Yes, Moda Health is leaving Washington’s health insurance market.
No, this shouldn’t be disastrous for small businesses, which will be looking at possible plan changes as the 2016 annual enrollment period is underway, from Nov. 1 to Jan. 31.
“While these Moda plans are being eliminated, the sky is not falling,” said Chris Free, founder and principal of Tacoma-based employee benefits consulting firm Rapport Benefit Group. “Your plan will still last however long it was supposed to do.”
On Oct. 28, Portland-based Moda Health gave notice to the Washington State Insurance Commissioner that it is pulling out of Washington state to focus on its “core markets” in Oregon and Alaska.
“Effective immediately, Moda will cease all sales and renewals of health insurance plans in the individual, small group and large group markets in Washington state,” the company said in a letter to the commissioner.
According to the Portland Business Journal, which originally broke the news, Moda officials had higher expectations about how much it would receive from the Centers for Medicare and Medicaid risk corridors program. The insurer expected about $89.5 million for last year — instead, it received just $11.3 million.
Now, Moda’s 47,000 Washington members will have to find new insurance plans in the near future. Moda Health explained that it will continue to fulfill all contracts signed on or renewed before Oct. 31, with an effective date prior to Jan. 1, 2016, until they expire according to their terms.
Moda Health was accepted last year into the state health exchange’s Small Business Health Options Program (SHOP) marketplace. In 2016, UnitedHealthcare will be the only provider that offers statewide SHOP plans, while Kaiser Foundation only offers them in Clark and Cowlitz counties.
Because UnitedHealthcare will be picking up the slack, it will probably not be catastrophic to be short another SHOP plan. Only businesses that fit a narrow window of eligibility would qualify for tax credits from SHOP plans, and those businesses are few and far between, Free explained.
“If there was no plan, that would be problematic,” Free said. “The fact that UnitedHealthcare will be in SHOP will mean employers will look forward to having another year of subsidy.”
Businesses can also breathe a sigh of relief over the fact that rates are already locked in, meaning prices won’t go up as a result of Moda’s departure. This fall, Insurance Commissioner Mike Kreidler approved an average rate increase of 3.9 percent, while insurance companies wanted an average rate bump of 5.6 percent.
For businesses which currently have Moda, it’s hard to say if changing plans will cause significant rate changes outside of the standard increases.
“The truth is, if they had kept the Moda health plan for another year, the rates were going to go up,” Free said. “If we move you to another plan, will it cost more? You can’t really compare the 2015 rates with the 2016 rates.”
Moreover, there are still plenty of options for small businesses to choose. According to the Insurance Commissioner’s office, there are 375 plans and 10 insurers in the small-employer market for 2016.
In addition, individuals can chose among 12 insurers selling 148 plans inside the exchange, and another eight insurers selling an additional 72 plans outside the state program.
“The number of (remaining) choices consumers have this year is evidence that Washington state’s individual market is thriving under health care reform,” said Kreidler.
Nonetheless, while Moda’s departure isn’t the end of the world, it is likely to cause an administrative migraine for those businesses that do use it.
“It’s definitely frustrating, and it’s definitely tumultuous, and it can be scary for the employees who thought they had a carrier,” Free said. “There’s definitely going to be some disruption here and there, (but) really not much more disruption than any other time an employer has to change carriers on a renewal.”