Health plans that have struggled to find success in the health insurance exchanges have taken the wrong approach, a health plan CEO says. They're acting as if the customers are like those from the employer-driven market.
The healthcare insurers that have pulled out of the Affordable Care Act exchanges, and some of those remaining, blame their failure to thrive on the way the exchanges work and the populations they serve, but one health plan CEO sees it differently.
He says they're just doing it wrong and they're slow to realize their mistake.
The mistake is looking at the exchanges in the same way insurers see employers and individuals who do not qualify for the exchanges, says Richard Topping, CEO at NC-based Cardinal Innovations Healthcare. It bills itself as the largest specialty health plan in the country, serving 720,000 members through its Medicaid, state and county funded plans.
Cardinal is not currently on the exchanges, but has not ruled out that possibility for the future. The plan is about 85% Medicaid-driven, with the remainder in state and local programs that mostly serve the uninsured.
"A lot of the insurers in the exchanges have approached it like a commercial market. It's really not," Topping says. "It's much more like a Medicare managed market or a Medicaid market. It is not an employer-based, large group commercial market."
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The consumers on the exchanges are individuals who typically have multiple healthcare needs and complex conditions, so the health plan must do much more than just pay for medical care, Topping says. To be successful with these customers, he adds, a health plan must coordinate care and manage their health.
Topping notes the example of giants Blue Cross Blue Shield and Aetna. In North Carolina, where Cardinal Innovations is based, BCBS lost $405 million on medical expenses for ACA customers in 2014 and 2015. It is still in the marketplace for 2017.
Aetna pulled out of the North Carolina market in 2016, citing total pretax losses of more than $430 million since January 2014.
Both insurers run exchange plans through the commercial side, not the Medicaid division, Topping explains. Centene, an insurer that has been more successful in the exchanges, runs that business through its Medicaid division, he says.
"I talk with my peers at other insurers and they say it's unbelievable how the people they get through the exchanges don't sign up in open enrollment, wait till they need care, lie about eligibility, pay premiums only for the three months they're in treatment, then stop paying premiums and disappear," Topping says.
"And I think, well of course they did. That's our Medicaid enrollment all day long. If you are operating in the exchange market as a traditional commercial insurer, you're going to lose your shirt. And that's what's happening."
'A Social Services Approach'
Serving customers in the exchanges is not a healthcare problem but a "bus pass problem," Topping says. If the insurer does not address the underlying issues that prevent some customers from seeking preventative care and early intervention, it can never achieve cost savings because it will always be in a reactive mode, he says.
That factor is far less influential in the commercial market, he says.
"Insurers avoided Medicaid in the past because they saw it as unprofitable, so they're all staffed up with people who cut their teeth on the commercial side of the house," Topping explains.
"A Medicaid-type population is not so much about healthcare cost management and much more like a social services approach. Half of my employees are frontline care coordinators, essentially social workers, whose job is to go and link our customers up with care- or community-based social support rather than waiting for them to show up in the ED."
Gregory A. Freeman is a contributing writer for HealthLeaders.