How Medicare Advantage could kill nonprofit insurers

Small, regional nonprofit insurers are feeling a negative impact from the Medicare Advantage program that could force them to raise premiums, cut benefits or even leave the market, Politico New York reported.

Nonprofit insurers in New York reported tens of millions of dollars in underwriting losses last year. EmblemHealth suffered a net underwriting loss of more than $167 million from Medicare, Excellus Blue Cross Blue Shield and HealthNow New York reported losses of $31.91 million and $78.97 million, respectively. 

They largely attribute those losses to three elements--reimbursement reductions, taxes and fees--plus the rising cost of care and prescription drugs.

"As a not-for-profit insurer, we're not focused on making money, we're just looking to cover our costs," Jared Gross, a senior vice president at HealthNow New York, told Politico. "And increasing costs make that all the harder."

These insurers are particularly hampered because they operate on a smaller scale and are limited by their service areas. "Most of the for-profits plans are operating across the country and therefore they can pick and choose what counties they are going to offer their products in," Bob Hinckley, chief strategy officer of the Albany-based nonprofit insurer CDPHP, told Politico.

If Medicare Advantage continues to cause such significant losses for smaller insurers, they're going to have to make changes.

"[The financial pressures] put us in the unfortunate circumstance of having to pass either benefit cuts to members or increased premiums to the members--neither of which we would like to do but unfortunately we're in that situation where we have to," Brian Morrissey, CDPHP's chief marketing officer, said.

Hoping to lessen the negative impact of their Medicare Advantage losses by boosting care coordination and lowering costs, several of these New York insurers are looking to increase partnerships with local hospitals and providers. That's what Anthem Blue Cross Blue Shield has done by partnering with Cleveland, Ohio-based University Hospitals to launch an accountable care organization to serve the insurer's Medicare Advantage plan, FierceHealthPayer previously reported.

To learn more:
- read the Politico New York article

 

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