Blue Cross Reportedly Hemorrhaging Money on Obamacare Exchanges

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Texas largest health insurer now seeks rate rises of 60 percent to cover unexpected losses.

Texas’ most prominent insurer the Blue Cross Blue Shield Association said that it was losing money on the federal health insurance marketplace since some customers are far more burdening to cover than expected.

The organization now seeks rate hikes increase of up to 60 percent starting 2017 to cover for its losses. The claim was written in a set of HMO plans recently submitted to federal lawmakers.

On Wednesday, the insurer declined to say what the outcome of a refusal would be. Blue Cross is the only Texas health insurer that provides coverage to all counties. Gustavo Bujanda, a representative for the group, declined to provide details on the insurers’ next year offerings.

Bujand said that the rate increase was calculated based on “strong science and data.” The association is currently seeking a rise from 57.33 to 59.35 percent in rates. The company added that the rate hikes would impact about 600,000 Texans buying health plans via federal exchanges under the Affordable Care Act, colloquially known as Obamacare.

Blue Cross and other insurers have complained that they are losing money as they cannot turn down customers based on their health condition after the health reform and many of patients are too burdensome to cover.

Texas Department of Insurance confirmed that the insurer filed for rate rises. Yet, since Blue Cross classified them as “confidential” the department couldn’t comment on them. A spokesperson said that the department needed to ask the company more questions.

The agency most probably will question the insurer whether the increases are justified. Rate requests need to be non-discriminatory and non-excessive if they seek approval. Plus, premiums need to be directly proportional to the benefits.

Analysts explained that The Lone Star State lacks the regulatory “teeth” to stop such hikes. For instance, the state hasn’t set in place regulation to set its own rate reviews on the federal health market. The only condition for a rate hike to be approved is to be justified.

Next, the rate hike request is processed by a federal body which conducts the reviews for exchange plans. In theory, the feds can ask for an adjustment, but in practice rate hikes are determined by insurers.

In theory, the Texas insurance commissioner could block the company from selling plans through bureaucratic methods. But that hasn’t happened in more than 10 years.

Image Source: The Blue Diamond Gallery

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