Highmark ends bleeding from ACA plans

Highmark Inc. is finally seeing signs of stability when it comes to health plans sold on the individual marketplace created by the Affordable Care Act, the Pittsburgh-based insurer said Friday.

Behind the improvement are lessons Highmark has learned on how to best manage its ACA members after several years of trial and error.

The insurer raised premiums, narrowed its network to offer fewer marketplace plans and improved patient management, according to Highmark Health Plan president Deb Rice-Johnson.

As a result, Highmark reported a $22 million profit for 2016 in its government business unit, which includes the ACA marketplace. The unit also covers Medicare, Medicaid and small group health plans.

The $22 million profit is a notable improvement compared to the unit’s $614 million loss in 2015. 

Highmark and other insurers have struggled to manage the population buying individual health insurance on the marketplace. Those members tend to be sicker and, therefore, more expensive to insure.

Due to their older age and increased likelihood of health issues such as cancer, ACA health plan members tend to be about 30 percent more costly than commercial insurance members.

Some insurers have pulled out of the marketplace completely, while others, including Highmark, have nearly doubled premium rates for 2017.

Highmark also continues to pursue money it says it is owed by the federal government.

In a lawsuit, Highmark says the federal government promised to give insurers back-up funding to cover their ACA costs but never paid up, according to a filing by Highmark in the U.S. Court of Federal Claims.

That case is ongoing, Highmark said. The insurer also is monitoring similar cases filed by other insurance companies across the nation.

As Highmark posted a profit in its government business unit, the Trump administration is working to unravel the ACA and replace it with a new plan that takes a dramatically different approach to Medicare, Medicaid and individual health plans.

Republicans released a plan this month called the American Health Care Act, which, if passed, would reduce federal payments to states for government health plans, like Medicaid, and remove the individual mandate to buy insurance.

So far the plan has been met resistance from all sides of the political spectrum, and it is already being altered since it was first released to improve coverage for seniors.

Despite uncertainties in health care reform, Highmark remained positive on Friday, with an overall net profit of $59 million for Highmark Health in 2016, following an $85 million loss the prior year. Highmark’s total net assets are $5.2 billion, and it has $6.5 billion in cash and investments.

Its operating revenue for 2016 was $18.2 million, up 3 percent from 2015.

“We began the year determined to improve our financial performance and break new ground in fulfilling the promise of our integrated delivery and financing system,” said David Holmberg, president and CEO of Highmark. “We succeeded, and in the process delivered steady, consolidated and cumulative top-line growth of nearly $3 billion during the last three years. We continue to increase our scale, we are financially strong and stable, and we maintain our leading positions in the markets in which we compete.”

Lenay Ruhl

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