Large Insurers Opt Out Of Missouri’s Health Exchange

When the new health exchange opens for business in Missouri on Oct. 1, at least three major health insurers will not be participating.

UnitedHealthcare, the nation’s largest insurer, said Monday that it won’t offer insurance policies this fall in the federally run health exchange in Missouri, but may enter the exchange later. The Minneapolis-based insurer also plans for the time being to stay out of Illinois’ health exchange.

Cigna, another leading insurer, intends to participate in only five of the 10 states in which it currently writes individual health policies. Cigna, based in Bloomfield, Conn., does not write individual policies in Missouri. Assurant Health, based in New York City, also won’t participate next year.

Health exchanges are designed to give consumers the opportunity to “comparison shop” for health insurance plans, and some insurers have complained there are still too many uncertainties to make sound business decisions.

But the Blue Cross and Blue Shield Association, which represents state-based Blue Cross plans nationwide, appears to be getting set to make a big splash in many of the new exchanges. The association has partnered with the nation’s largest drugstore chain, Walgreen Co., based in Deerfield, Ill., to launch a national educational campaign to better acquaint consumers with their health coverage options.

The decisions by some insurance industry giants to withhold their participation in certain state and federal health exchanges may be interpreted as another setback for the roll-out by the administration of President Barack Obama of a key component of the Affordable Care Act.

Insurers that already have a big foothold in the individual market and want to protect and perhaps expand their market share are jumping in, while others whose mainstay is writing policies for employees of larger companies are counting to three before they take the plunge.

Leading health policy experts say they are not alarmed.

“Everyone expects this will take some time to ramp up and that enrollment may not peak until year two or three,” said Larry Levitt, a senior vice president at the Henry J. Kaiser Family Foundation, a nonprofit, nonpartisan health policy research group. (KHN is an editorially independent program of the foundation) “So it’s a business strategy decision of whether to jump into the market from day one and capture market share, or wait a year or two until things shake out.” He said that insurers were “making very individualized decisions about whether they participate and where they don’t.”

Such decisions, Levitt said, depend on an insurer’s brand-name recognition in a state and its contracts with doctors and hospitals. He also said that, because such companies will need to invest heavily in the direct marketing of exchange-related policies, they must expect enough of a market share to justify the investment.

What matters, he said, is that consumers have enough choice of individual health policies and there is enough competition among insurers to help drive premiums down.

“As long as you’ve got at least three (insurance) plans in an area, you’re doing fine,” he said.

John Holahan, a fellow at the Urban Institute in Washington, said he anticipated that “there will be vibrant competition, except in the states where ‘the Blues’ (Blue Cross and Blue Shield) are the dominant players. … A lot of plans are showing interest, and they’re competing hard.”

He also said smaller insurers were likely to enter various state exchanges.

“This is an attractive market with a lot of covered lives, and smaller companies will probably come in and compete for them,” Holahan said. “Anyone can come into a market, but can you negotiate a good rate with enough (health) providers to keep your premiums down?”

UnitedHealthcare and Cigna, whose primary businesses are the larger group market, are reluctant to jump in too quickly.

“As we have stated publicly for some time, we continue to evaluate exchanges and see 2014 as just the very start of the exchange markets,” Kevin Shermach, a UnitedHealthcare spokesman, said in a statement.

“We will continue ongoing discussions with our provider partners and customers to continually review future exchange opportunities. As the economics, sustainability and dynamics of the exchange continue to become clearer over time, the exchange has the potential to be a growth market with much to offer UnitedHealthcare, other insurers and consumers.”

Anthem Blue Cross and Blue Shield, with an estimated 26 percent market share combined in Missouri’s individual and group markets, sounds more eager.

“As a market place leader in the individual and small employer markets, Anthem is uniquely positioned to succeed in the health benefits exchanges,” Deb Wiethop, an Anthem spokeswoman in St. Louis, said in a statement. “Anthem is actively creating product solutions for the exchange marketplace. … As the health care marketplace shifts to become more consumer and retail focused, we are changing to better meet those needs.”

Assurant Health, a leader in the individual and small employer group market, “plans to participate in exchanges in 2015,” spokeswoman Sue Pierman said.

Humana, based in Louisville, Ky., has announced plans to enter 14 different exchanges across the country in 2014 but has not yet identified those states, its spokesman Jim Turner said. Humana writes only a limited number of individual health policies in Missouri.

Other leading health insurers — Aetna and its subsidiary, Coventry Health Care Inc., as well as Clayton-based Centene Corp. — may also be planning to participate in the Missouri exchange, according to industry sources. Officials at Aetna, Coventry and Centene did not return phone calls Monday.

“There’s a lot of reluctance to talk about the exchanges, just because there are too many ‘what ifs,’ ” said Cigna spokesman Joe Mondy. “The insurance industry is one of those industries that doesn’t like a lot of what ifs.”