A new report shows that for the first time last year Blue Cross and Blue Shield of Kansas City made more money on the Obamacare exchange than it paid in claims.
The bond ratings agency Standard & Poor’s analyzed Blue Cross plans in 32 parts of the country and found that most are figuring out how to better set premiums to meet the cost of new enrollees as the Affordable Care Act exchanges begin their fourth year.
Blue KC is a prime example. Insurance companies use a “medical loss ratio” to measure how much revenue they get in premiums versus how much they pay in policyholders’ medical costs. Anything above 100 percent means the company is losing money.
Blue KC reduced its medical loss ratio from 109.1 percent in 2014 to 104.7 percent in 2015 to 98.7 percent last year.
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The 1.3 percent difference is probably not enough to overcome Blue KC’s administrative costs, but at least creates the possibility of profitability and the trend line is in the insurer’s favor.
That all could change if Congress changes the law.
Kelly Cannon, a spokesperson for Blue KC, said via email that the current situation in Washington, D.C., is “very fluid and challenging” and the company is still evaluating whether to sell plans on the exchange next year.
“With that said, we are closely following proposed legislative and regulatory changes and will stay close to this as the health care environment continues to evolve,” Cannon said.
Efforts by President Donald Trump and House Speaker Paul Ryan to repeal the ACA fizzled last month, but Republicans have since said they’re trying again to craft a bill to do it.
Insurers are in a difficult spot with less than two months left before they have to submit next year’s plan designs and premium rate requests to state regulators. One insurer who offered plans on the Missouri exchange, Humana, has already announced it’s pulling out of all of its ACA markets.
That leaves only Blue KC and Cigna on the Missouri side of the metro. Cigna officials did not respond to a request for comment on their plans for next year.
Cigna CEO David Cordani said during an earnings call in November that the company was expecting revenue growth in the ACA markets in 2017 but not enough to offset losses. He said the company would take a “cautious and slow” approach to selling Obamacare plans and not expand beyond its current seven states.
Blue Cross plans are even more critical on the Kansas side of the metro. Blue KC operates in Wyandotte County and Johnson County and Blue Cross and Blue Shield of Kansas sells plans in the rest of the state. The only other insurer on the Kansas ACA exchange this year is Medica.
The Minnesota-based company capped its enrollment at 10,000, though, which is less than 10 percent of the 101,555 Kansans who are currently signed up through healthcare.gov.
The rest fell to Blue Cross, and the plans sold outside of Johnson and Wyandotte County are not doing as well as the Blue KC plans.
The S&P report found that while the BCBS Kansas medical loss ratio improved from almost 120 percent in 2015, it was still 113.4 percent last year.
“It’s really been kind of a challenge every year,” said BCBS Kansas spokeswoman Mary Beth Chambers. “This year we are working with some continued uncertainty but we’re just doing the best that we can.”
BCBS Kansas is trying something new on the ACA exchange this year, operating only HMO plans that provide no coverage for out-of-network care.
But the nonprofit organization won’t know if that shored up finances before it has to decide whether to offer plans on the market again next year. Chambers said the BCBS Kansas understands the stakes.
“We recognize that if we were to get out of the individual market or the exchange market that Kansans could potentially have one or no choices,” Chambers said. “It’s something we take very seriously, but again we must balance that with what is in the best interest of our entire company cause we’re owned by our policyholders.”