At least six Blues plans tell me they have filed plans with state insurance commissioners and the Office of Personnel Management (OPM) to offer a multistate plan (MSP), which could be made available through state-operated and federally facilitated exchanges. A Blues MSP would be co-branded by the Blues plan and OPM, which will oversee the option.
Multistate issuers must offer coverage options in at least 60% of states during the first year of insurance exchanges and expand to every state and the District of Columbia by the fourth year. One MSP must be a not-for-profit — a requirement that appears custom-made for the Blues. Blues plans tell me that their MSP products will be similar to their other products, but will have a different name and will have OPM’s seal of approval. While no group is better positioned to operate an MSP than the Blues, it’s unclear if enough Blues plans will sign on to cover that many states. Both Cigna Corp. and Aetna Inc. have said they will not participate as MSPs, at least not for the 2014 plan year. UnitedHealth Group is said to be considering it. OPM has not yet approved any MSP applications, which were due last spring.
But while MSP participation offers scale, rates are negotiated by OPM, which makes it a “near zero-margin” business, according to Joseph Marinucci, a director in the insurance ratings group at the ratings firm Standard & Poor’s. And because MSPs would be a risk business, participating carriers would need substantial risk-based capital. The nation’s Blues plans collectively have a sizable footprint in the individual and small-group markets already, and will be cautious about their participation in exchanges. Moreover, local Blues plans will be selling qualified health plans (QHPs) through their state’s exchange and won’t want to compete against a national Blues option.
The MSP option — a consolation for Democratic lawmakers who pushed for a public insurance option — was championed by former Maine Senator Olympia Snowe (R), whose home state is dominated by WellPoint, Inc., affiliate Anthem Health Plans of Maine, Inc. Snowe’s intention was to bring more competition to her state and to others. What do Blues plans have to gain or lose from offering a multistate option?
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