“It’s really essential to compete aggressively on your premium for consumers and to make sure you’re attracting the right set of customers, that will let you earn money,” on the exchange, said Mark Shepard, assistant professor at Harvard University’s Kennedy School of Government.
Shepard’s research on insurer networks on the Massachusetts health exchange found that including big-name hospitals in their networks resulted in big losses for insurers.
“Insurers have found it uneconomical to cover them because… they deliver some of the most advanced care and therefore tend to have high prices,” Shepard said. “And I found that when you covered those star hospitals, you tended to attract sicker patients to your plan.”
“That is something we took into consideration,” said Cleveland Clinic’s Sears, who says they plan to approach the exchange market in the same way they have with their Medicare accountable care organization model.
“Our first year performance in that program, we were the top performing ACO, generating significant savings for Medicare,” Sears said. “We certainly are confident we’ll be able to do that in (the exchange) segment.”
The two are expanding into territory where larger insures are pulling out due to regulatory uncertainty. Earlier this month, Anthem said it will not be on the Ohio exchange next year, in part because of the risk that funding for Obamacare cost-reduction subsidies will be pulled. The subsidies known as CSRs help reduce out of pocket costs lower-income enrollees.
“I worry about a downside scenario… where you have a big disruption to the market by defunding CSRs… I certainly worry about that. That is not a zero possibility scenario,” said Schlosser.
But like other insurers, he’s increasingly convinced that officials in Washington will not carry out the threat to let the exchange markets fail.
“I think everybody understands its downsides in DC,” he said. “I have a very hard time believing that is going to take place… it’s just frankly, bad economics.”
Watch: Cleveland Clinic CEO says health care uncertainty prompts anxiety