CHICAGO – Only six insurance carriers have told the state of Illinois they want to sell a combined 165 health policies on the state's online insurance marketplace under the nation's new health care law – numbers far lower than expected, raising concerns the trend will hold true across the country.
Fewer health plans could mean less competition and possibly higher premium prices. Officials in President Barack Obama's home state had anticipated some 260 health plans would be offered by 16 different insurance carriers, based on a survey the Illinois Department of Insurance conducted last fall.
The Illinois numbers are an early indicator that insurance companies are backing away from full participation in the online marketplaces, said Robert Laszewski, a former insurance executive turned industry consultant.
"I'm hearing that from other carriers in other parts of the country as well," Laszewski said. "They are terribly fearful that if there's a poor launch (of the marketplaces) they're going to get blamed for a mess."
The carriers may participate in the marketplaces in their core customer states, bypassing other states in the first year, he said.
Insurers are concerned, in part, that people who have expensive medical conditions will sign up immediately for coverage through the exchanges, while healthier customers will wait. That could leave an insurer, at least initially, without enough premium revenue to handle the medical bills it receives. They're also concerned about how fees and coverage restrictions mandated by the law will affect the profitability of their plans.
But Gov. Pat Quinn expressed optimism in a statement released Wednesday, saying he's "very encouraged" multiple plans are being offered.
Mike Claffey, a Quinn spokesman on health care, said the prediction of higher numbers "included multiple subsidiaries of several different insurers" and plans "the federal government later ruled out for states not operating their own (marketplaces). The Department of Insurance is confident that the number of plans filed will allow for robust competition between insurers and broad choice for consumers across the State."
The national health law requires most Americans to have health insurance beginning Jan. 1. Many people who are now uninsured will buy health insurance through the government online marketplace because they'll be able to get tax credits to help pay for it. The online marketplaces – one in every state – are scheduled to be up and running by Oct. 1.
Fewer health plans on the exchanges could affect the cost of premiums people pay for coverage. Proponents of the Affordable Care Act say the online marketplaces will help hold down premium hikes because insurers will be competing against each other as customers compare several policies side by side to find the best match.
UnitedHealth Group Inc. and Aetna Inc. have told analysts that their involvement in the health insurance marketplaces across the country will depend on whether they're financially viable for the companies. On a conference call with investor analysts Tuesday, Aetna officials said they might pull their products from the online marketplaces at the last minute.
"We are entering these exchanges very carefully," Aetna Chairman and CEO Mark Bertolini told analysts Tuesday during a conference call to discuss earnings. UnitedHealth is the nation's largest health insurer, and Aetna is the third largest, based on enrollment.
In Illinois, one factor that could help competition on the health insurance marketplace is the nonprofit Land of Lincoln Health. The health law created a category of insurance carriers called Consumer Operated and Oriented Plans, or "co-ops." Land of Lincoln Health, the only co-op in Illinois to receive federal approval, received a $160 million federal loan to begin operations.
Dan Yunker, Land of Lincoln Health CEO, said Wednesday the organization hopes its premium prices will be the lowest on the marketplace. The company has submitted multiple health plans to the state.
Prices will be kept low, Yunker said, because consumers will govern the co-op, and "our executives are never going to take huge big paychecks."
While other carriers wouldn't say how many plans they submitted in Illinois, Chicago-based Health Care Service Corp. offered 35 plans to Illinois officials, said spokesman Greg Thompson. HCSC operates the Blue Cross Blue Shield health plan in Illinois.
"HCSC has filed its Qualified Health Plan (QHP) applications in each of the states in which it operates," Thompson said. "Our filings reflect our commitment to expanding access to care in our states and our intention to offer an array of competitively priced products and services to our existing and potential customers – on and off the health insurance exchanges."
The 165 health plans submitted will be reviewed by the Illinois insurance department to see if they meet requirements set out in the national health law. The department will recommend whether or not the plan should be certified as a "qualified health plan" to federal Health and Human Services on or before July 31. The federal agency will make the final determination by Aug. 31.
"I am very encouraged that we have seen multiple plans being offered on the Illinois Health Insurance Marketplace," Quinn said in a statement. "This means that people and families that have been struggling to obtain health coverage will have many options to choose from when we begin the open enrollment process beginning in October of this year."