March 24, 2018
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Anthem expects individual health plan membership to fall 70 percent in 2018

The office building of health insurer Anthem is seen in Los Angeles, Feb. 5, 2015.
By Carolyn Y. Johnson, The Washington Post

Anthem, a large insurer on the Affordable Care Act market, Wednesday projected a drastic 70 percent decline in individual enrollment for 2018, even as the company said it was on track to break even on the exchanges this year.

Anthem’s projections, announced during an earnings call, provide a further sign of how uncertainty is shaking companies’ confidence in the marketplace.

Anthem insures 1.4 million members through individual plans that comply with the Affordable Care Act — 900,000 of them through the individual exchanges, where people can access federal subsidies to help buy insurance.

The company had previously announced its cutback on participation on the exchanges through a trickle of state-by-state announcements over the last few months.

But the call highlighted just how much uncertainty over Obamacare, due in large part to mixed signals and last-minute changes from the White House, has shaken companies’ confidence in the marketplace.

Much of that uncertainty stems from the loss of cost-sharing reduction subsidies, federal payments that are made to insurers to offset the cost of offering lower-income Americans more affordable deductibles and co-pays. The payments are often referred to as “CSRs.”

“Unfortunately, marketplace instability created a variety of uncertainties, including cost sharing reduction subsidy funding,” Anthem chief executive Joseph Swedish said. “The uncertainty around CSR subsidy funding was an important factor as we engaged in constructive dialogue with state regulators and evaluated the appropriate levels of participation.”

Anthem said it would sell individual plans in just 56 of 143 regions of the 14 states where it operates.

Anthem will not offer plans on the exchanges in Ohio, Wisconsin, Indiana, Maine and Nevada. It is also shrinking its participation in California, Georgia, Kentucky, Virginia, and Missouri. It will remain on the exchanges in Colorado, New Hampshire, Connecticut and New York in 2018.

Swedish said that with a much-reduced footprint — an expected 70 percent cut in membership for plans that comply with the Affordable Care Act — the company expected to be slightly profitable on its individual health plan business next year. He added that if the uncertainty were reduced, the company would “have increased confidence” to reenter certain markets in 2019.

“Why not take a breather, right? There’s so much uncertainty on every aspect of this business,” said Ana Gupte, a managing director at Leerink Partners. “What they’re saying is they’ve left the infrastructure in place, so they can reenter at the appropriate time.”

Gupte said that Anthem’s decisions seem reasonable, giving the company the flexibility to reenter regions if by 2019 there is more certainty — including a possible legislative fix to the cost-sharing subsidies and greater clarity about whether other Republican-favored provisions that have been floated and then pulled repeatedly over the last nine months will change the health care landscape.

“Long story short . . . we’re very well positioned. I think our pricing is appropriate relative to the hand that’s been dealt us,” Swedish said.

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