Obamacare Disaster Is Happening Around The Nation: Blue Cross of Alabama predicts $135 million loss in 2015, mostly due to Obamacare
Feb 4, 2016 08:08:19 #
Blue Cross of Alabama predicts $135 million loss in 2015, mostly due to Obamacare
http://www.al.com/news/index.ssf/2016/02/blue_cross_of_alabama_predicts.html
Executives at Blue Cross Blue Shield of Alabama are predicting losses of $135 million in 2015, mostly due to the costs of insuring patients who gained coverage under Obamacare.
The insurance company has already tallied losses of $109 million through the end of October. The final results will be available at the beginning of March, according to a statement released by the company.
"Beginning in 2014, the ACA eliminated health underwriting and waiting periods for pre-existing conditions allowing individuals to buy healthcare coverage regardless of their health condition," read a statement from spokeswoman Koko Mackin.
"Company data indicates that many of our new individual ACA customers have used an extensive amount of medical services, which is causing total claims paid and their related operating expenses to exceed premiums."
Customers who became insured through the Affordable Care Act have been older and sicker than average.
According to Blue Cross, they have drug costs that are 25 percent higher than other customers, and costs that are 50 percent higher for outpatient surgeries and hospitalizations.
Blue Cross Blue Shield of Alabama joins several other Blue Cross plans across the country that have reported steep losses in the last two years. Blue Cross Blue Shield of North Carolina reported losses of $400 million in the first two years of the Affordable Care Act.
That insurer has cut sales commissions and advertising for Obamacare plans. Blue Cross Blue Shield of New Mexico pulled individual plans from the health insurance exchange after regulators denied a 53 percent rate increase.
Blue Cross Blue Shield of Alabama is not taking similar steps.
The company raised rates in 2016 by an average of 28 percent, and eliminated platinum and some gold-level plans. The company also shrunk its workforce slightly by not filling open positions, according to the statement.
The company's financial problems suggest that all insurers offering plans on the Health Insurance Exchange may be struggling, which will affect costs for customers and potentially reduce payments to providers, wrote Michelle LaVone, insurance analyst for Decision Resources Group, in an email.
"Blue Cross and Blue Shield of Alabama's net losses could portend even higher rate increases in 2017 for all participating carriers both on and off the Health Insurance Exchange," LaVone wrote. "BCBS of Alabama is king, and its losses suggest its closest competitorsif you can call them closeface similar challenges but lack the clout and influence to make self-serving amends."
According to the statement, Blue Cross executives remain positive about the future of the company, and expect income to stabilize in the coming years. Cynthia Cox, who leads research into health reform and private insurance at the Kaiser Family Foundation, said experts and insurance executives expected some instability in the first few years of the Affordable Care Act.
"We all knew going into this that insurance earnings could be volatile in the first few years because insurance companies had never offered anything similar," Cox said.
Blue Cross of Alabama is in a good position to weather that volatility, since it has more than $1 billion in reserves, according to the Alabama Department of Insurance.
Premium increases in 2016 could slow or stop company losses this year, Cox said.
"With the premium increases we've seen, that could bring these plans into stabilization," Cox said.
"This year we'll see, are they sufficient?
Or will they need to rise again in 2017?"
http://www.al.com/news/index.ssf/2016/02/blue_cross_of_alabama_predicts.html
Executives at Blue Cross Blue Shield of Alabama are predicting losses of $135 million in 2015, mostly due to the costs of insuring patients who gained coverage under Obamacare.
The insurance company has already tallied losses of $109 million through the end of October. The final results will be available at the beginning of March, according to a statement released by the company.
"Beginning in 2014, the ACA eliminated health underwriting and waiting periods for pre-existing conditions allowing individuals to buy healthcare coverage regardless of their health condition," read a statement from spokeswoman Koko Mackin.
"Company data indicates that many of our new individual ACA customers have used an extensive amount of medical services, which is causing total claims paid and their related operating expenses to exceed premiums."
Customers who became insured through the Affordable Care Act have been older and sicker than average.
According to Blue Cross, they have drug costs that are 25 percent higher than other customers, and costs that are 50 percent higher for outpatient surgeries and hospitalizations.
Blue Cross Blue Shield of Alabama joins several other Blue Cross plans across the country that have reported steep losses in the last two years. Blue Cross Blue Shield of North Carolina reported losses of $400 million in the first two years of the Affordable Care Act.
That insurer has cut sales commissions and advertising for Obamacare plans. Blue Cross Blue Shield of New Mexico pulled individual plans from the health insurance exchange after regulators denied a 53 percent rate increase.
Blue Cross Blue Shield of Alabama is not taking similar steps.
The company raised rates in 2016 by an average of 28 percent, and eliminated platinum and some gold-level plans. The company also shrunk its workforce slightly by not filling open positions, according to the statement.
The company's financial problems suggest that all insurers offering plans on the Health Insurance Exchange may be struggling, which will affect costs for customers and potentially reduce payments to providers, wrote Michelle LaVone, insurance analyst for Decision Resources Group, in an email.
"Blue Cross and Blue Shield of Alabama's net losses could portend even higher rate increases in 2017 for all participating carriers both on and off the Health Insurance Exchange," LaVone wrote. "BCBS of Alabama is king, and its losses suggest its closest competitorsif you can call them closeface similar challenges but lack the clout and influence to make self-serving amends."
According to the statement, Blue Cross executives remain positive about the future of the company, and expect income to stabilize in the coming years. Cynthia Cox, who leads research into health reform and private insurance at the Kaiser Family Foundation, said experts and insurance executives expected some instability in the first few years of the Affordable Care Act.
"We all knew going into this that insurance earnings could be volatile in the first few years because insurance companies had never offered anything similar," Cox said.
Blue Cross of Alabama is in a good position to weather that volatility, since it has more than $1 billion in reserves, according to the Alabama Department of Insurance.
Premium increases in 2016 could slow or stop company losses this year, Cox said.
"With the premium increases we've seen, that could bring these plans into stabilization," Cox said.
"This year we'll see, are they sufficient?
Or will they need to rise again in 2017?"
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