The industry doesn’t see the sky falling on Obamacare. In some ways, it’s brightening. Insurers see brighter ACA skies

Health insurers got their first taste of Obamacare this year. And they want seconds.

Insurers saw disaster in the fall when Obamacare’s rollout flopped and HealthCare.gov was a mess. But a strong March enrollment surge, along with indications that younger and healthier people had begun signing up , has changed their attitude. Around the country, insurers are considering expanding their stake in the Obamacare exchanges next year, bringing their business to more states and counties. Some health plans that skipped the new marketplaces altogether this year are ready to dive in next year.


At least two major national insurers intend to expand their offerings, although a handful of big players like Aetna, Humana and Cigna, are keeping their cards close for now. None of the big-name insurers have signaled plans to shrink their presence or bail altogether after the first rocky year. And a slew of smaller health plans are already making moves to join more states or get into the Obamacare business for the first time.

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“[W]e see 2014 as just the beginning for exchanges,” said Tyler Mason, a spokesman for UnitedHealth Group, one of the nations’ largest insurers. “As the economics, sustainability and dynamics of exchanges continue to become clearer, we believe exchanges have the potential to be a growth market with much to offer UnitedHealthcare and other insurers and consumers.”

Nurturing this growth and health plan participation will be one of the first tasks of Sylvia Mathews Burwell, assuming she is confirmed to succeed Kathleen Sebelius as secretary of Health and Human Services.

Insurers’ business blueprints may not mean much for Democrats’ political fortunes in 2014 midterm elections; Republicans will still run hard against President Barack Obama’s health law. And the insurance markets in some states still lack competition, even with new offerings factored in. But the industry doesn’t see the sky falling on Obamacare. In some ways, prospects are brightening.

The Obama administration announced Thursday that about 7.5 million people had signed up for health care in Obamacare exchanges through early April, a number even many allies considered inconceivable when HealthCare.gov imploded. The number is expected to edge up a bit more before an April 15 deadline for people who needed extra time to complete the sign-up.

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That’s encouraging some insurers to take a second look — even those with lingering questions about premium prices, provider networks and the politics of reform.

They may not have enough information just yet about Obamacare’s first-year customers to justify sweeping changes in strategy — but the exchanges do offer enticements, said Matt Eyles, a former insurance executive who is now with the Avalere Health consulting firm. Instead of just fighting over market share, the insurers see a chance to grow the market. That could bring some health plans off the sidelines.

“This seems like it will continue to grow and be a bigger opportunity over time … and there are only so many ways to grow organically,” Eyles said. “You can take market share from other people, but there aren’t that many chances to cover new lives.”

Blue Cross and Blue Shield health plans are already in 47 of the 50 states, and the group says it’s likely to be in 49 next year. Insurance giant UnitedHealthcare, which cautiously entered four exchange markets for individuals this year, intends to add coverage in Connecticut’s exchange next year, according to state officials.

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Aetna, Humana and Cigna say it’s too soon to tell whether they’ll add states to their relatively limited exchange offerings.

“Looking ahead, we will continue to analyze our experience in the exchange markets and continue to work closely with the individual states to determine what our exchange offerings will look like,” said Joe Mondy, a Cigna spokesman.

Kaiser Permanente, a big player in parts of the country, including the large California market, is in the exchanges in all nine states where it operates. Spokesman Chris Stenrud said the company won’t leave any of the nine exchanges. “We are committed to long-term partnerships with federal and state marketplaces where we operate,” he said.

Another insurer, Molina Healthcare, said it intends to continue offering exchange plans in the nine states it’s in this year. It won’t add more states in 2015. Like Kaiser, the carrier doesn’t do business in all 50 states.

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The Obama administration is looking to a competitive marketplace. “We expect consumers will continue to have a robust number of plan choices available to them for the 2015 open enrollment season as insurance companies compete for the business of millions of Americans seeking coverage with the assistance of tax credits,” said Department of Health and Human Services spokeswoman Erin Shields Britt.

The industry giants may be considering their options, but smaller plans have started making moves. State exchange officials say they’re hearing from new companies who want to get in.

State officials and insurance company representatives signaled in interviews that at least 10 states would feature more companies, not fewer, on the Obamacare health plan menu. Those include Kentucky, California, Connecticut and Washington, four states that have enthusiastically supported the health law and built high-performing exchanges. New York’s exchange chief, Donna Frescatore, said her state has had “additional interest” from new insurers, as well.

But the list also includes more surprising interest in places like South Dakota, Idaho, Iowa and Michigan, far from diehard fans of the president’s health law.

Even where insurers aren’t planning to expand, experts predict few will leave the market in 2015. That’s partly because the health law includes protections for insurers against losing too much money while the markets stabilize in the first three years. And it’s also because a strong finish to Obamacare’s first enrollment season offered a tantalizing preview of what could be ahead in Year Two. So insurers may want to get in and build a customer base that could last.

“There might be some minor adjustments, but for the most part, health plans will participate as they have,” said Robert Laszewski, an insurance industry consultant who has not been shy about predicting problems for Obamacare. “Health insurance companies want Obamacare to succeed. If Obamacare fails, what will happen next?”

Health plans are expected to apply to offer coverage in 2015 over the next few months, although states have varying deadlines to receive and vet their proposals.

Wellmark, which operates Blue Cross and Blue Shield plans in Iowa and South Dakota, says it intends to offer coverage on those states’ Obamacare exchanges next year, despite opting out in 2014.

“We have said many times that as a mutual insurance company, our goal is to make business decisions based on sound fiscal judgment that serve the best interest of our members,” spokeswoman Traci McBee said, explaining the company’s decision to join.

Even some critics of the law say they’re seeing signs that the 2015 market on the Obamacare exchanges could be stronger than this year’s. Ed Haislmaier, a senior research fellow for the conservative Heritage Foundation, said Wellmark’s decision could be a bellwether for the nation. But even more significant, he said, will be the decisions of smaller insurers for which Obamacare business is a much bigger part of the bottom line.

A spokeswoman for one of the companies Haislmaier cited, Michigan-based Physician’s Health Plan, said in an interview that it will indeed join the state’s exchange in 2015. The company had planned to join in 2014 but pulled out at the last minute, citing uncertainty caused by federal delays.

New, Obamacare-funded nonprofit insurers are expanding their footprints, as well. Minuteman Health in Massachusetts is expanding into bordering New Hampshire; Montana Health CO-OP will sell plans in Idaho; and Kentucky Health Cooperative is moving into West Virginia.

Officials in states that successfully ran their own exchanges described receiving “letters of intent” from insurers who hope to offer coverage for the first time next year.

“Although I can’t say who right now, we have seen interest from at least two additional companies that would like to come into the marketplace and are working very diligently to prepare to do that,” Bill Nold, deputy executive director of Kentucky’s exchange, said in a conference call.

Washington’s executive director, Richard Onizuka, said three new companies have signaled their intent to join, the same number that told California’s exchange chief, Peter Lee, that they expect to offer new coverage, as well.

Changes in business may not change the politics in the near term. Republicans intend to use the coming confirmation battle for Sebelius’s successor as a forum to reignite their war against Obamacare. And recent polls show the law is still controversial, although there are a few hints that disapproval is softening with enrollment numbers rising.

It’s also still unclear whether the increased competition will make a difference for consumers in parts of the country that insurers largely have avoided. New Hampshire and West Virginia, for example, each had just one insurer on its exchange this year. Even with some new entrants, residents will most likely have a paltry selection.

According to The Heritage Foundation, “More than half of U.S. counties have only one or two insurance carriers selling coverage in the Obamacare exchanges.”

Not all insurers who opted out last year are racing to rejoin in 2015. FirstCarolinaCare, a small insurer that withdrew from the North Carolina exchange two weeks before enrollment began in October has no plans to try again. A spokeswoman cited “continued uncertainty” in the exchange market.

United Security Life and Health Insurance, an Illinois-based company that considered joining Arkansas’s exchange last year, has stopped selling health insurance policies altogether, according to company president Sandra Horn, who cited challenges for the small company to comply with Obamacare regulations. The company has since canceled all its medical policies and reinvented its health team as an enrollment firm called ACA Marketplace Enrollment Solutions.