Blue Cross and Blue Shield, the state’s largest health insurer, expects to report its second consecutive financial loss in the coming weeks, as the company contends with continuing cost overruns under the Affordable Care Act, CEO Brad Wilson said Wednesday.
Wilson warned that Blue Cross cannot continue sustaining financial losses indefinitely in North Carolina and may have to decide later this year whether to get out of the ACA market in 2017. Blue Cross raised rates by an average 32.5 percent this year in the state, but Wilson said that wasn’t enough to stem losses.
“We can’t offer something for sale in this marketplace that we know every time it’s purchased we’re losing money,” Wilson said.
Wilson’s comments, made in a meeting Wednesday with members of The News & Observer editorial board and editors, mark the Triangle insurance executive’s strongest public expression of doubt about how the ACA is playing out here. Executives at other major insurers have also threatened to drop their ACA business if it continues losing money, but Blue Cross has consistently maintained its commitment to the federal health care law in North Carolina.
N.C. Insurance Commissioner Wayne Goodwin last week sent a letter to Sylvia Burwell, U.S. Secretary of Health and Human Services, expressing his concern that all three health insurers offering subsidized policies in North Carolina under the ACA could abandon the market, leaving thousands of residents with no options for health insurance. For example, all three insurers have cut back on sales commissions to agents and brokers who sell ACA policies.
A move by Blue Cross to stop offering federally subsidized policies would force more than 300,000 North Carolina residents to try other insurers, if they still offer ACA coverage, or revert to being uninsured. A withdrawal by Blue Cross would be acutely felt, as it’s the only insurer under the ACA that offers coverage in all 100 counties in the state.
Wilson said the size of the rate increase approved this fall by the N.C. Department of Insurance for next year would likely determine Blue Cross’s ACA strategy. He said the company will have to assess whether the rate increase the agency approves “makes sense” for the company.
“If it does, then we’ll move forward,” Wilson said. “And if it doesn’t, then we’ll react accordingly.”
Blue Cross will report its 2015 financials next month for the second full year of coverage under the ACA. The law requires most Americans to buy health insurance and prohibits insurers from rejecting applicants with cancer, heart problems and other costly pre-existing medical conditions.
Both Wilson and Goodwin said that the ACA would be more stable financially if Medicaid were expanded to accept more people and if North Carolina ran its own insurance exchange, options that the state’s GOP-dominated legislature rejected.
Wilson also said the company has made progress resolving technology snafus that prevented thousands of people from enrolling in individual policies in January.
Blue Cross saw a drop in individual insurance enrollments from December to January – during the time it was experiencing enrollment and billing problems. It lost 46,495 customers over that period, according to an internal email from Blue Cross’s enterprise analytics unit.
Blue Cross spokesman David Kochman said the drop off could have been partially caused by other reasons: the 32.5 percent rate increase this year, and health plan changes that restrict patients’ access to doctors and hospitals.
Wilson said Blue Cross is still experiencing software problems, particularly in billing and invoicing, but the volume of calls from customers has subsided. He said the magnitude of the software problems was unforeseen.
“We wouldn’t have deployed the software had we known what the ultimate results were going to be,” Wilson said.
The Department of Insurance has logged more than 1,000 customer complaints to date, “so we continue to get phone calls,” said agency spokeswoman Kerry Hall. The insurance department is intervening on behalf of people with urgent medical needs who can’t wait to get insurance coverage.
Wilson said Blue Cross officials don’t know why the software failed and noted that there may never be a satisfactory explanation.
“One of these days this will fade from peoples’ memory,” Wilson said. “But it has been unpleasant and unfortunate.”