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Insurance plan paring to one state

by Andy Davis | December 3, 2017 at 4:30 a.m.

Despite its name, the federal Multi-State Plan Program, created to expand consumers' health insurance choices, will soon have only one participating state: Arkansas.

Although insurers in 22 states are participating in the program this year, Arkansas Blue Cross and Blue Shield will be the only company left as of Jan. 1.

Created under the 2010 Patient Protection and Affordable Care Act, the program allows companies to sell plans on or state-run websites that have been endorsed by the Office of Personnel Management, which runs the health insurance program for federal government employees.

Because of Arkansas' unusual Medicaid expansion program, Arkansas Blue Cross and Blue Shield also reaps another benefit: tens of thousands more customers whose premiums are paid with federal and state Medicaid funds.

Under Arkansas Works, the state uses private plans to provide coverage to most low-income adults who became eligible for assistance under the expansion of the state Medicaid program in 2014.

The Department of Human Services normally buys coverage only in a company's cheapest qualifying plan.

But the department makes an exception for Arkansas Blue Cross and Blue Shield, allowing the company to enroll customers in both its Multi-State Plan Program offering and in the cheapest qualifying plan it offers outside that program.

Little Rock-based QualChoice Health Insurance also offers two plans to Arkansas Works enrollees.

But unlike Arkansas Blue Cross and Blue Shield, QualChoice offers the plans through two different subsidiaries, each with separate licenses from the state Insurance Department.

For both QualChoice and Arkansas Blue Cross and Blue Shield, the result is that Arkansas Works enrollees in much of the state have a choice of two plans each from those companies, but only one plan offered by the other participating company, St. Louis-based Centene.

Offering two plans, instead of one, also allows Arkansas Blue Cross and Blue Shield and QualChoice to increase their enrollment among Arkansas Works participants who are automatically assigned to a plan when they fail to choose one.

Because Arkansas Blue Cross and Blue Shield and QualChoice each have two plan offerings, the Human Services Department awards the companies as many as twice as many such enrollees each as it does to Centene.

The dual plan offerings have helped Arkansas Blue Cross and Blue Shield, which already dominated the state's individual insurance market, enroll more Arkansas Works customers than its competitors.

Of the 251,262 people enrolled in private plans under Arkansas Works as of July 27, more than 139,000 -- or more than half -- were in Arkansas Blue Cross and Blue Shield plans.

That included 81,288 people enrolled in the company's regular plan and 58,287 in its Multi-State Plan Program plan.

Centene, the only other company with statewide Arkansas Works offerings, had 72,830 enrollees.

QualChoice, which has Arkansas Works plans in 57 of the state's 75 counties, had 38,857 enrollees.

The additional Arkansas Works enrollment "is a benefit" of participating in the Multi-State Plan Program, Arkansas Blue Cross and Blue Shield spokesman Max Greenwood said in an email.

The company decided to stay in the program as other companies have dropped out because it "wanted to continue to provide additional options for our customers and did not want to create any additional hassle and confusion" for those covered by the plans, she said.

She said the company's participation in 2019 "will be evaluated later next year as we review the healthcare landscape in Arkansas and how we might best serve our members."

QualChoice chief executive Michael Stock said qualifying for more Arkansas Works enrollees was a reason the company began offering Arkansas Works plans through two subsidiaries, instead of just one, in 2015.

He said he hasn't raised any concerns with state officials about Arkansas Blue Cross and Blue Shield being able to offer two Arkansas Works plans under the same license. Centene representatives didn't respond to a request for comment.

From 2014 through this year, Arkansas Blue Cross and Blue Shield's participation in the Multi-State Plan Program was part of a contract between the federal Office of Personnel Management and the national Blue Cross and Blue Shield Association.

For the 2018 plan year, the federal agency is contracting directly with Arkansas Blue Cross and Blue Shield.

Sabrina Corlette, a research professor at the Georgetown University's Center on Health Insurance Reforms, said the Multi-State Plan Program is "a well-intentioned idea that never quite got off the ground."

"There was this general idea that members of Congress and federal employees have pretty good coverage," she said, "and can't people have access to something like that?"

But companies' Multi-State Plan Program plans are "essentially mirror images" of the companies' other plans and don't offer features, such as more benefits or lower premiums, to entice consumers to sign up, she said.

The program also doesn't offer much incentive to the insurers, she said. In addition to being certified by the Office of Personnel Management, the companies must be licensed in each state where they offer plans and meet state requirements.

"There wasn't any carrier who viewed it as a sort of national strategy to enter a bunch of new markets," said Gary Claxton, a vice president at the Menlo Park, Calif.-based Kaiser Family Foundation.

"It didn't turn out to provide any advantages in terms of administration or anything else."

Blue Cross and Blue Shield Association companies offered plans under the program in 30 states and Washington, D.C., in 2014.

The next year, a coalition of nonprofit insurers, created under the Affordable Care Act and known as Consumer Operated and Oriented Plans, or co-ops, joined the program, expanding the coverage to an additional five states.

Although the Affordable Care Act called on such contracts to expand coverage to all 50 states within three years, the program's coverage shrank to 32 states in 2016 as some of the Blue Cross and Blue Shield companies pulled out and several of the co-ops went out of business.

This year, the participating companies include 22 Blue Cross and Blue Shield companies or their subsidiaries and one co-op, New Mexico Health Connections.

Corlette said the program never addressed the key obstacles that prevent insurers from entering new markets.

"It's a chicken and the egg problem," she said.

A company can't offer low premiums unless it can get doctors and other providers to lower what they charge the company, she said. And providers won't offer discounts unless an insurer can offer a large pool of potential customers.

An Office of Personnel Management spokesman said in an email that her agency has had "effective partnerships with a wide range of health insurance issuers" that offer benefits to federal employees, "and we have continued that tradition through our work" on the Multi-State Plan Program.

She said the agency will keep running the program "so long as one or more issuers is willing to participate and meets the standards required to do so."

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