In a sign of the growing potential
under the federal health care law, several insurers that have been sitting on
the sidelines say they will sell policies on the new exchanges in the coming
year, and others plan to expand their offerings to more states.
“Insurers continue to see this as a
good business opportunity,” said Larry Levitt, a health policy expert at the
Kaiser Family Foundation. “They see it as an attractive market, with enrollment
expected to ramp up in the second year.” Eight million people have signed up for
coverage in 2014, and estimates put next year’s enrollment around 13
million.
In New Hampshire, for example,
where Anthem Blue Cross is the only insurer offering individual coverage on the
state exchange, two other plans, both from Massachusetts, say they intend to
offer policies next year. Harvard Pilgrim Health Care, a nonprofit insurer with
1.2 million members, said it expected to participate in the exchanges in both
New Hampshire and Maine for the first time and to add Connecticut to the mix in
2016.
UnitedHealth Group and Cigna,
which were notable in their caution about the exchanges last year, are expected
to enter more markets this year. In Washington State, United is among four new
insurers that have told state regulators they are interested in offering plans
in 2015.
Cigna’s chief executive, David
Cordani, said in an interview that the company’s “bias” was to expand beyond the
five states where it now offers coverage on the exchanges. But he cautioned that
the company, which sells plans mainly through large employers, would be
selective about picking new markets. “We don’t see it as a land-grab
opportunity,” he said.
Assurant Health, a unit of a
for-profit specialty insurer in New York, sold policies off the exchanges in 41
states last year and said it now intended to offer plans in some exchanges.
Assurant is joining the exchanges “to serve more consumers and provide
additional choice for customers purchasing on and off the exchange,” Mary
Hinderliter, a spokeswoman, said in an email. “We are evaluating exchanges on a
state-by-state basis and continue to finalize our strategy,” she said.
Companies must decide in the
coming weeks whether they want to participate in the online exchanges run by the
federal government, and states may have their own deadlines.
Federal officials said they were
heartened by the continued interest from insurers. “We are still early in the
process but it’s a positive sign that after just one open enrollment season we
are already seeing new entrants and more competition in the marketplace,” said
Erin Shields Britt, a spokeswoman for the Department of Health and Human
Services.
The critical question about
premiums — what insurers want to charge in 2015 and what regulators will allow
them to charge — will not be settled for months, and insurers do not have enough
experience to know if the prices they set for 2014 will cover the medical costs
of the people enrolled in their plans. As a result, some insurers expressing
interest now may back out later, and regulators could refuse to license a new
entrant.
Premiums varied widely in many
markets during the last enrollment period, which ended in March. But as a
handful of states have released insurers’ proposed premiums for 2015, the
difference appears to be narrowing, said Brett Graham, a senior executive for
Leavitt Partners, a consulting firm, and he has not seen any insurers leave the
market.
Early filings in Washington and
Virginia show potential rate increases in the single digits.
WellPoint, which has a large
presence on the state exchanges, says it has no plans to leave any of its
markets, and Aetna has also indicated it will most likely be in about the same
number of markets. Humana says it has not yet decided what it will do.
Several smaller insurers say there
are opportunities for expansion, especially in those states where competition is
limited. In New Hampshire, for example, Harvard Pilgrim offers employer coverage
in the state and had already planned to begin selling individual policies
through the state exchange.
“It’s not really a place where
very large-scale carriers are going to make a decision to come in,” said Beth
Roberts, a senior vice president for the insurer. “It’s a perfect opportunity
for growth for us.”
Harvard Pilgrim says it waited a
year because of the logistical hurdles involved in offering coverage in the
state, not for any lack on interest on its part. “It was really an issue of not
having the ability to ramp up as quickly as we needed,” Ms. Roberts said.
The other insurer planning to join
the exchange, Minuteman Health, is one of the 23 nonprofit cooperatives set up
under the law to increase competition. In Massachusetts, Minuteman distinguished
itself through its low prices, the result of a narrow network of hospitals and
doctors. In New Hampshire, the co-op said it hoped to win customers by focusing
on those individuals who do not yet have insurance. “The game there is to try to
knit together the best access while having a competitive price point,” said
Thomas D. Policelli, the co-op’s chief executive.
Idaho has a similar dynamic, where
the Blue Cross plan has long been dominant, according to Jerry Dworak, the chief
executive of the Montana Health Co-op, which managed to seize 40 percent of the
exchange market in that state. Blue Cross of Idaho, where Mr. Dworak once
worked, captured the bulk of the exchange business. “We came to the conclusion
Idaho really needed a co-op to compete with the Blues,” he said.
In West Virginia, where there is
also a dearth of competitors on the exchange, the Kentucky Health Cooperative
has said it plans to offer coverage next year.
In a few markets, Blue Cross
plans, which traditionally are the largest players in any given market, remained
bystanders last year. But there are signs of change. Wellmark, the Blue Cross
for Iowa and South Dakota, has said it plans to offer coverage on the exchanges
this year, while Blue Cross of Mississippi said it had not yet decided.
The advantage of having a large
player join the fray extends beyond the additional competition, Mr. Levitt said,
to its ability to attract more overall customers through heavy marketing.
More health systems also seem
interested in offering plans for 2015, at least from early signs, said Erica
Coe, a health care expert for McKinsey & Company, a consultant that analyzed
the competitive landscape in 2014. While some providers, like North Shore-LIJ
Health System in New York, entered the exchanges last year, more are expressing
interest in states like Virginia and Indiana.
The market dynamic is such that
insurers who wait a year or two may not be disadvantaged, Mr. Levitt said.
People buying coverage in the individual market tend to be focused on price and
may quickly switch plans if better deals become available. “If they come in low,
they could really alter the landscape,” he said.