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

Tens of thousands of Iowans could be left with no health insurance options next year, after the last carrier for most of the state announced Wednesday that it likely would stop selling individual health policies here.

Medica, a Minnesota-based health insurer, released a statement suggesting it was close to following two larger carriers in deciding not to sell such policies in Iowa for 2018, due to instability in the market.

“Without swift action by the state or Congress to provide stability to Iowa’s individual insurance market, Medica will not be able to serve the citizens of Iowa in the manner and breadth that we do today. We are examining the potential of limited offerings, but our ability to stay in the Iowa insurance market in any capacity is in question at this point,” the company’s statement said.

Medica’s announcement comes on the heels of word last month that Aetna and Wellmark Blue Cross & Blue Shield would pull out of Iowa’s individual health insurance market for 2018. Those are the only three choices for individual health insurance in most areas of the state this year.

The pull-outs would not affect Iowans who obtain insurance via an employer or a government program, such as Medicare or Medicaid. But the carriers’ exit could leave more than 70,000 Iowans who buy their own coverage without any options for 2018.

The news caught national attention Wednesday, because of fears that residents of other states could also lose insurance as carriers pull out of the market. 

The situation comes as the U.S. House of Representatives wrestles with a bill to replace the Affordable Care Act. Iowa’s insurance commissioner has said there is little he can do unless Congress loosens the reins on state authority over rules insurers have to follow.

Medica Vice President Geoff Bartsh said his company would have continued selling insurance throughout Iowa if Wellmark and Aetna had stayed in the market. But Medica, which lost $1.5 million covering 14,000 Iowans last year, couldn’t afford to take on tens of thousands more from the other two carriers, he said.

“The decision wasn’t, ‘Should we continue?’ It was, ‘Should we be the only game in town?’” Bartsh said in an interview Wednesday.

Medica, which also sells insurance in Minnesota, North Dakota, Nebraska, Kansas and Wisconsin, isn’t ruling out remaining in a small part of Iowa in order to keep its foot in the door here. But Bartsh said Congress and state officials would have to move quickly to firm up the market before mid-June, the deadline for carriers to submit proposed premium rates to state regulators. “Six weeks is a really short time,” he said. “…We need someone to do something.”

Medica would like to see a reintroduction of high-risk pools, to take on patients with histories of particularly expensive health needs. The insurer also wants Congress to reinstate a national “reinsurance” program, which helps shoulder costs when insured patients come down with extremely expensive health problems. Those two measures would help make insurers' annual costs more predictable, he said. 

Bartsh said Congress isn’t helping the situation by continuously arguing over how to change rules in midstream while insurers are trying to figure out their rates for 2018.

When asked what advice he would have for current Medica customers in Iowa, Bartsh replied: “Call your elected officials.”

Iowa Insurance Commissioner Doug Ommen, who was in Washington, D.C., Wednesday, reiterated that he’s worried about the situation, but can’t do much without changes in the Affordable Care Act.

“Long-term, the individual health insurance market under the ACA was and still is unaffordable and unsustainable. Iowa needs congressional action as soon as possible,” Ommen, who was appointed by Republican Gov. Terry Branstad, wrote in an email to the Register.

Medica member Karen Slessor of Reinbeck was troubled by news of her insurer’s likely exit from the market.

“It’s a disappointment,” she said. “It makes it scary for next year.”

Slessor, 61, is a widow living on a small pension and Social Security benefits from her late husband. Like many Medica customers, she has a policy whose premium is subsidized by Obamacare. She has diabetes, arthritis and other chronic problems, and she spent about six months without insurance before landing an Obamacare policy in 2014. If insurers were still allowed to deny coverage or charge more to people with pre-existing health problems, “I’d be totally out of luck,” she said.

Slessor hopes government officials can get their act together and pass at least a temporary patch to help people like her keep some kind of coverage next year. But she’s not optimistic.

“I just don’t think they’re working together very well. So I can’t say I have high hopes that’s going to happen,” she said.

The three carriers’ decisions to pull out will affect Iowans who buy individual health insurance either on or off the federal government’s online marketplace. Unless a replacement carrier is found, the change means moderate-income Iowans in most counties would not be able to use Affordable Care Act subsidies to help pay premiums for private insurance. It also means many better-off Iowans who pay their entire premiums without government assistance would lose their individual insurance policies next year.

The change won’t affect nearly 77,000 Wellmark customers who bought individual policies that took effect before Jan. 1, 2014. Those insurance pools are relatively stable, because the policies weren’t subject to Affordable Care Act regulations, including the ban on insurers denying coverage to people with pre-existing health problems.

The insurance carriers’ decisions to stop selling individual insurance will affect more than 70,000 other Iowans who bought more recent policies from Wellmark, Aetna or Medica. And the decisions could mean that other Iowans won’t have options for new health insurance next year if they lose jobs that offer coverage, age out of their parents’ policies or become divorced from a spouse who has an employer-provided plan.

Insurers have complained that the Affordable Care Act, also known as Obamacare, put them in a difficult spot. The 2010 lawbars insurers from denying coverage to people with pre-existing health problems. It also requires most Americans to obtain coverage or pay a penalty, but insurance industry leaders say that requirement has not been strictly enforced.

The result is too many young, healthy people are staying out of the pool, leaving insurers to cover mostly older, unhealthy people, the carriers say. Wellmark’s leader told the Register on April 3 that the problem will likely get worse because President Trump has told his administrators to stop enforcing the coverage requirement.

A fourth carrier, Gundersen Health Plan, currently offers individual health insurance in five counties in northeast Iowa. That company, which is based in Wisconsin, accounts for a sliver of the Iowa market. A spokesman told the Register this week that the company hasn’t decided whether to continue offering those plans for next year.