The Affordable Care Act roller coaster just went through another policy loop-de-loop. And Portland insurer Moda Group is once again the queasy kid in the last car wishing it would just end.
The Trump administration announced a week ago that it will freeze certain payments to some insurance companies intended to help defray the cost of covering high-risk customers. Moda, the company that nearly failed in the chaotic first years of the Affordable Care Act, is again the hardest hit Oregon insurer. If the temporary freeze becomes permanent, it will cost the company nearly $43 million just for last year, according to the U.S. Centers for Medicare and Medicaid.
That would virtually wipe out Moda's $44 million net income for the year.
The freeze could make insurance coverage more expensive and harder to find for American consumers, according to regulators and industry groups. The so-called risk adjustment program steered more than $10 billion a year to insurers nationwide that agreed to cover the sickest customers.
State officials did not rule out the possibility of reopening the 2019 insurance rate-setting process because of this decision. The freeze "puts Oregonians at risk by further injecting instability into the health insurance market, and we are pursuing all avenues to prevent additional unwarranted increases to 2019 rates," said Andrew Stolfi, Oregon Insurance Commissioner.
Federal officials said they had little choice but to freeze the program after a New Mexico court ruled that the Centers for Medicare and Medicaid was using an "arbitrary and capricious" methodology to set the payments. Skeptics argued that it was an attempt by the Trump administration to sabotage the Affordable Care Act.
The administration made repealing and replacing the Obamacare a top priority after Trump's election. Despite controlling both chambers of Congress, the Republicans couldn't pull it off.
But the administration continues to force change on the program. It has ended attempts to enforce the individual mandate, which requires everyone to obtain health insurance, for example. And now this.
The risk adjustment freeze comes as insurance companies are learning to live with the Affordable Care Act. Oregon carriers earned a combined $195 million in 2017, the first time in three years the industry finished the fiscal year in the black. By contrast, in the chaotic days of 2016 and 2015, Oregon insurers lost $35 million and $217 million, respectively.
The new stability is reflected in the relatively modest 5 to 10 percent rate hikes most of Oregon's insurers are tentatively getting in 2019. In the turbulent early days of Obamacare, some carriers struggled to survive and sought enormous double-digit rate increases.
Two years of significant rate hikes -- as high as 30 percent -- followed as companies desperately tried to shore up their bottom lines. The big and sustained price increases posed a bitter hardship to Oregonians who obtained their own insurance through the individual market.
Moda isn't the only company taking a hit. Regence Blue Shield in Washington, a carrier run by Portland-based Cambia Health Solutions, stood to collect more than $61 million in risk adjustment dollars. In all, Cambia companies were in line to get about $100 million from the program.
With 2.2 million customers in four states, Cambia says it has the size and financial strength to weather the storm. "Our focus on financial stability has enabled us to serve our members for more than 100 years," said company spokesman Jared Ishkanian.
The risk-adjustment program gave, and it took away.
Some carriers got millions of dollars in financial assistance. Others, particularly those with safer, healthier, more profitable customers, actually had to pay into the program.
So, the tentative freeze could actually save some insurers significant sums of money. Providence Health & Services in Oregon, for example, was scheduled to pay more than $31 million into the risk adjustment pool in 2017. Kaiser Permanente could save $25 million in Oregon and about $50 million in Washington.
Whether they won or lost in the risk adjustment sweepstakes, some major carriers agreed that that freezing the program is a bad idea. "The risk adjustment program is an important component for a stable market," said Cambia's Ishkanian. "We hope the government restores these payments and fulfills its obligation."
Kaiser called on the government to "avoid unpredictable changes of direction." The risk adjustment program "has not been perfect, and Kaiser Permanente and others have raised concerns and offered suggested improvements over the years, it has essentially been working as intended, and has helped promote market stability over the past five years, said Bill Wehrle, Kaiser vice president of health insurance exchanges.
While the risk adjustment numbers seem huge, most of these insurance companies are also enormous. For instance, the $40 million Moda stands to lose pales next to its $561 million in total premiums in 2017.
"We're a $3 billion company," said Moda spokesman Jonathan Nicholas. "This is a receivable, a good one. Sure, we'd like to be paid next week. It now looks like that's not going to happen. We look forward to getting it as soon as possible."
-- Jeff Manning