atop Fifth Avenue Place in Downtown Pittsburgh.
Tribune-Review
The Highmark sign atop Fifth Avenue Place in Downtown Pittsburgh.

Highmark Inc. announced Friday that it will continue selling Affordable Care Act plans for 2017 despite continuing losses and a trend of major insurers abandoning the three-year-old marketplace.

The insurer reported a loss of $68 million through June 30 for the marketplace plans, bringing its total losses from providing coverage under President Obama's signature health care law to more than $800 million since 2014.

“These losses are unsustainable to anyone; however, we continue to work diligently to stabilize our ACA book of business,” David Holmberg, CEO of Highmark Health, the insurer's parent company, said in a conference call with reporters.

The insurer will sell plans on the health insurance marketplace next year in Pennsylvania, where it has requested average premium increases of up to 48 percent with the Department of Insurance; and will sell plans in Delaware and West Virginia, Holmberg said.

Highmark, like other major national insurers, has said that the people who signed up for plans under the federal health care law were sicker than expected, driving claims far higher than premiums. That trend continues, Holmberg said, with claims holding relatively steady among the smaller pool of marketplace members that Highmark retained after the 2016-17 open enrollment period.

UnitedHealthcare, the nation's largest insurer, has abandoned ACA markets, while Aetna has greatly curbed its participation, pulling out of Pennsylvania and most other states.

Highmark reported an operating gain of $31 million for the first half of 2016, an improvement over its reported operating loss of $171 million for the same period in 2015. The insurer reported net income of $36 million for the first half of this year, compared with $221 million last year, when the one-time acquisition of a Blue Cross Blue Shield affiliate in northeastern Pennsylvania increased revenue.

The insurer reported $9.3 billion in operating revenue for the period, up from $8.7 in 2015. It had $6 billion in cash and investments and net assets of $5.3 billion.

Highmark set premiums for plans sold on the federal marketplace in 2014 and 2015 that were among the lowest in the nation, attracting more sign-ups than other insurers. It raised premiums for 2016 and enrollment dropped to 195,000 people in Pennsylvania, West Virginia and Delaware, down from 350,000 in 2015. Highmark had about 125,000 members across the state of Pennsylvania as of May.

Meanwhile, UPMC Health Plan kept its price increases for ACA plans below 10 percent from 2015 to 2016, and offered the lowest-priced “silver” plan — a popular midlevel option — for 2016. UPMC Health Plan had about 122,000 ACA members in Western Pennsylvania as of May.

Highmark's enrollment reduction was intentional, Holmberg has said, and the insurer cut costs elsewhere by shrinking networks of hospitals and doctors, reducing or eliminating commissions for brokers who sell ACA plans and reducing by 4.5 percent what it pays doctors who treat patients with the plans.

“We need to get the right rates, the right networks and the right care models in place to make this care model sustainable,” Holmberg said Friday.

He said Highmark continues its pursuit in court of about $223 million for 2014 the insurer says the federal government owes it in so-called risk corridor payments, which the Affordable Care Act created to offset insurers' losses in the first three years of the new insurance market. The Centers for Medicare & Medicaid Services has estimated it has paid about 12.6 percent of what it owes insurance companies in risk corridor payments.

Highmark plans to work with whoever is elected president on ways to improve “structural issues” in the 2010 health care law, Holmberg said. One area of focus is cracking down on people who abuse the law's special enrollment periods, he said. The periods allow people to buy insurance outside of annual open enrollment periods if they have special qualifying conditions, such as losing or gaining a job, having a child or moving.

Insurers have identified a trend of people signing up during the special enrollment periods, receiving a bunch of treatment and not paying their premiums, Holmberg said. On average, people who enroll during special enrollment periods receive $1.51 worth of treatment for every $1 they pay in premiums, he said.

The ability to qualify for a special enrollment period by moving has proven especially problematic, Holmberg said, and he supports requiring people to pay outstanding premiums before they re-enroll in insurance.

Wes Venteicher is a Tribune-Review staff writer. Reach him at 412-380-5676 or wventeicher@tribweb.com.

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