Wellmark trims broad-network health insurance options

Iowans looking to buy individual health insurance policies now have fewer options from the state’s largest carrier.

Wellmark Blue Cross & Blue Shield leaders said Tuesday that they no longer will sell standard, broad-network health policies, known as PPO plans, on the individual market in Iowa. The company will continue to sell plans that steer participants to specific hospital-and-clinic systems, such as the Mercy Health System or the University of Iowa system. It also will sell an HMO plan that has some restrictions on out-of-network care.

Wellmark has said it lost $99 million in Iowa’s individual health-insurance market in the past two years. That’s because newly eligible consumers under the Affordable Care Act have used even more health care than expected, Wellmark officials say.

Many Wellmark customers who already are covered by individual broad-network plans will be allowed to keep them. However, about 7,000 who purchased “gold-tier” plans in recent years will soon receive notices that those relatively expensive, rich-benefit plans are being curtailed.

Tuesday's announcement does not affect hundreds of thousands of Iowans who obtain Wellmark coverage via an employer or as a supplement to Medicare. It also doesn’t affect about 55,000 individual Iowa consumers who bought Wellmark before the Affordable Care Act took effect.

The company announced Tuesday that it is making a bigger shift in South Dakota, where it will no longer sell any new individual policies. Wellmark said about 8,000 South Dakota customers will get cancellation notices on individual policies they bought in recent years.

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One of the reasons cited for the instability has been the Affordable Care Act’s requirement that insurers accept applicants without regard to pre-existing health problems. Insurers say they have taken on even more health-care costs than expected since that change took effect in 2014.

“Wellmark’s mission is to create affordable health insurance for people to access quality health care. And, for the majority of the past 75 years, we’ve been able to achieve that,” Wellmark Chairman John Forsyth said in a press release Tuesday. “However, it’s apparent that continuing to offer plans with broad networks, combined with the rich benefits of the ACA, is not consistent with managing continually rising costs. While we could seek additional premium increases to mitigate rising costs, this is not sustainable for our members’ pocketbook.”

Wellmark plans to raise premiums by 38 percent to 43 percent next year on about 30,000 Iowans who bought individual policies since the Affordable Care Act took effect in 2014. People who bought Wellmark policies before then are facing smaller increases.

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State Insurance Commissioner Nick Gerhart noted that other states, including Nebraska, are seeing similar contractions of coverage options. “Unfortunately, Iowa’s not immune to these pressures,” he said in an interview Tuesday. He noted the number of Iowans buying their own insurance has actually dropped, from about 190,000 to about 185,000, since the Affordable Care Act took full effect in 2014. He suspects many relatively healthy consumers have dropped out of those plans because of skyrocketing premiums spurred by the entry of people with chronic health problems.

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Janis Van Ahn, a Johnston insurance agent specializing in health policies, said she wasn’t surprised to see Wellmark trimming the options it sells in the individual market. “It’s tough right now. Although they’re strong in our market, they’re losing lots of money here,” she said. The underlying problem is the pool of customers contains many people with significant health problems but not enough people who are healthy, she said. “There just aren’t enough people to spread the risk."

Van Ahn added she expects more consumers to be steered into narrow-network plans, in which they must get most care from a specific hospital and clinic system. Consumers prefer broader plans, she said, but more of them will have to accept narrow ones to find a premium they can afford.