Two new federal programs that are supposed to protect health insurers against upheaval related tothe Patient Protection and Affordable Care Act may do more for themarket giants than for smaller, newer players.
|This possibility emerges from a LifeHealthPro.com analysis of agiant batch of PPACA reinsurance and PPACA risk-adjustment programdata that the Centers for Medicare & Medicaid Servicesreleased June 30.
|The risk-adjustment program is supposed to shift cash fromhealth insurers that have low-risk enrollees in PPACA-compliant individual and small-groupplans to insurers with high-risk enrollees.
|A third component of the "three R's" PPACA risk-managementsystem is a temporary risk corridors program that's supposed toshift cash from insurers with especially good underwriting resultsin 2014, 2015 and 2016 to insurers that have especially poorunderwriting results during those years.
|CMS put preliminary reinsurance and risk-adjustment programpayable and receivable estimates for 2014 in the report that cameout June 30. Officials arranged the data by state and did not makeany effort to provide totals for related groups of insurers.
|Members of the public who wanted to look for insurers gettingespecially large or small amounts from the programs had to pagethrough the report manually. CMS did not provide any revenue,enrollment or per-enrollee figures that members of the public canuse to put the data in context.
|CMS had one risk program application process for insurers withmore comprehensive data and another process for insurers with lessdata. We fed the data for the issuers that used the standardapplication process into a spreadsheet.
|We found, for example, that Blue Cross Blue Shield of Texas, aunit of Health Care Service Corp., is on track to get more PPACAreinsurance program money than any of the 481 other individuallylisted issuers that's eligible to get reinsurance money through thestandard application process. Texas Blue could get $549 million inreinsurance money.
|Because of the way the reinsurance program is set up, everycarrier in the program pays a flat fee per enrollee to participate.The median payout for an individually listed issuer that's eligibleto get reinsurance money through the standard process appears to beabout $3.2 million.
|In the risk adjustment program, the top recipient of PPACArisk-adjustment money could be Blue Cross and Blue Shield ofFlorida. The preliminary report shows it could get about $222million in individual insurance risk-adjustment money from othercarriers through the standard application process.
|Because of the way the risk-adjustment program works, many planissuers will have to pay cash into the system. Our analysissuggests that Blue Cross of California, a large unit of AnthemInc., could pay more into the program than any other individuallylisted issuer: about $182 million.
|The top recipient of PPACA risk-adjustment money paid out in thesmall-group market through the standard process could be OxfordHealth Insurance Inc. of New York, a unit of UnitedHealth GroupInc. Oxford could get $145 million in small-group risk-adjustmentmoney for 2014. Aetna Life Insurance Company of New York could endup with the biggest small-group risk-adjustment payable: about $62million.
|We also sorted the data by issuer name, and we created subtotalsfor obviously related groups of carriers that appeared next to eachother in the alphabetized spreadsheet, such as the group includingBlue Cross and Blue Shield carriers with BCBS or Blue Cross. Weadded the numbers for Blue Cross of California to the Anthem totals, but we did not make specialefforts to put other issuers into corporate groups. We did notcreate a subtotal for Health Care Service Corp., for example.
|A glance at the issuer group subtotals confirms the impressionwe got from a quick look at the original CMS report that thereinsurance and risk-adjustment programs may send a lot more moneyto big insurers than to small carriers. In theory, PPACA exchangeprogram managers wanted insurers to bring in as many young, healthy"invincibles" as possible, to hold down overall PPACA program costsand increase the percentage of Americans who have health coverage.In practice, carriers that succeeded at bringing in the younginvincibles might end up facing big "payables," or negativenumbers, for the risk-adjustment program.
||PPACA reinsurance program
| Blues (includessome Anthem units) | $2,327,596,809 |
| Humana | $551,915,510 |
| Anthem (including Blue Crossof California) | $534,925,112 |
| Blue Shield ofCalifornia | $363,050,265 |
| Kaiser | $300,149,830 |
| Assurant (Time) | $265,749,693 |
| Coventry (Aetna) | $247,459,900 |
| Health Net | $214,194,301 |
| Cigna | $202,203,268 |
| Highmark (Blue) | $201,553,610 |
| Aetna (other thanCoventry) | $116,080,270 |
| UnitedHealth (including Oxfordand Optimum) | $89,033,399 |
| Premera (Blue) | $78,394,061 |
| Regence (Blue) | $77,750,205 |
| Carefirst (Blue) | $68,590,591 |
| Molina | $7,566,670 |
| Centene (Celtic) | $7,003,291 |
| Assurant (JohnAlden) | $2,784 |
| Source: CMS | |
PPACA risk-adjustment program, individual market
| BCBS/Blue Crosscompanies | $304,373,735.29 |
| Blue Shield of California | $135,212,707.60 |
| UnitedHealth (including Oxford andOptimum) | $110,840,237.28 |
| Assurant (Time) | $109,474,581.90 |
| Cigna | $108,583,010.34 |
| Aetna (other thanCoventry) | $65,338,605.35 |
| Kaiser | $53,933,839.21 |
| Regence (Blue) | $39,443,946.38 |
| Molina | $1,735,966.22 |
| Assurant (John Alden) | -$162,197.22 |
| Highmark (Blue) | -$1,022,421.69 |
| Premera (Blue) | -$1,342,427.11 |
| Centene (Celtic) | -$8,470,928.48 |
| Carefirst (Blue) | -$10,170,055.86 |
| Health Net | -$69,679,464 |
| Humana | -$111,175,060.05 |
| Anthem (including Blue Crossof California) | -$197,844,730.00 |
| Coventry (Aetna) | -$239,201,054.37 |
| Source: CMS | |
PPACA risk-adjustment program, small-group market
| UnitedHealth (including Oxfordand Optimum) | $113,337,442.22 |
| BCBS/Blue Cross companies | $86,079,523.72 |
| Anthem (including Blue Crossof California) | $44,261,149.34 |
| Regence (Blue) | $24,544,872.00 |
| Blue Shield of California | $13,755,875.29 |
| Highmark (Blue) | $92,086.75 |
| Cigna | $70,541.90 |
| Assurant (Time) | -$7,336.93 |
| Assurant (John Alden) | -$916,553.39 |
| Premera (Blue) | -$7,630,241.94 |
| Health Net | -9,140,117 |
| Humana | -$11,218,406.63 |
| Carefirst (Blue) | -$12,720,249.63 |
| Kaiser | -$15,872,519.07 |
| Coventry (Aetna) | -$17,713,016.65 |
| Aetna (other thanCoventry) | -$178,638,575.49 |
| Source: CMS | |
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Allison Bell
Allison Bell, ThinkAdvisor's insurance editor, previously was LifeHealthPro's health insurance editor. She has a bachelor's degree in economics from Washington University in St. Louis and a master's degree in journalism from the Medill School of Journalism at Northwestern University. She can be reached at [email protected] or on Twitter at @Think_Allison.
