Contributor: Bill Melville
Topics: Blue Cross Blue Shield, exchanges

Several state health benefit exchanges now look a lot less Blue, and that could leave consumers far from happy.

In three states, Blue Cross Blue Shield plans have opted against selling exchange policies. Another one, Regence Blue Cross and Blue Shield, opted out of the Oregon health exchange but will still sell individual exchange policies through a subsidiary.

These states should be the exception. Most Blue plans have shown no signs of flinching, and WellPoint has not backed off on plans to sell exchange policies in its 14 Blue states. Blue Cross Blue Shield plans are traditionally the strongest players in the individual and small-group markets in their respective states and have been considered likely players in the exchanges.

But a few exceptions have surfaced. Wellmark, the nonprofit Blue Cross Blue Shield plan and largest insurer in Iowa and South Dakota, will sit out both state exchanges in 2014. Given its market dominance and the ability to construct narrow networks around its ACO initiatives, Wellmark seemed tailor-made for the health exchange market.

Wellmark’s pass could have financial repercussions for plans in the exchange. Sicker residents and those previously covered by high-risk pools will be among the health exchange’s first enrollees, so the threat of adverse selection will loom over Iowa’s exchange carriers, most of which will be smaller than Wellmark.

Iowa, however, looks as if it could have a robust market in which to spread that risk. Aetna’s Coventry Healthcare of Iowa and CoOportunity Health applied for the individual exchange. Sanford Health, Health Alliance Midwest and CoOportunity Health applied to sell Small Business Health Option (SHOP) policies. Avera Health Plans and Gunderson Health Plan each will participate in both but only in their regions (northwest Iowa and northeast Iowa, respectively). The state’s demographics should also help. Only 289,000 Iowans, less than 10 percent of its population, go uninsured (HealthLeaders-InterStudy).

Other states could be less fortunate. Mississippi has only had two carriers apply for the exchange (Centene and Humana), and their coverage areas will leave 36 Mississippi counties without a single exchange policy option. Notably absent from the conversation about Mississippi’s exchange is Blue Cross & Blue Shield of Mississippi, which did not apply to sell exchange policies. Typically, these non-metro counties are places where a Blue plan would sell coverage.

The Mississippi Blue plan’s actions could indicate that other Blue plans in the southeast will spurn state exchanges. Suddenly, a lack of Blue could be a plausible turn in Louisiana, Alabama, and South Carolina.

As the exchange participants become clearer, the threat of “coverage deserts,” where the uninsured have no plan options, becomes more real. At first coverage deserts seemed to be an issue more likely in the western states, where geographically large counties might only have a few thousand residents. In Mississippi, almost half the counties – and an estimated 60,000 uninsured - will have no exchange policy available. That could be a problem anywhere a Blue plan skips the exchange.

The majority of Blue plans will still play in state exchanges. The danger lies in where they choose not to play. For some states, a Blue plan bowing out of a health exchange guarantees no oasis in a coverage desert.

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