Major insurer to lose $400 million in 2 years with ACA

North Carolina’s largest health insurer is reporting major losses after just two years of selling plans through ACA exchanges

Insurance News

By Lyle Adriano

Blue Cross and Blue Shield of North Carolina provided its financial update to agents on Jan. 28 bearing bad news: the health insurer has projected losses of up to $400 million in two years on its Affordable Care Act business in the state.

The company—considered North Carolina’s largest health insurer with plans available in all 100 counties—is considering eliminating sales commissions and imposing other measures to mitigate its financial losses due to the federal healthcare legislation.

Roy Watson Jr., sales director for individual and small group markets, said that while the company has yet to disclose its year-end financial results, he anticipates the company’s combined loss for both 2014 and 2015 to exceed $400 million.

Blue Cross’ slow descent is worrying insurance agents and public health officials alike. State insurance commissioner Wayne Goodwin even plans to send a letter to U.S. secretary of health and human services Sylvia Burwell, outlining the company’s dire state. Goodwin’s letter also addressed concerns regarding the company’s technological malfunctions, which have affected many of the carrier’s customers.

Wake Forest University law professor Mark Hall proposed that Blue Cross’ financial loss is not “wholly unexpected,” noting that insurers are still learning the ropes in an unfamiliar federal exchange market .

To ensure financial solvency, Blue Cross raised its rates by an average of 32.5% for 2016, with the approval of the state Department of Insurance. The company also said that it would stop paying insurance agents commissions in order to limit ACA enrollment.

Some insurance agents believe that Blue Cross took a huge hit since low-income individuals signed up for significantly discounted coverage. Households below a certain income level enjoyed federal subsidies that offset their health insurance fees - at the cost of the insurers.
 

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