When an insurance executive cited a teenager's $12 million annual health care costs to explain rising premiums in Iowa's exchange market, the teen's story became a political flashpoint—leaving his family "devastated," and sparking a debate about how state and federal policies contributed to rising premiums, a Jonathan Cohn writes for the Huffington Post.
According to Cohn, Wellmark Blue Cross Blue Shield EVP Laura Jackson in 2016 said one individual—whose care reportedly cost the insurer $1 million per month—accounted for about 10 percentage points of the insurer's 2017 rate hike for coverage purchased through Iowa's individual market.
In March, Jackson cited the patient again, but this time Cohn writes "Jackson was unusually specific," saying the patient was a teenage boy with a severe form of hemophilia, a genetic disorder that affects blood clotting, who required high-cost specialty drugs.
The insurer withdrew from the state's individual market a few weeks later, again citing the individual as an "extreme example" of rising health care costs in the Affordable Care Act's exchanges.
Around the time Wellmark withdrew from the exchange, media headlines touting Iowa's $12 million teen went viral, and based on the details, one couple realized "the teenager was almost certainly their son," Cohn writes.
The parents spoke with Cohn on the condition their names would not be released.
A day in the life of the $12M patient
The news stories circulating about the $12 million teenage boy in Iowa devastated his parents, whom Cohn calls Lisa and Michael, in part because they knew their son was reading the articles.
"Not only is he reading that he's the reason that people can't be insured, he's been reading people had to pay more money for insurance premiums just to take care of him. He's scared, and it's very upsetting," Lisa said.
About 20,000 people in the United States have hemophilia, a genetic disorder that prevents blood from clotting. The disorder can cause internal hemorrhaging that can go undetected for hours or days, cause severe pain, and in extreme cases can be deadly if blood spills into and around vital organs.
The Iowa patient, whom Cohn calls Jacob, was born with a severe form of hemophilia. To prevent episodes of uncontrollable bleeding, he takes medications that, Cohn writes, "list for several hundred thousand dollars most months, and sometimes nearly $1 million." His family has sought to cut costs by handling the daily infusions themselves, instead of hiring a home health aide. Even so, when severe bleeds occur, Jacob requires "more intensive treatment, typically involving infusions every two hours around the clock until the bleeding has stopped," Cohn writes.
Recalling an episode Jacob experienced at his grandparents' house, Michael said, "[The] only way I can describe his pain is that if you put your hand on a train track, and a train pulls up on it, and it won't move. He begged to be put under―that's how excruciating the pain was."
Iowa's challenges go beyond one patient
Paying for Jacob's medications has been an ongoing battle for Lisa and Jacob, Cohn writes. The Affordable Care Act eased some of those challenges by prohibiting lifetime coverage caps and by creating an incentive for young, healthy enrollees to purchase coverage and balance out insurers' risk pools.
But the ACA was not able to entirely prevent "adverse selection," through which sicker people who expect to have high medical bills are more likely to purchase coverage than healthier patients—a phenomenon that Wellmark's Jackson referred to when she cited the $12 million Iowa patient. This phenomenon resulted in insurer premium hikes and prompted some insurers to leave the exchanges.
Still, while high-cost patients such as Jacob have contributed to rising premiums, Cohn argues that policy changes at the state and federal that could have mitigated the challenges facing Iowa's exchanges.
For instance, Cohn asserts that Iowa's exchange "suffered because state officials were, at best, indifferent to making the newly reformed markets work." Some critics have said the state did not do enough to promote the open enrollment periods, making it more difficult for insurers to get sufficient numbers of enrollees. Overall, according to the Kaiser Family Foundation, only 20 percent of people eligible to enroll in an exchange plan in the state did so—the lowest percentage of any state.
Similarly, Cohn argues that the funding shortfall that crippled the ACA's "risk corridor" program—which Cohn says was designed to shield insurers from unexpected losses during the first few years of the exchange—also undercut Iowa's market. While larger insurers managed to sustain operations when CMS was unable to make payments, smaller insurers and start-ups weren't able to: One Iowa cooperative, which at one point provided coverage for 30,000 state residents, had to close down because of the lack of payments.
Another political factor affecting Iowa's exchange, according to Cohn, is uncertainty about the Trump administration's plans for the ACA. He writes that when Medica, an insurer selling coverage options throughout Iowa, was projecting its premiums for the coming year, the insurer had to account for the possibility that President Trump might opt to end the individual mandate and cut off cost-sharing reduction (CSR) payments—as the administration ultimately did earlier this month. According to Cohn, the lost CSR payments led Medica to increase its premiums by about one-third.
The state is assessing how to improve its exchange as it gears up for this year's open enrollment, which began Wednesday, Cohn writes.
One option, according to Cohn, would be to file a so-called state innovation waiver request to create a reinsurance program, similar to those in other states that would reimburse insurers for enrollees with particularly high medical expenses (Cohn, Huffington Post, 10/29).
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