Catholic Health Initiatives’ foray into health insurance appears to be fizzling.
The national hospital chain, parent company to CHI Health in Nebraska and southwest Iowa, withdrew its application this year to offer commercial health insurance in Nebraska. Further, the national chain has said it may get out of the insurance business altogether, having lost considerable money on it over the past year.
The developments exemplify the volatility of the health insurance market in the era of the Affordable Care Act. A local expert in health insurance says newcomers to the market face a harsh reality.
“With the regulations that now exist in the health insurance market, you just can’t make money,” said Scott Stevens, a health insurance consultant in Omaha. Stevens envisions a marketplace that will be dominated by giant companies such as UnitedHealthcare, Aetna/Coventry, Cigna and Blue Cross affiliates across the nation.
Stevens said provisions of the Affordable Care Act, such as the ban on declining policies to those with pre-existing conditions, the requirement that most plans have “essential benefits,” and other elements, have made profit margins “razor thin.”
Etti Baranoff, an associate professor of risk, insurance and finance at Virginia Commonwealth University, agreed that the health insurance industry isn’t for rookies. “There is a lot of money lost for the newcomers,” she said. “It’s not for the faint of heart, the business of health insurance. You need a lot of experience.”
CHI entered the insurance business in 2012. Commercial insurance, such as that provided by Blue Cross, United and Aetna, is private insurance that generally isn’t paid with government money.
CHI wrote in its quarterly report in late June that it was “exploring options to sell the health insurance business,” called QualChoice Health. The CHI insurance program suffered a $96.9 million operating loss in the nine months ending on March 31, the report said. Another portion of the report says CHI in May “decided to exit the health insurance business.”
CHI Health operates Bergan Mercy, Creighton, Immanuel, Lakeside, Midlands (Papillion) and Mercy (Council Bluffs) Hospitals in the metropolitan area, and other hospitals across Nebraska and southwest Iowa.
A Catholic Health Initiatives spokesman in Englewood, Colorado, said HeartlandPlains Health, a Medicare Advantage insurance program offered by CHI in eastern Nebraska, laid off five people and has closed its Omaha office. But the spokesman, Michael Romano, said Heartland still functions, serving Douglas and Lancaster Counties.
He said CHI “continues to explore all strategic options” for its insurance business.
CHI has such businesses in Nebraska, Iowa, Arkansas, Ohio, Kentucky, Washington and Tennessee, he said. It began by acquiring a Medicare Advantage plan in Washington four years ago and broadened its effort from there. It purchased an Arkansas-based commercial health plan, QualChoice, two years ago, with the hope of expanding it.
HeartlandPlains Health in eastern Nebraska launched in 2015. Iowa also has a CHI Medicare Advantage plan, called HarvestPlains Health. Medicare Advantage plans generally replace for their members standard Medicare plans. The Medicare Advantage plans continue to do business in Nebraska, Iowa and other states, he said.
Cynthia Cox, associate director of health reform and private insurance with the Kaiser Family Foundation, said insurance companies are generally doing well except on the health insurance exchanges (the Affordable Care Act marketplaces) and other individual plans.
Individual plans generally appear to be priced too low, Cox said. Their participants tend to be sicker than expected, and too few young, healthy people are enrolling, she said. The employer insurance market, both large and small, is doing OK or “much better than OK,” she said.
Dr. A. Mark Fendrick, director of the University of Michigan Center for Value-Based Insurance Design, said CHI’s insurance struggle is somewhat similar to the problems that consumer-owned and operated health insurance plans (co-ops) have had. “The low number of successful new health insurance entrants demonstrates the high financial requirements, complexity and unpredictability of a rapidly changing marketplace,” he said in an email.
Kaiser Health News reported last month that only seven co-ops will remain this fall. Co-ops were set up as nonprofits with federal loans under the Affordable Care Act. Conceived as alternatives to commercial insurance, there were 23 in 2014, Kaiser reported, but “failures are piling up.” CoOportunity Health of Iowa is among the failures, having gone out of business in 2015. CoOportunity also served some Nebraskans.
Dr. Cliff Robertson, CEO of Omaha-based CHI Health, said he’s aware that Catholic Health Initiatives has been reviewing its strategy.
He said CHI Health desires a system in which care and reimbursement link to provide excellent service.
“We are confident that patients and employers will be better served when the providers and insurers are on the same side of the table, working together to lower costs and improve the quality of care,” Robertson said in an email. “That’s the overall goal for both CHI Health and Catholic Health Initiatives.”
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