Regence BlueCross BlueShield out of Utah exchange
One of Utah's largest health insurance companies has abandoned Avenue H, the state's much-touted "shop exchange" for small businesses.
Regence BlueCross BlueShield has participated in the insurance marketplace since its inception in 2009. But its health plans will not be among those available to Avenue H shoppers on Oct. 1 when Obamacare's insurance exchanges go live.
"We support a competitive health insurance marketplace and will continue to work closely with the state as they implement system changes to meet exchange guidelines," Regence said Tuesday in a prepared statement. But for now, the nonprofit insurer has committed only to selling plans on a separate, federally run exchange for individual Utahns, albeit under a different name, and to buyers outside the exchanges.
Regence declined to comment on the reasons for its withdrawal. What it means for Avenue H, or for consumers, isn't clear.
The federal health reform law requires virtually all Americans, including 380,000 uninsured Utahns, to have health insurance come Jan. 1, 2014. Online exchanges, a primary path to that coverage, are set to open in less than 50 days.
But most states, including Utah, have yet to release a list of approved plans and prices, leaving consumers in the dark about their choices.
Utah's plans have been approved, but aren't yet certified as meeting actuarial standards for balancing finances and risks, explained assistant state insurance commissioner Tanji Northrup.
Once that happens, the information will be made public, possibly next week, she said.
But even then, experts say it's too early to tell how exchanges will alter the health insurance landscape, or whether they'll push prices up or down.
The health law seeks to level prices for everyone, which generally means lower prices for the elderly and higher prices for the young and healthy, said Princeton University health economist Uwe Reinhardt during a webinar Tuesday sponsored by the Alliance for Health Reform.
But media reports of "premium shock" are overblown, he said. "Sicker people will experience premium joy."
Insurance rates vary widely from state to state today, and will continue to do so, explained Linda Blumberg, a senior fellow at the Urban Institute.
In most states, age, family size and whether a person smokes are still factors in pricing, she said. Out-of-pocket costs also hinge on the plan you choose, the size of its deductible, and whether it's a bronze, silver or gold-level plan. The Affordable Care Act classifies plans according to how much of a patient's health costs it covers.
A study of 10 states' lowest-cost "silver" plans, which cover about 70 percent of health costs, shows monthly premiums average about $300 a month. That's significantly lower than today's average going rate of $516 for an individual on an employer-sponsored plan, Blumberg said.
But "there are outliers and some insurers are modifying their rates after seeing where their competitors land," she noted.
More importantly, said Reinhardt, prices don't take into account government subsidies that many uninsured will get to put toward their insurance purchase.
Still, Regence's departure is bound to have some effect. It dominates Utah's market, rivaled only by Intermountain Healthcare's insurance arm, SelectHealth.
"To be viable [Avenue H] needs a number of plans to choose from," said Salt Lake City insurance broker Ernie Sweat.
The exchange's loss of Humana in 2011 left Regence the only insurer contracted with hospitals and doctors outside the Intermountain Healthcare network.
But there's a new insurer in town, a health care cooperative known as Arches, which is joining Avenue H, said Sweat. "My understanding is that their rates will be very competitive when they are released. It's possible that much of the enrollment that would have gone to Regence would have been diverted to Arches anyway."
About Utah's Avenue H
Utah was the second state in the country to launch an online insurance exchange. Avenue H was slow to catch on but continues to post small gains in enrollment.
To date, 350 employers and 8,000 workers and their dependents get coverage through Avenue H, according to its director, Patty Conner. And they have their pick of about 140 different plans from three insurers.
Technological and other upgrades are in the works to bring Avenue H into compliance with the federal health reform law. But participating has been expensive for insurers, which have had to handle applications manually.