Across broad swaths of the Midwest, the fate of the Affordable Care Act increasingly rests on the shoulders of a small nonprofit health insurance plan headquartered in suburban Minneapolis.
Medica is not a household name. It provides health insurance to 700,000 people scattered across Iowa, Minnesota, North Dakota, Nebraska, Kansas, and Wisconsin. The plan's enrollment is dwarfed by that of big health plans like UnitedHealth (47 million patients) and Aetna (20 million).
Medica stuck around the Obamacare marketplaces as big for-profit plans fled, scared away by dismal financial returns and uncertainty wrought by the Trump administration.
"We may find ourselves with a large number of lives in many of these states that we didn't earn in the traditional sense of the word, by beating the competition," says Geoff Bartsh, Medica's vice president of individual market business. "We just happen to be the last person standing."
The plan is currently undecided as to where it will stick around in 2018. Executives say they would hope to remain with the marketplaces, but much of their decision-making rests on getting more certainty and stability about the law's direction from the Trump administration and state regulators.
It is suddenly the case that if Medica were to quit Obamacare, the impact would be huge. The company's exit would leave 187 counties without any Obamacare insurers. This would be in addition to 47 counties in Missouri, Ohio, and Washington that are already down to zero Obamacare plans.
An estimated 137,000 Obamacare enrollees live in the areas where Medica is currently the only Obamacare provider.
That a small health plan can play such a linchpin role in the Affordable Care Act's future speaks to the marketplace's fragility. Obamacare's drafters expected marketplaces with health insurance plans competing against each other. Increasingly, markets are held by just one plan.
It now falls to Medica to figure out whether a small health plan can, quite suddenly, play a very large role in shoring up the Affordable Care Act marketplaces.
"We certainly think there is a role for us in all the markets we're in right now," Bartsh says. "In all these states we have a statewide presence, and I don't know if we'll be able to continue that. But I certainly know we're working to stay in as many areas as we can."
The Affordable Care Act's marketplaces have struggled since their launch to attract a robust set of health plans. Most health plans lost money in the first few years, setting premiums that didn't nearly cover their patients' claims.
The uncertainty the Trump administration has created over how they will run health law programs, industry sources say, has made those problems worse — just when some thought the marketplaces were beginning to stabilize.
"The information we've seen coming from the administration actually creates more uncertainty rather than creating greater certainty," says Brad Wilson, chief executive of Blue Cross Blue Shield North Carolina.
Large, publicly traded health plans like Aetna and UnitedHealth began to quit the marketplaces in 2016. Most states, however, had a failsafe option: the local Blue Cross Blue Shield plan.
Many Blues plans are nonprofit. Before the Affordable Care Act, many served as the "provider of last resort" — the insurer that would cover the really sick, really expensive patients that all other health plans had rejected.
As other plans quit, Blue Cross plans became the Affordable Care Act's backbone. "In almost all parts of the country where there is one insurer left, it's a Blue Cross Blue Shield plan," says Cynthia Cox, an associate director at the Kaiser Family Foundation who studies the marketplaces. "These plans just have a strong history serving their community."
But in the Midwest, Blue Cross plans have begun to abandon the Affordable Care Act marketplaces. Blue Cross Blue Shield of Nebraska stopped selling plans there this year, and Wellmark (Iowa's Blue Cross plan) will quit the state's marketplace in 2018.
(Wellmark had never been especially committed to the Obamacare marketplaces, making the state a bit of an outlier. While most Blues plans lined up to sell on the marketplaces in 2014, this for-profit one held off until 2016 to join.)
Blue Cross Blue Shield of Kansas City announced on May 24 that it will not sell coverage on the Obamacare marketplaces next year. The plan has experienced significant losses in recent years and is scared off by the current uncertainty over the health law's future.
"Like many other health insurers across the country, we have been faced with challenges in this market," Blue KC chief executive Danette Wilson said in a statement. "Through 2016, we have lost more than $100 million. This is unsustainable for our company. We have a responsibility to our members and the greater community to remain stable and secure, and the uncertain direction of this market is a barrier to our continued participation."
Medica only sold coverage in three Midwestern states before the ACA. It saw the health care law as a chance to break into new neighboring markets.
"It wasn't until post-ACA that we looked more aggressively for opportunities for geographic expansion," Bartsh says. "The advent of the exchanges was an easier way to create a distribution channel."
Medica launched on three marketplaces — Minnesota, North Dakota, and Wisconsin — in 2014. It joined the Nebraska and Iowa marketplaces in 2016 and the Kansas marketplace this year.
Medica, like many of its competitors, has lost money in the Obamacare marketplaces. In 2016 alone, the plan lost $50.6 million in the individual market. But unlike bigger health plans, it remains bullish. Medica has decided to weather the storm and says that in the first quarter of 2017, it's already seen improvement.
The plan expected to keep adjusting premiums until it got them right, and slowly gain market share. But then other plans started quitting — and now Medica is set to gain market share incredibly quickly.
"We felt like we could get a knowledge base relatively quickly," Bartsh says. "But we didn't plan on entering these markets and taking over in three years' time."
Medica is now faced with the possibility of more than doubling its Obamacare membership next year, as the only remaining health plan in 192 counties. There are 85,000 people who buy coverage, for example, on the Nebraska marketplace. Right now Medica only covers 36,000 of them. If it remains the only health plan in the state, it will need to absorb the other 50,000 people.
"Each state is asking questions about their own state, and they should, but we've got to look at the bigger picture and what is realistic for an insurance plan our size," Bartsh says. "It's a marketplace that hasn't been wildly successful, and this would be dramatic growth."
There is so much uncertainty around the future of the Obamacare marketplaces that Medica's actuaries are preparing more contingency plans than Bartsh can count.
They've modeled out what premiums look like if the Trump administration continues paying the Affordable Care Act's cost-sharing reduction subsidies, which help offset copays and deductibles for low-income enrollees. They've modeled out another scenario where they don't, since the White House has been aggressively ambiguous about whether they will fund that program.
"When you're dangling the cost-sharing subsidies — they're on the table, they're off the table — that creates uncertainty," Bartsh says.
They've talked with the Trump administration and state regulators about creating a reinsurance program (possibly similar to Alaska's) to hold down premiums, and they've spent time thinking through how that would affect their ability to stick with the marketplace.
Medica is gaming out a situation where it remains the only health insurance plan in its markets. This means already laying groundwork to expand its call center and claims processing capacities. "It's not a good introduction to new markets to say hey, we're the only plan in town, but you can't get your claims paid or get through to customer service," Bartsh says.
Medica is also gaming out a scenario where another plan joins one of its marketplaces. In Iowa, Wellmark (the plan that quit in April) has said it would rejoin the market if the Trump administration approves significant regulatory changes. Obamacare monopolies aren't true monopolies; other health plans can decide to rejoin marketplaces and undercut existing health plans' prices.
"In Kansas City, we're the only carrier, but I'm sure the regulators in Kansas and Missouri are trying to find someone else to come," Bartsh says. "So we'll have to assume in Kansas City there is another competitor. That has implications for how we price, how we want to be viewed compared to an unknown potential competitor. If I make assumptions that I know everything, and then something changes right after I file, that's the situation that keeps me up at night."
Right now Medica is making all the assumptions. But at some point in the next month, it will have to decide which assumption is realistic — how many Obamacare enrollees a small insurance plan can absorb, what premiums it needs to charge to account for the risk it's taking on — and use that assumption to make a decision. And then it's going to hope the assumption it made was right.