BCBS won’t offer plans in the exchange in 2016

Earlier this year, Blue Cross and Blue Shield of New Mexico filed a proposal to increase premiums for 2016 by an average of 51.6 percent.  The announcement generated headlines nationwide, standing out even among some of the relatively steep rate increases proposed in other states.  BCBS garnered about a third of the market share in the New Mexico exchange in 2015, so their proposed rate increase would have had a significant impact on the market.

But in early August, the New Mexico Office of the Superintendent of Insurance (OSI) denied the proposed rate hike, stating that the data submitted with the rate proposal didn’t justify a rate increase of more than 24 percent.  BCBS rejected the rate change offered by the state, but came back in the following days and submitted new rates that they claimed had an average rate increase of 11.3 percent. But the OSI has said that they don’t consider the secondary proposal to be a “real offer or realistic offer” and it was not accepted.

Including off-exchange business, BCBS insures about 35,000 people in the individual market in New Mexico, and the carrier confirmed in late August that they will not be offering individual plans in the New Mexico exchange in 2016.  BCBS will keep one individual off-exchange plan – a bronze level HMO – with rates unchanged from 2015.  This avoids a full market exit, meaning that BCBS will have the option to return to the individual market with additional plans in 2017, if they choose to do so.  But the off-exchange bronze HMO plan currently has very few enrollees, so the vast majority of BCBS’s individual market insureds will need to find new plans during the upcoming open enrollment that begins November 1 (it’s likely that many of them would have opted to find new coverage anyway, if the 51 percent rate increase had been approved, because the coverage would have become much less affordable).

Lisa Reid, OSI’s director of life and health insurance, explained that BCBS currently has the lowest rates in the exchange, but they’re not dramatically lower than their competitors.  So their proposed 51 percent rate hike would have put their prices significantly above many of the other plans, most of which will only see single-digit rate increases.  For 2014, BCBS proposed rates so low that OSI required an increase before the plans could be approved for sale (similar to what Oregon regulators have required for some plans going into 2016).  And then in 2015, BCBS didn’t increase their rates at all.  Ultimately, they did end up with significant claims costs that would have justified the 24 percent average rate hike that OSI proposed – but OSI determined that the data presented by BCBS wasn’t sufficient to justify a 51 percent rate increase.

The other four carriers in the exchange have said that they are ready to accept an influx of new enrollees switching off of BCBS plans.  And all four of them proposed much smaller rate increases than BCBS for 2016. Presbyterian had asked for a 6 percent rate hike, and the approved rate change was between 3 and 6 percent. NM Health Connections will have rate changes between 4 and 17 percent, depending on the plan.  The other two carriers in the exchange – Molina and Christus – didn’t ask for rate increases in their preliminary proposals; regulators approved Christus rates with no changes, and Molina’s rates will be decreasing by 2 percent.

The individual market only comprises about ten percent of BCBS’s book of business in New Mexico.  They proposed much smaller rate increases for their group market plans, and those were approved by OSI.

Celtic is entering New Mexico’s individual market in 2016, but will only be selling off-exchange plans.