Thomas Garvie
tgarvie@uwyo.edu
A month ago Winhealth insurance announced it will no longer offer Affordable Care Act, ACA, coverage in 2016, which was followed by an even more important declaration that Winhealth is to be placed in a state of rehabilitation and receivership by the Department of Insurance (DOI).
“We have been monitoring Winhealth for some time,” State Insurance Commissioner Tom Glause said.
The receivership allows Glause to formally oversee the conservation of Winhealth’s assets, as well as distribution of the capital in an effort to ensure members continue to receive benefits.
The focus of the Department of Insurance’s monitoring of Winhealth was on RBC or risk based capital. RBC is what protects consumers from economic downturn either as a product of the overall economy or even as a product of an uptake in claims being paid. The proverbial last straw came when Winhealth fell below a ratio of 200 RBC, Glause said.
“State statute dictates that an insurance company must maintain a ratio of 200 percent risked based capital,” Glause said.
While Glause himself expressed that the formula is a bit convoluted, he said the crux of the matter is that a standard ratio risk based capital must be retained to ensure protection of the consumers. Winhealth’s inability to do so was a major contributor to the state’s intervention.
While Glause’s said his focus is now on the “rehabilitation of Winhealth,” the focus for many citizens is figuring out insurance coverage.
“As long as you continue to pay your premiums, you will be covered for the rest of the year,” Glause said.
The commissioner’s concern about coverage begins in the coming year. With the open enrollment period open now through Jan. 1, Glause provided advice for those seeking new coverage in the coming months.
“Select a plan by December 15 in order for it to be effective on January 1,” he said.
Any plans selected after Dec. 15 will become effective on Feb. 1.
Another concern that has arisen as the result of Winhealth’s statement on the matter is the economic environment created by the ACA was a primary reason for the company’s financial struggles.
“The ambiguity of federal government repayments, both in timeline and amount, have created an environment of uncertainty and increased risk in the individual environment,” according to the Winhealth statement.
However this is a premise with which Economist and Associate Vice President at UW Anne Alexander does not fully agree with.
“I would say that the company had additional financial concerns in addition to the reduction in how much it would be reimbursed by the federal government,” she said.
Alexander said while the impacts of the ACA were certainly a factor, it was likely not the soul reason for the down turn
“The part of compensation that will be reduced, the Risk Corridor payment, is definitely a contributing factor,” Alexander said, “but if they were relying on that, their financial situation was pretty shaky.”
Alexander said there are important economic impacts of Winhealth’s leaving the market in 2016. Her concern is that without Winhealth on the exchange, Blue Cross Blue Shield becomes the only company on the exchange causing prices to rise. This was one of the early concerns with the ACA in Wyoming, she said.
“From the outset, many folks who were analyzing the potential market exchange were concerned that the marketplace in Wyoming may be too small to entice multiple companies to compete in the ACA market,” Alexander said.
While Blue Cross Blue Shield has said it has no intention of reducing its number of options for the sake of profit, Alexander said she still believes more competition is always better for the consumer.
However this is a concern Glause does not share.
“Blue Cross Blue Shield will be the only provider on the exchange but not the only one available,” he said.
In addition Glause said because premium prices have already been submitted for 2016 it will be difficult for Blue Cross Blue Shield to capitalize on Winhealth’s situation.
