Tuesday, August 16, 2016

Is Medical Mutual of Ohio Losing or Winning?

Medical Mutual of Ohio, one of the largest insurers in the state, announced that with the 2017 open enrollment they will discontinue to offer PPO plans both on and off exchange. This has significant ramifications to Ohio's Obamacare marketplace with the biggest impact being that eliminating these plans reduces the counties that Medical Mutual will participate in from all 88 down to 31.

This is not what Medical Mutual wants to do, but is necessary to continue selling individual plans.

Overall this decision will eliminate insurance to 25% of their membership and cause an unknown (guessing very large) percentage of their membership to have to switch from a PPO plan to an HMO or POS plan. The POS plans will only be available in the Cleveland market while all other regions will be migrated to HMO plans.

Beside losing plans, members will also lose access to providers and facilities. At the top of the list of facilities no longer available is Cleveland Clinic. Unless you fall in one of the nine counties surrounding Cleveland (POS plans) you are out of luck. What if you want the James Cancer Center at OSU? Not if you are outside of Columbus. How about Bowling Green, Ohio's Wood County hospital? Sorry, they aren't even in the HMO networks available. The list goes on and on and we haven't even mentioned the potential loss of primary doctors and specialists.

The decision came down to survival. For 2014 and 2015 Medical Mutual lost a combined $175 million. Even with reinsurance payments of $125 million it still leaves them $50 million in the hole. Obamacare supporters and insurers expected to see claims slow down and the market to stabilize. Neither of these things have happened. Add to the mix reinsurance is ending, and insurers like Medical Mutual see that it is impossible for them to continue the same strategy in the marketplace.

The new strategy is simple. Limiting network choice and limiting where to do business is bound to reduce the unhealthy risk while also eliminating providers who are unwilling to lower their reimbursement rates.

Instead of Medical Mutual rolling out 45% increases to members they will send them cancellation notices. Those in the 31 counties where HMO's will be offered will see renewals that map them to new plans. These renewals will vary based on rating regions. For those going from PPO to POS (Cleveland area) they will see increases in the low teens. Those already in HMO products will see increases in single digits. The winners will be those going from PPO to HMO where significant rate decreases will be given.

It's the financial winners that will be the focal point. Obamacare supporters will point to the rate reductions as a product of the law working. Never mind the fact that it is only "working" by limiting the providers of care that are essential to the health of those Obamacare was supposed to protect the most.

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