The latest snafu in Obamacare left a marketing opportunity that Priority Health is pursuing in one direction — but the Blues is pursuing in the opposite direction.
Many people with individual insurance policies learned their plans did not have the coverage required by the Affordable Care Act, so their insurance companies, following the law, refused to renew for 2014. The subsequent criticism of the Obama administration led to the government deciding to delay the required shift to ACA-approved insurance coverage.
On Nov. 22, the Michigan Department of Insurance and Financial Services announced the state would permit insurers to decide whether they would continue offering policies that are not compliant with the ACA. The option created a marketing moment for the two biggest carriers in Michigan.
On Nov. 22, Blue Cross Blue Shield of Michigan and Blue Care Network announced it will continue to move its individual and small group subscribers out of expiring policies and into new plans for 2014 that meet the requirements of the Affordable Care Act.
On Nov. 25, Priority Health said it would continue to offer all of its pre-Affordable Care Act plans for 2014.
Paul Brand, executive vice president of the Alliance for Health in Grand Rapids, said Priority Health is “contrasting themselves with their major competitor, which is Blue Cross.”
Brand said health insurance carriers have spent a lot of time and money to prepare new plans that comply with requirements of the ACA and to make their customers aware of the cancellations of the old plans and the decisions that must be made before 2014.
He said he believes the Priority Health decision to reinstate policies it already had cancelled is “almost heroic on their part. … It costs them a bunch of money and they don’t get anything for it.”
BCBSM said its decision to offer only ACA-qualified plans in 2014 is “an effort to ensure Michigan consumers have a choice of the best and most affordable health insurance now and into the future.” BCBSM also said current individual-coverage customers who have not selected an ACA-compliant plan when their policy expires at the end of 2013 will be “transitioned” into the Keep Fit plan so that they don’t have a lapse of coverage.
BCBSM said Keep Fit is its only “pre-Obamacare” individual plan that will remain in force through 2014.
“For two-and-a-half years, we’ve been preparing to serve our customers in the new marketplace defined by the Affordable Care Act,” said Daniel J. Loepp, president and CEO of BCBSM. “The suggestion to keep non-compliant plans open for an additional year adds a great deal of complexity, and we know by the phone calls coming in that it concerns and confuses our members.”
BCBSM noted that government-provided insurance subsidies are not available to anyone enrolled in pre-Obamacare health plans, including Keep Fit. It estimates that about 50 percent of its current individual plan customers are eligible for ACA subsidies “that could get them better coverage at lower prices.”
The company said Keep Fit is its most popular individual coverage, with 27,878 contracts in force covering 47,408 members. Existing BCBSM members enrolled in other individual plans can transition into Keep Fit through Dec. 31.
“BCBSM has not increased rates on those plans since 2011. Keeping the plans open in 2014 would require a ‘catch-up’ premium rate increase of 30 percent or more,” it stated in the announcement.
“This was not an easy decision for us, but it’s a responsible decision,” Loepp said. “We understand that many people are upset that federal law set forth the need to transition out of their old health plans. We are taking those calls every day. But it’s responsible to our members to promote insurance affordability. Avoiding 30 percent rate hikes and helping people find the subsidies they are eligible for is our effort to help our members during this time of tremendous change.”
BCBSM is Michigan’s largest insurer with 4.4 million covered, while Priority covers more than 600,000 people.
Priority Health said it will continue to offer all of its 2013 pre-Affordable Care Act plans for coverage through 2014 because that is “consistent with the company’s commitment to provide customers with flexibility and choice.”
“We understood, early on, that an extension of our 2013 plans would give employers and individuals peace of mind and time to assess their options before being required to change under the ACA,” said Joan Budden, chief marketing officer for Priority Health. She noted that Priority Health was identified by the government as Michigan’s Benchmark Health Plan, which all other health plans were required to model.
Michiganders looking for a new plan can enroll with Priority Health through December 2013. It noted on Nov. 25 that more than 70 percent of its current individual members, “and many who received cancellation notices from other companies,” have already taken advantage of this option.
Priority Health spokesperson Amy Miller said the company plans to offer all of its pre-ACA plans for the 2014 plan year.
“We currently have 22,000 (individual) members,” said Miller, referring to individuals who are not covered by a group plan. “Seventy-five percent of our members have chosen this option and we continue to get new members purchasing these plans every day, as well.”
She confirmed that the insurance subsidies for qualifying individuals are only available to those purchasing the new plans that meet ACA requirements.
“Priority Health is offering folks the option,” added Miller. “You can extend your 2013 plan or purchase a 2013 plan (pre-ACA) and give yourself time to consider your options or purchase a 2014 and take advantage of the subsidies now available to you.”
Priority Health has also invited small employer groups to renew early. The company said more than 40 percent of Priority Health small employer groups have taken advantage of this early renewal option.