Commissioner questioned about ACA’s impact on insurance companies

Kansas Insurance Commissioner Sandy Praeger Photo by Jim McLean

Kansas Insurance Commissioner Sandy Praeger
Photo by Jim McLean

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 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.

  • YahooSerious

    Isn’t that nice that they ask how insurance companies are doing. Have they asked how the people without insurance are doing since they refused to expand Medicare? Have they asked how the hospitals in the state are doing? Answer=not good. Nice to know big insurance is okay though. Good job republicans!

  • DerpSquad

    The insurance companies will be okay. Obama already has a bailout for them written into the ACA. The only way this theft can work is periodic bailouts of the industry that is now completely set up to fail. This should be obvious to anyone with any kind of common sense.

    • YahooSerious

      Insurance companies are set up to fail? Haha. That’ll be the day. Nice try, Derp. This isn’t the financial bailout that the Bush era started and Obama finished all because of relaxed federal regs. Because Clinton trusted super conservative Alan Greenspan to much and let him have his way. What does Greenspan say now: I made a mistake, unregulated capitalism is bad, bad, bad.

      • derpatcha

        It is so sad that you think Greenspan, a former chairman of the Federal Reserve, ever believed in “unregulated capitalism” when the sole purpose of the fed is to regulate capitalism. Government monopolized currencies do not exist in capitalism. I think you need to turn off MadCow and Screwball and actually read sometime.

        Statist gunna state tho. Just remember you said this unlike all the other times you are wrong (always).

    • Chief59

      Bringing MORE customers to the table is setting them up to fail? Please do explain that and your theft comment.

      • YahooSerious

        He’s been watching to much Fox News. Or should I say the ultra right propaganda channel. Like msnbc is the ultra liberal channel. My suggestion to you Derp would be to stick with the AP, PBS, or even CNN. They are about the most balanced and factual you’ll find.

        • Chief59

          But, but, but….Fair and balanced……Haha. Always good to see you here Yahoo.

          • YahooSerious

            Thank you kind, Sir.

      • Chief59CriesEveryNight

        Yes, Chief59 who thinks hayspost posts make him an intellectual and important voice in the city. Please tell me more about economics, ChiefBigPlanBigSpend. Explain to me how the $17T debt that has caused more poverty than any good needs to be increased to do more of your “good.”

        Out of all the tar ds that post on hayspost, you are without a doubt the biggest of them all. You should be proud of yourself. It takes a lot to become the biggest ta rd in the room these days.