This week PreferredOne, a major insurer on Minnesota’s health insurance marketplace (called MNSure), announced it would not participate in the marketplace in 2015. The company’s press release states: “Continuing to provide this coverage through MNSure is not sustainable.” The news caused a stir because this insurer has the lowest premium rates on the marketplace, and in 2014 garnered 59 percent of overall enrollment. At least four insurers will remain in the marketplace to continue to serve consumers.
Why would a company leave the health insurance marketplace?
Affordable Care Act (ACA) prognosticators will be quick to draw conclusions from this market withdrawal. Some will say it’s a signal that the marketplaces themselves are not sustainable, or of insufficient marketplace leadership. But that kind of rush to judgment is misplaced, at least in this circumstance. Long before the ACA was passed, insurers have been entering new markets and departing other markets. These are business decisions made by the companies based on a wide range of factors, from enrollment and revenue, to risk selection and cost structure, to regulatory oversight. That’s why all states have had longstanding rules for orderly market withdrawals on their books. The ACA doesn’t change this dynamic – insurers will continue to have the freedom to make these market entries and withdrawals for many years to come.
Only PreferredOne executives know all the reasons they’ve decided to exit MNSure. They were new entrants to the nongroup market; their focus to date has been on the employer-based market. They could have miscalculated their price point – by all accounts they offered some of the lowest prices in the country; they could also have miscalculated the number and risk profile of people who enrolled in their plans. To be sure, entering a new market with no prior experience is not for the faint of heart.
What does this mean for consumers enrolled in PreferredOne plans?
Consumers enrolled in PreferredOne plans will have to return to MNSure, update their income and household information, get a new eligibility determination, and shop for a new plan from a different insurer. But the truth is, they would probably have to do this anyway, even if they weren’t losing their plan, and even if they’ve had no income or household changes. Most consumer advocates are advising all current enrollees to actively renew their coverage and shop for plans. This is because, in most markets, the cost of the benchmark plan (to which premium assistance is pegged) will have changed for 2015, meaning that all consumers will need to get an updated determination of the tax credits for which they are eligible. Once they get a new determination of eligibility, they also may need to switch plans to ensure they’re getting the best deal possible.
The challenge for marketplaces nationwide – for MNSure, healthcare.gov, and other state-based marketplaces – is to ensure that their IT systems have the capacity to handle these active renewals, and that they have robust online, telephone, and in-person assistance trained and available to help consumers through the process.
Stay tuned: As part of an ongoing project for the Commonwealth Fund to monitor implementation of the health insurance marketplaces, CHIR researchers will soon publish state-by-state data on marketplace plan participation for 2015.