PHP Getting Out Of Individual Health Insurance Market
August 24, 2016 at 7:05 p.m.
By Staff Report-
In a press release, PHP said that provisions written into the Affordable Care Act law, anomalies between state mandates, federal risk-sharing provisions, and future uncertainty in the ACA have created unsustainable individual product lines for PHP.
“Looking ahead, it doesn’t appear the market will correct soon. Therefore, PHP has opted to exit the Individual Indiana Marketplace and its individual product line for 2017,” the release states.
“PHP individual products account for only a small percentage of overall business. PHP will continue to serve small and large group markets; employers and brokers.
“Looking ahead, PHP recognizes an upcoming opportunity to provide products and services to those employers who will be required (by federal guidelines) to terminate transitional insurance plans by Dec. 31, 2017. Nearly half of the small group market will have to shift to either an ACA-compliant plan or a self-funded plan, which offers a great deal more flexibility, control and potential cost-savings, according to the release. PHP has a successful product in place, Level Solutions, that gives groups an attractive alternative to a Marketplace plan,” the release states.
“We are disappointed that we feel forced to this difficult decision,” stated Michael Cahill, president and CEO of PHP, “but we had to keep in mind that we do have a responsibility to the community and the beneficiaries we serve as a not-for-profit health insurer. By withdrawing from the individual market today, PHP can take the millions of dollars in losses we would incur and put that back into community efforts we’ve been supporting since our founding in 1983.”
The decision to exit Individual product lines, both on and off the Marketplace, is a business decision that allows PHP to continue to focus on and fulfill its two-fold mission of:
• Making certain that the medical policies, protocols and procedures that we adhere to are formulated and overseen by physicians that live, work, and play in the communities it serves; physicians that understand and appreciate Indiana residents’ values and the need to keep premiums as low as possible.
• Supporting the communities and filling vital, unmet needs in three areas:
– Providing significant funding for direct low income health care (e.g. Matthew 25 Clinic, SuperShot program, Neighborhood Health Clinics, etc.)
– Contributing to health education resources to improve community well-being
– Advocating economic development initiatives designed to grow its communities
In 2016, for every premium dollar received, PHP estimates it will pay $1.20 for medical expenses. PHP estimates this number would increase to $1.36 in 2017.
This loss in premium does not begin to cover operating costs or overhead, according to the release. The deficiency is attributed to three factors:
1. The Risk Adjustment Program, which was intended to move monies between health insurers based on the relative cost of the populations attracted. It did not take many measures into account and was not designed for the commercial individual insurance marketplace.
2. The Risk Corridor Program, put in place to keep premiums down and make products affordable in the early years, was ultimately not funded by Congress leaving most insurers with large, unexpected medical costs.
3. Adverse selection due to certain anomalies between federal mandates and state mandates for health insurance has left some insurers, including PHP, unprotected in several areas.
The press release states “PHP remains extremely well capitalized and on solid financial ground. This decision will allow PHP to focus on serving businesses, employers and brokers in product areas that we are extremely skillful at handling and to focus on supporting the needs of communities we serve.”
To learn more about PHP insurance plans and health insurance administrative services, call PHP at 800-982-6527, or email [email protected].
In a press release, PHP said that provisions written into the Affordable Care Act law, anomalies between state mandates, federal risk-sharing provisions, and future uncertainty in the ACA have created unsustainable individual product lines for PHP.
“Looking ahead, it doesn’t appear the market will correct soon. Therefore, PHP has opted to exit the Individual Indiana Marketplace and its individual product line for 2017,” the release states.
“PHP individual products account for only a small percentage of overall business. PHP will continue to serve small and large group markets; employers and brokers.
“Looking ahead, PHP recognizes an upcoming opportunity to provide products and services to those employers who will be required (by federal guidelines) to terminate transitional insurance plans by Dec. 31, 2017. Nearly half of the small group market will have to shift to either an ACA-compliant plan or a self-funded plan, which offers a great deal more flexibility, control and potential cost-savings, according to the release. PHP has a successful product in place, Level Solutions, that gives groups an attractive alternative to a Marketplace plan,” the release states.
“We are disappointed that we feel forced to this difficult decision,” stated Michael Cahill, president and CEO of PHP, “but we had to keep in mind that we do have a responsibility to the community and the beneficiaries we serve as a not-for-profit health insurer. By withdrawing from the individual market today, PHP can take the millions of dollars in losses we would incur and put that back into community efforts we’ve been supporting since our founding in 1983.”
The decision to exit Individual product lines, both on and off the Marketplace, is a business decision that allows PHP to continue to focus on and fulfill its two-fold mission of:
• Making certain that the medical policies, protocols and procedures that we adhere to are formulated and overseen by physicians that live, work, and play in the communities it serves; physicians that understand and appreciate Indiana residents’ values and the need to keep premiums as low as possible.
• Supporting the communities and filling vital, unmet needs in three areas:
– Providing significant funding for direct low income health care (e.g. Matthew 25 Clinic, SuperShot program, Neighborhood Health Clinics, etc.)
– Contributing to health education resources to improve community well-being
– Advocating economic development initiatives designed to grow its communities
In 2016, for every premium dollar received, PHP estimates it will pay $1.20 for medical expenses. PHP estimates this number would increase to $1.36 in 2017.
This loss in premium does not begin to cover operating costs or overhead, according to the release. The deficiency is attributed to three factors:
1. The Risk Adjustment Program, which was intended to move monies between health insurers based on the relative cost of the populations attracted. It did not take many measures into account and was not designed for the commercial individual insurance marketplace.
2. The Risk Corridor Program, put in place to keep premiums down and make products affordable in the early years, was ultimately not funded by Congress leaving most insurers with large, unexpected medical costs.
3. Adverse selection due to certain anomalies between federal mandates and state mandates for health insurance has left some insurers, including PHP, unprotected in several areas.
The press release states “PHP remains extremely well capitalized and on solid financial ground. This decision will allow PHP to focus on serving businesses, employers and brokers in product areas that we are extremely skillful at handling and to focus on supporting the needs of communities we serve.”
To learn more about PHP insurance plans and health insurance administrative services, call PHP at 800-982-6527, or email [email protected].
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