Obamacare was profitable for some insurers despite public comments

One of the most vocal insurers about the problems with the Affordable Care Act marketplace made nearly $400 million in one state already this year, documents show.

Blue Cross Blue Shield of North Carolina lost about $400 million on ACA individual plans sold on Healthcare.gov in 2014 and 2015. After raising rates by about 32% for 2016, the company made nearly the same amount for the first three quarters of 2016 for all individual plans sold on and off the exchange, data filed with the state department of insurance show.

However, company spokeswoman Darcie Dearth says BCBSNC's insurance data so far this year — which shows the difference in what it paid in claims compared to what it received in premiums — doesn't include operating expenses while the losses do. And, she says, costs are indeed still rising and the new customers the company will have next year represent a "big unknown."

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Katherine Hempstead, who heads the health insurance team at the Robert Wood Johnson Foundation, says, "It could be that at least some of these plans are turning a corner, and some may have hit bottom in 2015 in terms of financial performance."

She added, "There is a continual process of learning and adjustment, as you would expect in a new market."

As Congress and the incoming Donald Trump administration consider repealing and replacing Obamacare, supporters say what worked with the law — like getting 20 million people insured — has been overshadowed by the focus on insurers' claims about losses and soaring rates for those who don't get heavily subsidized plans.

"Plans have been very vocal about describing features of the market that they think are not working optimally (but) they are also learning what they can do to improve their experience," Hempstead says.

The Centers for Medicare and Medicaid Services declined to comment, but Acting Administrator Andy Slavitt told reporters recently that insurers are just starting to learn how to price their plans for the ACA exchanges.

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When Aetna announced in August that it was leaving the exchanges in 11 of the 15 states it sells in for 2017, it said it had a pretax loss of $200 million on its individual insurance plans in the second quarter of this year and total pretax losses of more than $430 million since January 2014 on its individual insurance plans. Nearly all of these policies are sold on the ACA exchanges. At the time, CEO Mark Bertolini said the move would "limit our financial exposure moving forward."

But Aetna made nearly $12 million on individual ACA plans in Texas and more than $8 million in Pennsylvania, according to financial filings with state regulators, and is exiting the Healthcare.gov exchange in both states anyway. Asked to comment on decisions to leave states where it was making money, Aetna spokesman T.J. Crawford said, "We don't discuss performance at the state level."

Aetna will continue to sell individual and family policies off the ACA exchanges in most of the states. People who are eligible for subsidies — those earning less than $97,000 a year for a family of four — have to buy their plans on the exchange and those with lower incomes have more health problems. Aetna said 55% of its exchange customers this year were new and those "in need of high-cost care" made up a bigger share of these patients.

After United Healthcare and Aetna announced plans to leave North Carolina, BCBS increased its request for a rate hike from 18% to 24%. The company said it would need to insure about 260,000 more customers than expected.

"It’s important that we are equipped to cover all of our customers’ health expenses and service needs," BCBSNC CEO Brad Wilson said in a blog post at the time. "This is how insurance works for everyone."

Wilson said he had been undecided about remaining in the market because he wasn't sure "operationally, we could handle it," according to the Triangle Business Journal. North Carolina's Department of Insurance fined BCBSNC nearly $4 million in September over massive technical and customer service problems, including incorrect policy cancellation notices and delayed premium refunds.

Along with higher rates for 2017, BCBSNC dramatically reduced the number of plans they offer and added more plans that have higher cost sharing depending on what doctors and hospital are used.

"Our conclusion is that it is too soon to comment on the financial performance of ACA plans," said Dearth. "We still have one quarter to go for this year, and 4th quarter is typically a high medical utilization period."

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In the four states where it will still sell on the exchanges — Virginia, Nebraska, Iowa and Delaware — Aetna increased the number of plans it offered and added several new plans, including special ones for people with specific medical conditions.

Mario Molina, CEO of insurer Molina Healthcare, was more optimistic than some of his larger competitors on his company's last earnings call

“The marketplaces are generally performing well," he said. "They only require modification and adjustment, not wholesale change.”

Michael Neidorff, CEO of insurer Centene, also told investors in October that this company's exchange "experience continues to be favorable" and that it expected its ACA plans to continue to be profitable in 2017.

"Sometimes the things that are working get less attention," Hempstead said.

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