Facing financial losses, Pittsburgh-based insurer Highmark will shift gears in terms of what it offers through the Affordable Care Act exchanges, opting for more narrow-network plans, according to the Wall Street Journal.
In its latest earnings figures, Highmark reports an operating loss of $318 million for individual ACA business for the period ending June 30--that's compared to a loss of $76 million in the same period in 2014. Overall, the company's health plan business reported a loss of $146 million, which Highmark notes is $223 million lower compared to the prior year.
The company attributes the ACA-related losses to the high cost of care associated with health plan enrollees with chronic conditions and its decision to offer a broad array of plan options, the WSJ notes. Highmark currently does a brisk amount of exchange business, with around 380,000 enrollees in ACA plans.
The situation means "we will have less products in the market overall," says Highmark CEO David L. Holmberg, adding, "Is there going to be a trend toward more narrow networks? Yes."
Narrow networks have become a hallmark of many insurers' public exchange plans as they seek to cut costs and mitigate premium hikes. Even so, several states recently approved hefty rate hikes for 2016.
And Highmark's struggle with its ACA business is not unique.
For example, Blue Cross Blue Shield of North Carolina stopped offering its broadest network plans in three of the state's most populous cities because of the $123 million operating loss it faced in its first year of ACA business, according to the WSJ. And recently Blue Cross Blue Shield of New Mexico opted to pull out of the state's exchange entirely when the state insurance commissioner denied its rate hike request of more than 50 percent.
Consumer operated and oriented health plans, meanwhile, also have faced financial challenges, causing some CO-OPs, like Nevada's, to even close up shop.