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States look for contingency plans as ACA insurers eye the door

States with only one insurer offering Affordable Care Act plans in 2017 may see that number fall to zero in 2018 if state legislatures cannot convince them to stay.

In Alabama, Alaska, Oklahoma, South Carolina and Wyoming, local regulators have scrambled for contingency plans as the political winds in Washington have disrupted efforts to alter federal healthcare regulation in ways that may have appealed to insurers.

"I imagine [state regulators] are monitoring the noise on Capitol Hill as to what might be replaced. I think everyone is still in a bit of a holding pattern, but they don't have a whole lot of time," Chris Sloan, senior manager at research firm Avalere Health, said in an interview.

Anthem Inc. said in its February earnings call that it may pull out of exchanges if measures it recommended to Congress are not folded into a reform bill. Efforts to pass the American Health Care Act, an ACA replacement, imploded in March when House Speaker Paul Ryan, R-Wisc., pulled the bill from the floor.

"We continue to actively pursue policy changes that will help with market stabilization and achieve the common goal of making quality health care more affordable and accessible for all," Anthem said in a statement, when asked if the company would exit state marketplaces.

Both Oklahoma and South Carolina's public marketplaces are at the mercy of Blue Cross Blue Shield, Sloan said. If the not-for-profit companies decide the risk is too much and pull out of the states, "there will be trouble," he said. But, Sloan maintained, states are not going to let their remaining companies, even if it is just one, leave the state without trying to sway them with incentives.

"Essentially, we do think there are going to be more exits going forward," Sloan said. "If more [BCBS companies] start leaving, which at this point are propping up the market, or if Anthem leaves, or if some of the others, particularly in rural areas, you could see a significant [number of] counties with no one participating next year."

Even with the exodus of four major insurers, Ray Farmer, director for the South Carolina Department of Insurance, is upbeat that BC&BS of South Carolina will stay in the Palmetto State. Since exchanges were set up by his state in 2013, only BCBS has remained in the public marketplace. It now serves about 195,000 of the state's approximately 4.7 million citizens.

"We are down to one, but we are also fortunate they write [policies] in every county in our state," Farmer said. "So we are optimistic that we will have that one company in the marketplace. Companies that have been around 100 years or more, if their business is writing health care insurance, and they cannot make a profit, they don't have a sustainable business model that works."

But the ACA has fallen far below expectations, Farmer said. In the four years it has been operating in his state, rates have risen 48%, he said.

Farther west, Oklahoma has seen the same five-to-one drop in ACA insurers as South Carolina.

Mike Rhoads, Oklahoma deputy commissioner of life and health insurance, said in an interview that he is confident Blue Cross Blue Shield of Oklahoma will stay. He said the company, as in South Carolina, has given regulators no indication that it will make an exit. But if the worst happens, he said, the state has contingency plans in the works.

There are three scenarios going forward, Rhoads said. In the first, if BCBS pulls out, ACA-eligible customers will have to buy insurance off-exchange, which they will likely not be able to afford — though they will be exempt from paying a penalty for being uninsured if they cannot get insurance. The second scenario is applying for an ACA Section 1332 waiver, which allows states to introduce changes to exchanges and commercial health insurance market rules. But those waivers are difficult to obtain, Rhoads said.

The third scenario would involve passage of a bill recently introduced in Congress that would allow people to use their ACA subsidies to buy state-approved health plans if they have no option to buy insurance on ACA exchanges in 2018. A bill from Republican Tennessee Sens. Lamar Alexander and Bob Corker aims to provide that relief to about 230,000 Tennesseans who use the state's exchange. That bill, Rhoads said, could provide the same relief in Oklahoma.

"This is not a permanent solution," Alexander said on the Senate floor as he introduced the bill. "Congress has a responsibility to continue its work to solve this problem and to give more Americans more choices of lower-cost health insurance."

But Avalere Health's Sloan pushed back, saying the Alexander-Corker bill would only help a small group of people, and that population's risk would still be too much for off-exchange insurers. Even if it passes, Sloan said, it would not be a long-term solution.

"If ... it becomes pretty clear [Congress is] not going to do something this fiscal year, then you're going to see a lot of other things like Alexander's bill or other stand-alone [bills] to try and help people," Sloan said.