A change in insurance law could allow health insurers to move in and out of a geographic coverage area at the discretion of the insurance commissioner, rolling back a statutory five-year bar on re-entering an area after an insurance company has pulled out.
The five-year bar exists to stop insurers from gaming the system and disrupting the market by offering insurance in a given area only when they can maximize profits.
But despite the bar, three prominent insurers -- Providence Health Plan, PacificSource Health Plans and Moda Health Plan -- have sought to cut back their coverage areas significantly in the individual insurance market, retrenching to the counties where they have favorable contracts with hospitals and larger market share, as well as the profitable and competitive Portland metro area.
The Oregon Department of Consumer & Business Services took aggressive steps to push back on the geographic service reductions, and stop the individual insurance market from descending into a spiral that might leave only one insurer in certain counties.
In a highly unusual move, state regulators allowed Providence and Regence BlueCross BlueShield to have an additional rate increase in August if they would agree to maintain statewide coverage. The increase was on top of a double-digit increase set for both companies in the annual rate review process last July for 2017 individual health plans.
On Monday, Insurance Commissioner Laura Cali argued that House Bill 2340 would give another tool to state regulators, by giving them the power to allow carriers like Moda to come back into an area rather than forcing them to wait until 2022 as current law dictates.
“There may be reasons for an insurer to leave a market that’s not to game the system,” Cali told the House Health Committee. “A player might leave a market to shore up its financial position. … We might allow a carrier to come back sooner.”
HB 2340 has the support of the committee chairman, Rep. Mitch Greenlick, D-Portland, and the bill will likely move to the floor of the House later this month after Cali and the Division of Financial Regulation provide technical amendments to the bill, which faces no opposition.
Chris can be reached at [email protected].
