Future of ACA written by insurers like Medica

As the last option standing in two states' Affordable Care Act marketplaces for next year - one of them being Iowa - a small Midwestern health insurer faces a decision that could become a symbol of the law's failure or of the last-minute political compromises needed to keep its markets intact.

While large, national insurers' pronouncements about the future of the marketplaces have been closely followed, it is insurers such as Medica - a nonprofit, regional health plan with 1.2 million members - that will determine whether people can buy insurance next year.

Medica's competitors in Iowa and Nebraska have announced they will drop out of selling insurance on the exchanges next year, making the company the likely last guard against a scenario that leaves participants with zero options for buying their own health coverage.

Last week, Medica issued a threat that, without government action, it might leave Iowa's exchange. The company promptly found itself mentioned in President Donald Trump's Twitter feed, touted as evidence of the 'broken system” that would be solved by House Republicans' health care bill.

This week, Aetna - Medica's only competition on the marketplace in Nebraska - announced it would pull out of the exchange next year.

Aetna had said early in April that it would drop out of Iowa's exchange. Des Moines-based Wellmark Blue Cross and Blue Shield announced its departure that same week.

'The insurance markets in two states are now hanging by a thread, held together at this moment by a small, Midwestern plan that most people had never heard of before,” said Larry Levitt, a vice president at Kaiser Family Foundation. 'The big national insurers have essentially abandoned the marketplaces, and they were very skeptical to begin with. ...

It's not the big traditional commercial insurers that have made this market, that have been offering coverage in this market and succeeding.”

While each state's market is different, Medica's predicament provides a window into the challenges and major business decisions that all insurers face for next year. Amid a fluctuating political, competitive and regulatory landscape, companies are coming up on deadlines to decide whether to offer insurance on the exchanges next year and what rates to charge.

'It is challenging to stay focused on our mission to provide access to high-quality affordable health care when there's noise around the system and a lack of clarity of rules,” said John Naylor, chief executive of Hopkins, Minn.-based Medica, who called the amount of uncertainty being thrown at insurers at the moment unprecedented. 'With our social mission, we're like the little engine that could - we're chugging away.”

Medica, founded 42 years ago by physicians, has its roots in Minnesota and in the business of selling insurance to employers.

About a decade ago, the company began to expand into neighboring states - North Dakota, South Dakota and Wisconsin. After the ACA became law, the company began to expand its footprint farther, selling insurance to individuals in three new states - Iowa, Nebraska and Kansas.

Last year, the insurer broke even in its individual insurance business in two states, but lost money in the rest - including Iowa and Nebraska.

'We have to build brand recognition and we have to get in and serve the members, but first and foremost we need a set of rules to be able to design products and price products, so that we can properly quantify the risks,” Naylor said. 'So as we went into these markets, there were pretty clear rules in a given year: Here's how the market works. And then all of a sudden, the rules changed.”

Many health policy experts expect to see more insurers withdraw from states, curtail their participation or raise their rates.

'The risk that in Iowa or somewhere else you have counties with no coverage, no insurers participating, is real and I think it's reasonably likely in 2018,” said Caroline Pearson, a senior vice president at Washington, D.C., consulting company Avalere Health. 'The ACA doesn't have a solution for that situation.”