Oregon’s Major Health Insurers Shed Tens of Thousands of Members

As number of people with insurance climbs, the companies that have traditionally enrolled the most people in Oregon see membership decline. Could these health plans be losing clout?

The number of people receiving health insurance through small insurers or buying individual marketplace plans in Oregon dropped significantly in 2016, with 74,422 fewer people covered under the state’s major plans at the end of last year than a year earlier. These counts do not show what's happening with overall health insurance in the state -- and instead show shifts in how many members are enrolled in the state's largest plans.

According to the State Department of Consumer and Business Services, here's how enrollment shifted overall across the state:

  • Individual Market: 217,196 people were enrolled in individual market plans at the end of 2016, down from 219,578 at the end of 2015.
  • Small group: 162,254 people were enrolled at the end of 2016, up from 162,254 at the end of 2015.
  • Overall commercial market -- which includes individual and small group, plus large group, student and other plans: 1,134,547 people were enrolled at the end of 2016, up from 1,116,285.

Those broad enrollment gains at the same time as Oregon's largest health insurance companies report fewer members on their rolls hint at a broad shift in how and where people get their insurance. The numbers don't tell exactly what is going on, but it would appear that the companies that have traditionally been the biggest players in the state may be losing clout to insurers headquartered outside Oregon.

Health Republic and Oregon’s Health CO-OP, founded under Affordable Care Act programs, have left the market completely, after mostly shutting down in 2015. That left 26,699 people behind. LifeWise, which is exiting Oregon due to losses, shed 38,462 members last year – and the 27,545 still enrolled in its plans as of Dec. 31, 2016, will need to find new insurance this year. And Moda Health Plan, which nearly went into receivership when Affordable Care Act funds it had counted on did not materialize, shed 86,474 members in 2016 as it worked to stabilize its finances.

Some of the people who left shrinking or closing health plans enrolled with other major insurers: Kaiser Permanente, Providence Health Plan, Health Net Health Plan of Oregon and Zoom Health all reported growth in membership over the course of 2016.

In absolute terms, Providence Health Plans grew the most, adding 53,263 new members, which brought total membership at that plan to 271,684. Zoom Health Plan, still a tiny start-up, grew the most on a percentage basis – 1,167 percent. It ended 2015 with just 217 members, and had grown to 2,750 members by the end of last year. But the gains at insurance companies that added members were not enough to make up for the broader overall trend of declining membership. Those numbers do not include Providence Assurance, the program under which Providence reports government enrollments.

It’s not entirely clear what happened to the people who left their health plans or lost their insurance last year. Some may have gotten jobs with larger employers – insurance companies only have to report membership numbers for small business, individual and certain government-funded health plans, so that data is not available. Others may have purchased individual plans with non-Oregon based companies that have tiny membership bases within the state.

Still others may have enrolled in Medicaid-funded coordinated care organizations, which now cover roughly one in four people in the state. But CCO total enrollment is also down, from 948,721 in January 2016, to 846,720 in January 2015.

From largest enrollment to smallest, here’s how each major Oregon insurance company fared in 2016:

  • Kaiser Permanente: 498,474 members at the end of the year, up 4.8 percent from a year earlier.
  • Regence BlueCross BlueShield of Oregon: 482,774 members at the end of the year, down 0.7 percent from a year earlier.
  • Providence Health Plan: 271,684 members at the end of the year, up 24.4 percent from a year earlier.
  • PacificSource Health Plans: 161,881 members at the end of the year, down 3.9 percent from a year earlier.
  • Moda Health Plan: 129,793 members at the end of the year, down 40 percent from a year earlier.
  • Health Net Health Plan of Oregon Inc.: 94,051 members at the end of the year, up 17.1 percent from a year earlier.
  • LifeWise Health Plan of Oregon Inc.: 27,545 members at the end of the year, down 58.3 percent from a year earlier.
  • BridgeSpan: 14,928 members at the end of the year, down 25.6 percent from a year earlier.
  • Zoom Health Plan: 2,750 members at the end of the year, up 1167.3 percent from a year earlier.

Quest for profits remains a challenge for many

Profits have remained elusive for most health insurance companies in Oregon. Only Kaiser Foundation Health Plan of the Northwest, Regence BlueCross Blue Shield of Oregon and BridgeSpan reported positive net income, or profits, for the year.

PacificSource, Providence HealthPlan, Health Net Health Plan of Oregon, Moda, LifeWise, and Zoom reported losses – and in each case, these insurers also reported net losses in 2015.

Here’s how each major Oregon insurer fared in 2016, ranked from highest profits to lowest losses:

  • Kaiser Foundation Health Plan of the Northwest: profit of $40,363,259, up from a loss of $13,498,515 in 2015.
  • Regence BlueCross BlueShield of Oregon: profit of $30,214,856, up from a profit of $25,831,413 in 2015.
  • BridgeSpan: profit of $3,456,693, down from a profit of $18,719,600 in 2015.
  • Zoom Health Plan: loss of $4,746,487, down from a loss of $3,899,934 in 2015.
  • LifeWise Health Plan of Oregon Inc.: loss of $6,707,262, up from a loss of $35,739,721 in 2015.
  • Moda Health Plan: loss of $12,904,649, up from a loss of $49,529,430 in 2015.
  • PacificSource Health Plans: loss of $21,087,838, down from a loss of $10,209,074 in 2015.
  • Providence Health Plan: loss of $28,116,816, up from a loss of $63,042,540 in 2015. Including profits from Providece's Medicaid and Medicare plans, which the company tracks through its sister nonprofit Providence Assurance, total insurance losses were only $3.6 million.
  • Health Net Health Plan of Oregon Inc.: loss of $31,842,735, down from a loss of $25,390,663 in 2015.

While LifeWise opted to leave the market, two companies’ financial reports disclose strategies aimed at bolstering their financial health: Moda and Zoom, which both relied on surplus notes from outside to boost their capital.

Moda already reported its strategy of using surplus notes, a debt-like tool to improve capitol. It now has $95.95 million in these surplus notes on its balance sheet, as follows:

  • $10 million at 4.5 percent dating to 2012, left over from an earlier note that has been partially paid off, and owed to OEA Welfare Benefit Trust.
  • $50 million at 4 percent from 2014, owed to OHSU for a cash infusion.
  • $13 million at 4 percent from Dec. 31, 2015, to Oregon Dental Service.
  • $22.7 million at zero percent from Feb. 28, 2017, to Healthy Living Alliance, with no specific maturity date.

These surplus notes can only be paid off with the approval of Oregon’s insurance commissioner. In addition, Moda’s parent company contributed $80 million in capital to its balance sheet in 2016, and the company has a $4 million line of credit with U.S. Bank.

While Moda has been trying to right itself after being caught off-guard when Congress opted not to fund risk-corridor payments it had counted on, it was recently awarded a $214 million judgement from the federal government, following a lawsuit over that funding. It’s not clear if that money will ever materialize.

Zoom Health Plan, meanwhile, faces a challenge common to startups across many industries: maintaining enough capital to grow while its revenues are still relatively small. In 2016, it received $4 million in cash capital through surplus notes issued to parent company Zoom Management, bringing to $10.75 million the total value of surplus notes on its balance sheet. Each note carries 6 percent interest and the earliest begin to mature in 2020. They can only be paid off with the approval of the state insurance commissioner.

Reach Courtney Sherwood at [email protected].

Editor's note: This story has been updated to include figures from Providence Assurance, where Providence reports the results of its Medicare and Medicaid health plans, and to incorporate statewide enrollment figures provided by the Oregon Department of Consumer and Business Services.

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