The path forward for Iowa's individual health insurance market
Over the last three years, many Wellmark members with individual health plans governed by the ACA (generally people who have purchased new individual health insurance plans since October 2013) have endured double-digit premium increases. Despite these increases, Wellmark has lost $90 million in Iowa over this same timeframe on these ACA individual plans. Other health insurance carriers in Iowa and their customers have suffered a similar fate. This is simply not acceptable or sustainable.
Against this backdrop, and with no workable congressional solution appearing on the horizon, Wellmark recently announced that we will no longer offer or renew individual ACA plans in Iowa as of Jan. 1, 2018. Unfortunately, this decision impacts 21,400 Iowans, or 1.3 percent of Wellmark’s members in the state (employer-based and Medicare plans are not affected by this decision).
Immediately following our announcement, we began working alongside state and federal officials to structure a solution that will make the health insurance market stable and affordable again for Iowans purchasing their own insurance. We knew it was important to share our decision early in the year so that we could refocus our efforts on building an Iowa-based solution.
While the ACA has had a mixed record, we believe there are key aspects of the law that should remain:
• Everyone should be able to purchase health insurance regardless of their health status and have access to care (guaranteed issue).
• Young adults should be able to remain on their parents’ health plan until age 26.
• Policies should have no annual or lifetime maximums.
• Iowa’s legislature, governor, and regulators should maintain control of ensuring health plans cover vital services including existing health insurance laws or mandates.
• Iowans who purchased a health plan prior to the ACA should be allowed to keep it as long as it meets their needs.
• Reasonable premium assistance should continue to be available for those Iowans who need it.
With those existing protections in place, addressing three principles will reduce individual ACA premiums and provide an environment that would allow Wellmark and other carriers to re-enter the health insurance market in Iowa.
Ensuring a viable risk pool
The larger the group of people — with varying degrees of health — who band together to spread their health care risks, the more stable, predictable, and affordable an insurance market (or pool) becomes.
There should be strong incentives to encourage Iowans to invest in health insurance coverage while they are healthy and maintain that coverage without interruption.
Under the current rules, some individuals wait to buy insurance until they become ill. This is like buying car insurance at the scene of the accident. When this happens, it drives up the cost of insurance for everyone. The rules need to be tightened.
Access to subsidies
Premium assistance should be available based on both age and income to help people pay for health insurance. This will have the much-needed effect of attracting a diverse pool of people to purchase health insurance, driving down costs for all members in the pool.
Broadly share catastrophic costs
Medical costs are rising rapidly, and a small number of very sick people can drive up premium costs for everyone. When premiums get too high, healthy people stop buying health insurance. With fewer healthy people, the only people left in the market to fund the coverage are the very sick.
An efficient option is to create a program to spread the catastrophic costs beyond the individual market. The sickest Iowans would stay with their health insurer, but a base of federal funding, administered by the state, would assist with costs incurred by a person above a certain amount in a calendar year. Using this approach — often referred to as reinsurance — could significantly reduce premiums for individual Iowans while requiring no incremental federal funding on per individual basis.
Flexibility to design plans Iowans want and can afford
The ACA requires health insurers to provide coverage that does not meet the needs of many Iowans. Health insurance is not one size fits all. We need the ability to design plans that are innovative, easy to understand, and offer even more transparency. By doing this, we will be able to provide plans that cost less and deliver more value to Iowans while maintaining the ACA’s Essential Health Benefits and state benefit mandates.
The path forward
We hope others will join and support our commitment to working with public officials and other key stakeholders to create an accessible individual health insurance market where everyone thrives as soon as 2018. A white paper with each of the three principles listed above is available in the Newsroom section of Wellmark.com.
l John Forsyth is chairman and CEO of Wellmark Blue Cross and Blue Shield.