72,000 Iowans could be first to lose coverage as insurance market collapses

Karen Slessor’s health insurance is hanging by a thread.

Slessor, a Reinbeck widow who has diabetes and arthritis, is one of nearly 72,000 Iowans who are on the brink of losing coverage as Congress tries to overhaul the country’s health care system. The at-risk Iowans buy their own health insurance policies, usually because they don’t work for employers that offer coverage and they don’t qualify for government insurance programs, such as Medicaid and Medicare.

Iowa is the first state where consumers face the likelihood of losing all access to individual health insurance policies, but experts say other states could soon follow.

The two largest health insurers offering individual coverage in Iowa, Aetna and Wellmark Blue Cross & Blue Shield, announced last month that they would stop selling such policies for next year because of heavy financial losses and uncertainty in the market. In most of the state, that left just one relatively small carrier, Medica. The situation became critical on Wednesday, when Medica leaders said they probably also will pull out of Iowa.

“Then what would I do? I don’t know,” said Slessor, who has a Medica policy.

Other states could follow

Iowa could be on the leading edge of a national calamity. Cynthia Cox, a vice president for the Kaiser Family Foundation, said Iowa is the first state to face the likelihood of having no individual insurance carriers in most counties. In Tennessee, 16 of 95 counties are without a carrier for 2018, she said. Several other states have just one carrier left, so they could quickly be in the same boat as Iowa.

Medica, the last insurer selling individual health policies in most of Iowa, likely to exit

The U.S. House narrowly passed a bill Thursday that would replace the Affordable Care Act. In celebrating the victory, House Speaker Paul Ryan cited the imminent collapse of Iowa's individual health insurance market.

"What kind of protection is Obamacare if there are no plans to choose from?" the Wisconsin Republican asked at a White House news conference.

The House bill includes some measures meant to cushion risks to insurers, but critics say it would make matters worse for many middle-age Americans and people with chronic health problems. The House bill faces an unclear future in the U.S. Senate, and insurers are running out of time to make decisions about where to offer coverage next year.

"It looks like the political uncertainty could continue," Cox said. 

Reports from Washington indicate it could take at least several weeks for the Senate to take up its version of the health-care bill. If the Senate passes a measure that's different from the House bill, the two would have to be reconciled, then voted on again. That could take weeks or months more.

Sen. Chuck Grassley said Friday that he recognizes the need to move quickly to head off a disaster in Iowa. “The goal is to enact legislation to improve health care in time to help as many people as possible, including those who may find themselves in a tough spot next year," the Iowa Republican said in a statement released by his staff.

Iowa's other Republican senator, Joni Ernst, indicated she is balancing the calls for speed with the desire to pass a well-crafted bill. "Sen. Ernst has said she’s taking a look at the House-passed bill, and stressed that as with any reform, we want to make sure it’s done thoughtfully and carefully. Of course she is keenly aware of the need to pay close attention to how it will affect insurance availability in 2018," Ernst spokeswoman Brook Hougeson wrote in an email to the Register. 

Gov. Terry Branstad told reporters Friday he hopes the House passage of the bill will help head off a crisis in Iowa. "This is an important and significant step forward and critically important to Iowa," he said.

The loss of Iowa carriers could hamstring people who bought subsidized insurance policies on the Affordable Care Act’s online marketplace, as well as Iowans who bought full-price policies via insurance agents.

The loss of individual policy options wouldn’t affect more than 2 million Iowans who obtain insurance via an employer or government plan, such as Medicare or Medicaid. It also wouldn't affect about 77,000 longstanding Wellmark customers who bought policies before the Affordable Care Act took effect in 2014. But people who buy individual policies usually do so because they have no other choices. The loss of carriers could leave tens of thousands of Iowans adrift, unless Congress acts quickly to shore up the market.

Individual coverage has been a prime option for many people who become divorced or widowed and lose access to their spouses’ employer-provided coverage. Another vulnerable group could be young adults who lose access to their parents’ coverage when they turn 26. If they can no longer obtain their own insurance, such consumers could be under increased pressure to find jobs offering health benefits. That could limit their flexibility to work part time or take jobs with small employers that don’t provide coverage.

Shaky market gets shakier

Insurance experts say the individual health insurance market was already shaky under former President Barack Obama’s Affordable Care Act, and it has become even more unstable because of uncertainty about whether and how President Donald Trump and the Republicans running Congress will change the rules.

Slessor is in a particularly precarious position. She’s the kind of potential customer health insurers used to screen out, before the Affordable Care Act barred carriers from denying coverage for pre-existing health conditions.

She’s 61, and she has diabetes and arthritis. She makes regular trips to doctors’ offices, including a visit to a Cedar Falls eye clinic Wednesday for examination of a small growth on her eyelid. Such visits to medical specialists cost her a $60 copay, which is a stretch for someone living on an annual income of $29,000 in widow’s pension and Social Security benefits. But if she becomes uninsured, she fears she won’t be able to visit doctors at all.

The Affordable Care Act, also known as Obamacare, subsidizes premiums for private insurance policies purchased by moderate-income Americans like Slessor. She pays about $213 per month in premiums, which is a relative bargain. The federal government pays another $808 per month to Medica.

“There’s no way I could afford that — not if I wanted to buy medicine and eat,” she said.

Slessor doesn’t see any other coverage options. She makes a bit too much to qualify for Medicaid, which is the federal and state program for the poor. She used to be covered under an employer-provided policy via her husband, Rod, who was a pastor. But she lost access to that policy after he died in 2013. She’s four years away from qualifying for Medicare, the federal program for seniors.

“I was just hoping I could kind of creep through,” she said.

Carriers not required to sell policies

Obamacare relies on private insurance carriers to cover moderate-income Americans, but it doesn’t require the companies to offer policies. Many carriers have been pulling back in recent years. Their main complaint is the government hasn’t done enough to enforce an Obamacare requirement that most Americans have coverage. The lack of enforcement has let many young, healthy Americans stay out of the pool, insurers say. Now, carriers don’t know what to expect from the Trump administration and the Republican-controlled Congress, which vowed to repeal and replace Obamacare.

Medica Vice President Geoff Bartsh said in an interview that Congress has been compounding the market's instability by continuing to argue even as insurers try to figure out their rates for 2018.

“We need someone to do something,” Bartsh said.

Medica, which has about 14,000 Iowa customers, has until mid-June to tell state officials whether it intends to sell individual policies here for 2018. On Wednesday, the company announced that it probably would pull out of Iowa’s individual health-insurance market, in which Wellmark alone says it has lost $90 million in three years. Medica leaders said they couldn't afford to take on the entire market alone. 

An Aetna spokesman said Friday that his company's decision to pull out of the Iowa market for 2018 is final. Wellmark's president said last month that his company's decision not to sell individual insurance in 2018 also was final. However, Wellmark spokeswoman Traci McBee put out a statement Friday that left open the possibility of a re-entry into the market. She said the bill "is getting closer" to addressing Wellmark's desire for help in controlling insurers' risks. But, she said, "nothing has passed with any level of certainty yet. That makes forecasting any future participation plans or solutions difficult."

Medica released a statement saying it opposes the overall House bill but supports parts of it. "The specific provisions in the bill intended to stabilize individual insurance market, like Iowa’s, take some positive steps forward and move us backward in others. Something needed to happen and it did, but more work needs to be done," the carrier said. 

Iowa Insurance Commissioner Doug Ommen has said his hands are tied unless Congress gives states more flexibility to set insurance market rules.

“This is a federally created situation, and we need a federally created solution,” he said last month. His spokesman declined comment Friday on the likelihood that Congress could move quickly enough to prevent Iowa from losing all of its individual health-insurance carriers for next year. 

The Republican plan that passed the House on Thursday would let states opt out of many Obamacare rules, including the one barring insurers from charging more to people with pre-existing health problems. In return, the bill would offer billions of dollars to help states set up high-risk pools for people with chronic health problems, but skeptics say the money would not be nearly enough. 

Supporters say the Republican plan would encourage Americans to maintain coverage without requiring them to have it, as Obamacare has tried to. Critics warn the new plan would return the country to pre-Obamacare days, when insurance was out of reach for many Americans with chronic ailments.

Agents look for options

Leading Iowa insurance broker Lynn Schreder has been advising clients not to panic about the looming loss of carriers here. She wants to see Congress act quickly to give states some flexibility in trying to woo or retain health-insurance companies. But the clock is ticking.

“What I’m telling people is we have to hope and pray that something’s going to happen in Washington, because that’s our only hope,” she said.

Schreder is president of the Iowa Association of Health Underwriters and a co-owner of the KHI Solutions insurance brokerage, based in Fort Dodge and West Des Moines. She has been aggressively seeking alternatives for customers in danger of losing individual health insurance policies.

For some self-employed customers, Schreder has been arranging to set up “micro-group” plans. To qualify, they need at least one employee. That person could be a spouse, as long as they receive company pay that is reported to the IRS on a W-2 form, she said. In some cases, a carrier will let a self-employed person with no other employees declare themselves a group.

The “micro-group” plans could be good alternatives for self-employed people, even those who have pre-existing health problems, Schreder said. Insurers used to set small businesses’ rates partly on employees’ health status, but they’re not allowed to do that under the Affordable Care Act. Carriers now only consider participants’ age, ZIP code and gender when setting rates.

Some Iowans could sign up for faith-based “health care sharing ministries,” in which religious people agree to help cover each other’s medical expenses. Such options aren’t full insurance. The plans require participants to attest to religious beliefs, and they exclude costs for such things as birth control, out-of-wedlock pregnancies and injuries sustained in drunken-driving accidents. The ministries also can exclude payment for pre-existing health problems. But they do count as qualifying coverage for Americans trying to comply with the Affordable Care Act’s requirement that most Americans obtain insurance.

Carriers didn't foresee costs

When the Affordable Care Act first took effect in 2014, one of Iowans’ main options for individual insurance was CoOportunity Health, a health insurance cooperative set up with tens of millions of dollars in federal money. The effort collapsed in 2015, followed by most other such co-ops nationally.

One of CoOportunity’s founders, Dave Lyons, said last week that he had feared the market’s problems would lead to a complete lack of carriers for individual health insurance in Iowa.

Lyons, who is a former state insurance commissioner, said numerous problems destabilized the individual insurance market.

“I’m incredibly disappointed that even the largest, strongest, deepest-pocketed carriers aren’t able to pencil out how to remain in this marketplace,” he said.

Experts for all the carriers, including CoOportunity, failed to foresee how much health care formerly uninsured Americans would use once they became covered, Lyons said. Also, he said, the federal government failed to live up to commitments to help shelter carriers from unexpected risk in the new market.

Lyons also noted that in Iowa, Wellmark was allowed to keep tens of thousands of longstanding customers covered in older policies that didn’t meet the Affordable Care Act regulations. Those customers were healthy enough to pass health screenings that insurers previously used to check for pre-existing conditions. After the Affordable Care Act took effect, the block of relatively healthy Iowans stayed out of the general pool, skewing the risk among the remaining consumers, he said.

Lyons said he hopes someone figures out how to prevent tens of thousands of Iowans from losing their coverage for 2018.

“It’s hard to be optimistic right now,” he said.

Cox, the Kaiser Family Foundation expert, also noted Wellmark's reports of having a single, unidentified Iowa patient with a rare genetic condition that is costing more than $1 million per month to treat. Cox speculated that once Wellmark announced that it was leaving the Iowa market for individual insurance, the remaining two carriers might have decided they would have to also leave or risk taking on that patient's extreme costs. 

Sara Collins, a national expert on health insurance issues, said Iowa is one of several states that were down to just one carrier for individual insurance as of last week. Collins, a vice president of the Commonwealth Fund, said some carriers have gotten the jitters from Trump’s stated desire to see the Affordable Care Act collapse and from Congress’ stop-and-start attempts to repeal and replace the law.

“That has created a lot of uncertainty for insurers,” she said.

If Congress doesn’t resolve the issues by the end of May, more insurers could decide against offering individual policies for 2018, she said. However, Collins said states and the federal government have several options to try to encourage carriers to stay in or re-enter the market.

One would be to organize “re-insurance” arrangements, which would help shoulder the costs of particularly expensive patients. If insurers knew they wouldn't have to carry such patients alone, they could be more confident in setting rates for everyone else, she said.

Such reinsurance arrangements were offered by the federal government in the first few years of the Affordable Care Act, but they have been phased out.

“Congress could reinstate that tomorrow,” Collins said.

She added that Alaska and Minnesota have set up state versions. The U.S. House bill includes money states could use for such arrangements. 

Collins said the Trump administration also could help ease insurers’ fears by committing to continue spending billions of dollars to help cover deductibles and other costs related to health insurance policies that moderate-income Americans purchase via Obamacare. That money goes to the insurers, and Trump has at times talked about cutting it off.

Members of Congress would face enormous pressure if thousands of their constituents were suddenly forced off of insurance plans, Collins said.

“I think ultimately, they will find a way to make sure people in these states have access to health insurance,” she said.

In a pinch, Congress theoretically could pass a temporary patch. For example, Collins said, residents in states lacking private carriers could be allowed to buy into existing government insurance plans, such as Medicaid, the military program Tricare or federal employees’ health insurance program. Those who now qualify for Obamacare subsidies for private insurance could be allowed to use that money for public coverage.

Slessor, the Medica customer, would favor that idea. She thinks in the long run, the country should shift to a single-payer system, in which everyone is covered by a taxpayer financed plan such as Medicare. But Slessor, who is a Democrat, knows such a plan would never fly with the current president and Congress. She's not sure how hopeful to be that even a short-term fix could be approved to help Iowans like her avoid losing their subsidized private coverage. 

"If there aren't any companies that are willing to come in and do it, then I'm not sure what anybody's going to do," she said.