Anthem uncertain it will continue in CT’s individual market next year

Anthem Blue Cross and Blue Shield is likely to notify state regulators this summer that it will withdraw from Connecticut’s individual market next year – even though the company has not yet decided whether to sell plans in 2018, the company’s president told the head of the state’s health insurance exchange.

Companies seeking to withdraw from the market must notify the state six months in advance – a deadline that falls before the likely resolution of “uncertainties” affecting whether Anthem could sell coverage through the individual market, Anthem President Jill R. Hummel wrote.

She added that the company could ultimately seek to rescind its withdrawal notice and continue selling individual coverage if uncertainties “resolve favorably.”

Anthem is the largest insurance company in Connecticut, and a big player in the state’s individual market. It is one of only two carriers currently selling plans through the state’s Obamacare exchange, Access Health CT. This year, Anthem has approximately 34,500 exchange customers, 31 percent of the exchange’s business. Last year, the company covered 56,700 people through individual market plans sold on and off the exchange.

“[I]t is highly probable that we will issue notice of our intent to withdraw because of the uncertainties at this time,” Hummel wrote in an email to Access Health CT CEO Jim Wadleigh. The message also was sent to Connecticut Insurance Commissioner Katharine L. Wade and Victoria Veltri, the chief health policy advisor to Lt. Gov. Nancy Wyman.

“It is too early to say whether we will actually pull out of the individual market place because that is dependent on the outcome of factors that are unknown at this time,” Hummel added, noting that the company hoped to ultimately offer coverage.

It’s not clear whether the state would allow an insurer to rescind a withdrawal notice and continue selling coverage.

Hummel’s email, sent Wednesday, came a day before Anthem President and CEO Joseph R. Swedish wrote to Congressional leaders that the company would begin to “surgically extract” itself from the individual market starting next year unless there are “significant regulatory and statutory changes.”

Swedish’s letter, obtained by the publication Morning Consult, praised provisions of the House Republican proposal to replace the federal health law, and urged legislators to act quickly.

While he did not endorse the full proposal, Swedish cited four provisions he deemed “essential:” the creation of a fund for states to use to stabilize the insurance markets, the repeal of the Affordable Care Act’s tax on health insurance, the continuation of federal subsidies to reduce the cost-sharing obligations of low-income private insurance customers, and a change that would allow people to use federal subsidies to buy insurance outside state exchanges.

Wyman, who chairs Access Health’s board, said the company’s decision will have an impact on the state.

“While Anthem hasn’t given formal notice of their intent, if they pull out of national insurance markets in 2018, it will have an impact on individual health plans in Connecticut and on the state’s health care exchange,” Wyman said in a statement Saturday. “They have been a good partner in our state, and we hope they will continue to be.”

Whatever the company decides, Wyman added, coverage for existing customers won’t be affected in 2017.

Hummel’s email did not specify what uncertainties could lead Anthem to exit the Connecticut individual market. She said providing notice by July 1 that the company would exit the market is “the only way we can preserve our rights in the event that the uncertainties resolve themselves in a manner that will not allow us to successfully manage our individual book in 2018.”

In a statement Saturday, the company said, “We have served the Connecticut individual market for a long time and have been strong partners to Access Health CT since its creation. We are in the process of formulating our 2018 rates and making our decisions about future participation. Anthem is committed to working with all the parties to find solutions.”

An Anthem spokeswoman did not answer questions about what uncertainties Hummel was referring to in her email.

‘Tremendous’ rate shock under GOP proposal?

The future of the state exchanges, and the broader individual market, have been major questions as federal lawmakers move forward on plans to repeal and replace portions of the Affordable Care Act, the law commonly known as Obamacare.

The House Republican proposal would effectively eliminate the mandate that nearly all Americans have health insurance, reducing the penalty for not having coverage to $0 as soon as the proposal becomes law. Instead, people who go without insurance would be charged an extra 30 percent in premiums for one year once they buy coverage, but critics say that won’t help to get enough young, healthy people to buy coverage.

Wadleigh said he worries that the exchange won’t have any insurers offering coverage in 2018 “because of perceived improvements in the market that drive the carriers out.”

“Without a mandate, I’m not sure how a carrier can charge enough,” Wadleigh said. “Some carriers are already starting to say 30, 40, 50 percent rate increases without a mandate.”

“The rate shock in Connecticut would be tremendous under the new president’s plan,” Wadleigh added.

ConnectiCare, the other insurer that sells coverage through the exchange, said in a statement after the House Republican plan was released last week that it hopes to offer coverage in the individual market in 2018, but that it’s too early to say for sure.

During an interview before the House plan was released, ConnectiCare President and Chief Operating Officer Eric Galvin noted that the company primarily serves only one market – Connecticut’s.

“With that said, if we are seeing a model come out of Washington that has a significant impact to ’18…then we would have to think long and hard about viability of that line of business going forward,” he said, referring to participating on the state’s exchange.

He also raised concerns about changes to the individual mandate, such as the Internal Revenue Service’s recent announcement that it would not stop tax returns from being submitted if filers don’t report whether they had insurance the previous year. The tax process is how the individual mandate is enforced.

“If you weaken the individual mandate without doing something to further stabilize premiums, that’s a big problem. That’s a challenge,” Galvin said.

The company’s statement after the GOP plan was released said it would be watching developments closely.

“While the ACA replacement bill has just been introduced, we will be watching carefully to see if Congress can strike the right balance between plan components, like mandates and access guarantees, in order to keep premiums affordable,” ConnectiCare said. “Making health insurance accessible and affordable to the people of Connecticut is a priority for us. We will continue to work with legislators and regulators here in Connecticut to create a stable and sustainable individual health insurance market.”

Insurance companies planning to sell insurance through the state’s individual market must submit proposed rates for 2018 to regulators by May 1. That is a required first step toward offering coverage in 2018, but does not obligate companies to sell plans. Last year, ConnectiCare threatened to leave the exchange in September after raising concerns about the adequacy of the rates the insurance department would allow it to charge customers. The company ultimately remained on the exchange.

Related: What the GOP Obamacare replacement bill means for you and CT