Iowa’s final Obamacare insurer Medica explains why it’s staying

Anyone paying attention to Iowa's individual insurance market over the past several months knows it has been tumultuous.

Two insurers announced within days of one another that they would stop selling plans in 2018. The insurance commissioner went to Washington, D.C., to persuade the federal government to approve a stopgap measure he thinks would provide temporary relief - though Iowa still is waiting for an answer.

The state was continually held up by Republican officials - including President Donald Trump - as an example of everything that is wrong with the Affordable Care Act.

And everyone was left waiting to see what Medica - the last insurer selling plans in a majority of counties - would do. Medica kept its cards close to its chest, waiting until the final day to file rates with the Iowa Insurance Division.

The company found itself in the national spotlight - something Geoff Bartsh, vice president of individual and family business at Medica, said he didn't mind. It amplified Medica's voice and allowed the company to offer perspective in the ongoing health care debate.

'But for day-to-day decisions about business, you have to separate out the political noise from that and make decisions that are good for us and the communities we serve,” Bartsh in an interview Tuesday. 'We didn't really say anything when other carriers were announcing they'd leave markets. We wanted to not overreact. We wanted to make sure that we understood the markets.

'But it does put you in an interesting perspective when you're the last one there.”

Price of Staying

The price of staying is high - Medica officials said that for all products, the average proposed rate increase is 43.5 percent. The insurance division will hold a hearing on the proposed rate increase at 10 a.m. Aug. 26.

The Minnesota-based not-for-profit insurer has business throughout the Midwest, including in Iowa, Minnesota, Kansas, Nebraska, North Dakota, South Dakota and Wisconsin. It expanded into Iowa and Nebraska two years ago. At the time, company officials told The Gazette they wanted to help add stability to the market and were committed to being in Iowa.

Iowans had just watched the not-for-profit CoOportunity Health fold under financial pressures. The insurer was taken over by then-Insurance Commissioner Nick Gerhart as it had too many members and not enough money to pay for costly claims. Those on CoOportunity plans were left with only one option - Coventry Iowa, operated by Aetna. Medica wasn't the only insurer to come to Iowa that year - UnitedHealthcare also expanded to the state and Wellmark Blue Cross and Blue Shield entered in 2017.

But one by one, insurers started to pull out - first UnitedHealthcare in 2016, then Wellmark and finally Aetna. They cited high costs and uncertainty over the future of the ACA.

Big Decision

Medica was left with a big decision.

'Do we believe we know enough about the markets to continue to operate, and operate profitably?” said Bartsh, who has been with the insurer for six years but started his current role the same day Aetna said it would leave. 'Can we operate in a way where we are no longer losing money in a post-ACA market? ... Do we think we can make it work - can we understand the knowns and unknowns that still exists?”

The company had to decide whether it would stay and how many counties to sell insurance in. It ultimately decided to sell plans in all 99 counties, Bartsh said, to better spread out the risk pool and have the opportunity to get those younger and healthy members. But that means it will go from 14,000 Iowa members to more than 70,000.

That fills Bartsh with extreme excitement and extreme anxiety.

'It's no small undertaking to grow this much in that short amount of time,” he said. 'We need to be prepared for and handle that growth well. We need to make sure members coming to us from other carriers - that the experience goes well for them. There are 14,000 who chose us versus other carriers. If things stay the same, there are 72,000 coming to us, and some not by choice.”

Developing New Plans

Medica is working with key provider partners in the state and developing new plans, Bartsh said, as well as informing members about upcoming rate increases.

Those eligible for subsidies are likely to not see much of a difference in premiums, he said.

For 2018, the insurer estimates that 80 to 90 percent of the individual market will be eligible for federal subsidies, which are expected to increase dramatically for 2018. For example, a 25-year-old earning $30,000 in 2017 would have been eligible for a subsidy of $21.88 a month applied to the second-lowest cost plan in Des Moines. In 2018, that same individual will be eligible for a subsidy of $256.07 a month.

Medica officials do not believe that double digit rate increases are sustainable over the long term and want to find a more long-term solution, such as through reinsurance - a method used to better spread out high costs from sick individuals. That could help bring premiums down, Bartsh said.

'I have no idea what Congress will do this week. We're planning for every scenario and meeting deadlines,” he said. 'We'll adjust for the knowns when they become clear.”

l Comments: (319) 398-8331; chelsea.keenan@thegazette.com