Iowans who buy health insurance through Wellmark Blue Cross and Blue Shield won't be getting premium rebates anytime soon. Wellmark has a near-monopoly on Iowa's individual and employer health insurance market. After the company announced last summer that it would not participate in the state's health insurance exchange during its first year of operation, Democratic State Senators Jack Hatch and Matt McCoy questioned why the company was holding about $1.3 billion in reserves. The senators argued that the Iowa Insurance Division had previously justified Wellmark's large cash reserves on the grounds that the company would be selling policies through the health exchange created under the 2010 Affordable Care Act. Hatch and McCoy asked Iowa Insurance Commissioner Nick Gerhart to study the issue, and in November, Gerhart retained Risk and Regulatory Consulting to investigate Wellmark's reserve levels.
The consultants' report, made public yesterday, concluded that Wellmark's cash reserves are "reasonable and prudent." Click through to read the full six-page report at the end of the article by Tony Leys of the Des Moines Register.
I've enclosed below a few excerpts from Leys' report, Hatch's letter to Gerhart last July, which provides background on the issue, and the joint statement Hatch and McCoy released yesterday. They noted that Wellmark "will be using its current reserves to protect them from risks that do not exist for them; namely, the Insurance Marketplace Exchange." Hatch and McCoy added that the report "puts to rest the notion that the ACA could ever be the basis for a future premium increase by the company, at least in the next three years."
After many years of double-digit percent increases in health insurance premiums, Wellmark did not raise premiums for many of its individual customers this year, presumably to deter them from shopping for a better deal on Iowa's exchange. I predict Wellmark will cite the 2010 health care reform law as an excuse for raising premiums again before too long. Iowa individuals and families can purchase policies on the exchange from either Coventry or Co-Oportunity Health. Only Co-Oportunity is selling employer health insurance plans through Iowa's exchange.