Commissioner questioned about ACA’s impact on insurance companies
By Jim McLean
KHI News Service
TOPEKA — Kansas Insurance Commissioner Sandy Praeger said she has seen no evidence the Affordable Care Act is straining the finances of health insurance companies operating in the state.
Praeger, a Republican who has drawn criticism from some in her party for supporting the health reform law, made the comment today in response to questions from Sen. Mary Pilcher-Cook, the chairwoman of the Senate Public Health and Welfare Committee.
Praeger said it is too early to tell whether early trends such as the sluggish enrollment by younger, healthier people would continue and result in more risk for companies. She also said the law has mechanisms to offset those sorts of costs and “equalize risk among the companies.”
Because the federal law left state insurance departments in charge of licensing and regulating companies, Praeger said her agency would continue to monitor the financial health of Kansas insurers.
“We have access to all of their financial information,” she said. “And we still have the ability to take whatever action is needed to get them back on sound footing.”
Pilcher-Cook, a Shawnee Republican and critic of the ACA, said her questions were based on concerns that the law could put insurers and their customers “at risk.”
“The level of risk is out of whack,” she said.
Sheldon Weisgrau, director of the Health Reform Resource Project — which is funded by several Kansas health foundations, including the Kansas Health Foundation, a major funder of the KHI News Service — said it was premature to conclude that insurance companies offering plans in the HealthCare.gov marketplace had failed to account for potential risks.
“The assumption behind the questions is that because not as many young people are signing up as would be ideal, rates are going to go up,” Weisgrau said. “You can’t make that assumption because if the actuaries did a good job of anticipating that, their rates are going to be on target.”
Blue Cross concerned going in
A couple of months prior to the October 2013 launch of the marketplace, Andy Corbin, chief executive of Blue Cross Blue Shield of Kansas, said the company was careful not to set its rates based on overly optimistic assumptions. Still, he acknowledged being a bit nervous about what lay ahead.
“Frankly, I don’t know what I’m going to get,” Corbin said at the time. “If I get all the people with illnesses, I’ll be in real trouble. If I get a cross-section, we can probably hope that our rates are OK.”
Praeger said only the three insurance companies offering plans in the Kansas marketplace — which is run by the federal government — know the risk profile of their new enrollees. She said if any of them are assuming more than their share, it will show up in the financial information reviewed by her agency and steps would be taken “to get them back on sound financial footing.”
Praeger said the decision this week by the Obama administration to further delay enforcement of the so-called employer mandate would allow more time to work out implementation details with affected businesses.
But she said the delay could further skew the enrollment numbers enough to increase premiums in 2015.
Kansas enrollment trends
Praeger said the good news in Kansas is that companies are enrolling a slightly higher percentage of people age 34 or younger than insurers nationally — about 32 percent of the 14,242 Kansans who enrolled from October through December were age 34 or younger.
“When you compare Kansas enrollment data to national data, we’re 2 percent higher in terms of that younger age cohort, which is good,” she said. “But it’s probably not as good as plans need it to be to help offset the cost of older, sicker folks.”
In addition, more Kansans are deciding to pay higher premiums in exchange for plans that provide comprehensive coverage and require lower out-of-pocket costs, such as co-pays and deductibles.
“Our enrollment in the ‘gold plan’ is 12 percent higher than the national data,” Praeger said, noting that likely means that the people enrolling in such plans have specific and potentially expensive health care needs.
About 74 percent of the Kansans who purchased coverage in the marketplace qualified for financial assistance — federal tax credits available on a sliding scale to those with annual incomes between 100 percent and 400 percent of the federal poverty level. That is 5 percent below the national average, Praeger said.
Through the end of December, approximately 5,500 Kansans who attempted to purchase coverage discovered that they qualified for Medicaid or CHIP, the Children’s Health Insurance Program.
The current eligibility threshold for Medicaid in Kansas is among the lowest in the country at 33 percent of FPL, or $7,770 a year.
Kansas is one of 23 states that have decided not to expand Medicaid eligibility to everyone making up to 138 percent of FPL — $15,856 for individuals and $35,355 for a family of four.
If it stands, the decision is expected to leave approximately 78,400 Kansans without coverage, according to researchers at the Kansas Health Institute.
Such Kansans make too much to be eligible Medicaid but too little to qualify for federal subsidies to help cover the cost of private coverage. Those subsidies are available on a sliding scale to people between 100 percent and 400 percent of federal poverty guidelines.