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You are here: Home / Anderson On Health Insurance / Iowa’s new monopoly

Iowa’s new monopoly

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Iowa’s governor signed into law a plan that will intentionally break the ACA market in Iowa

Wellmark, Iowa’s Blue affiliate, and the Farm Bureau will be allowed to sell to any Farm Bureau member “health benefit plans” that are explicitly not health insurance and therefore unregulated by the ACA. These plans can underwrite. These plans can exclude pre-exisiting conditions. These plans don’t need to offer a full set of benefits. These plans are basically a reversion to the 2009 status quo.

And if an individual can pass underwriting and does not qualify for significant ACA subsidies, these plans are a good deal as that group of people are mainly looking for hit by a meteor protection. Well subsidized individuals will be indifferent to these plans as the subsidies buys affordable comprehensive insurance on the Exchange. The people in trouble from this scheme will be individuals who either can never pass underwriting or will pass with so many upcharges or restrictions that passing is still pointless. Their options are to either move out of the state or to drop their incomes so that they qualify for ACA subsidies.

Additionally, Wellmark will be effectively granted a de facto monopoly on non-group insurance sales in Iowa. There is currently a single insurer, Medica, offering ACA plans. Wellmark has signalled that it wants to re-enter the ACA market in the state for 2019. Wellmark will be able to strategically offer ACA compliant products that can stick Medica with very high cost individuals without sufficiently high risk adjustment payments to make them whole. At the same time, Wellmark can pick up all of the limited remaining good risk into the underwritten not quite insurance plans while choosing how much and at what price point they want to take on of the remaining highly morbid guaranteed issued pool. Medica has no ability to defend itself or project its exposure. I will be shocked if Medica is still selling policies in Iowa next January.

Wellmark then will have the entire individual market and significant elements of the group market in Iowa. They will have an incredible data and pricing advantage against any potential competitor. And given that the Iowa political establishment pulled the rug out from underneath Medica after Medica did them a solid, I don’t think many competitors will be willing to enter the state.

Reader Interactions

32Comments

  2. 2.

    Matt McIrvin

    Huh. So I could build an automobile that violates all EPA and safety regulations, and sell it legally by declaring it not an automobile?

  3. 3.

    Waratah

    Farmers are not illiterate, a lot if not most have college degrees. The farm bureau’s are disgusting for offering the plans.

  6. 6.

    Ohio Mom

    @Waratah: Yes, it takes a lot of smarts to run a farm. You have to have to know about soil, weather, economics and business, technology, plant biology, animal husbandry, the list goes on.

    But considering how farming states vote, clearly political science isn’t on the list.

    Eventually Iowans will figure out they’ve been screwed. In the meantime, I hope a lot of Republicans suffer.

  7. 7.

    nonynony

    @Ohio Mom: Farmers are basically small business owners.

    Small business owners repeatedly hit themselves in the face by voting Republican because of the promise of lower taxes.

  8. 8.

    gvg

    I assume farmers that are doing all right are buying regular policies all along just like non subsidized people were doing before ACA, so this is going to screw the not failing yet but not prospering. I think it impacts the family farmers and gives another competitive advantage to AG corporation farms and rich farmers.
    Somebody needs to follow the money. And the only way to fix it is win elections using this as a weapon.

  9. 9.

    Mathguy

    Kansas GOP: Well, we’ve screwed up the state as much as we possibly can.
    Oklahoma GOP: Ha! You don’t have earthquakes.
    Iowa GOP: Hold my beer….

  11. 11.

    Another Scott

    I hope this gets slapped down by the courts. (sigh)

    Possibly related, possibly not – Reuters: Walmart talking with Humana on closer ties, possible acquisition.

    Should the talks lead to a tieup, it would be the latest deal to bring together a retail chain and a health insurer in the last few months, following CVS Health Corp’s (CVS.N) $69 billion deal to acquire Aetna Inc (AET.N) and Cigna Corp’s (CI.N) $54 billion deal to buy Express Scripts Holding Co (ESRX.O).

    Walmart approached Humana earlier this month and the deliberations are preliminary, two of the sources said. While the conversations have focused on new partnerships, an acquisition of Humana by Walmart is also something being discussed, the sources added.

    I wonder why all these deals are happening now. Hmm… :-/

    Cheers,
    Scott.

  12. 12.

    E Schneider

    Also, you don’t need to be a farmer to be a farm bureau member. I’m a member in my state and all it costs is $30 a year. (You get a break on vet bills. :) So these policies will be available to anyone who coughs up a small membership fee.

  17. 17.

    mainmata

    Having been stymied at the national level in killing Obamacare, it ends up getting slowly killed through death by a thousand cuts in the republican states and persistent sabotage in Trump’s HHS. I do hope Joe Liberman and the other Blue Dogs are happy now.

    This is how the country slowly dies.

  18. 18.

    p.a.

    @low-tech cyclist:

    Not on topic, but related to the general topic of health: Trump’s nominee to head the CDC __________ (fill in the blank) is dangerously bad.

    Fixt. But beat to the punchline. Which write themselves in tRumplandia.

  19. 19.

    mainmata

    @nonynony: Many are small businesses but more than quite a few are really contract farmers for big agribusiness corporations, which probably provide their own insurance plans. As usual, the little people get screwed because GOP = Big Money.

  20. 20.

    Bill

    “There are farmers and small business owners across Iowa who can’t afford insurance.”

    This is an admission that this product is insurance. Well that and the fact that its being sold and administered by an insurance company. Really really shitty insurance.

  21. 21.

    Yarrow

    Health insurance needs its version of the Parkland kids. Unafraid, righteous, getting in the face of lying GOP, calling out politicians, registering voters. Their aggressive push and refusal to accept the status quo is so refreshing and inspiring.

  22. 22.

    Frankensteinbeck

    @Mathguy:
    It’s deliberate. Republicans are venting their desire to be mean and break everything if they can’t be special snowflakes anymore. They’ll convince themselves of all kinds of righteous sounding dogma, but abusers always do. We have got to vote these people out.

  23. 23.

    PAM Dirac

    @Steve in the ATL: It is hard to believe, but his pick to head NIH (keep Francis Collins) and National Cancer Institute (Ned Sharpless) are actually good picks. Hard to understand how that happened, but there it is.

  25. 25.

    sheila in nc

    @PAM Dirac: Dr. Collins was the director of NIH under Obama. He was initially kept on temporarily, then extended to a full reappointment.

  28. 28.

    ProfDamatu

    @Bob Hertz: Semi-decent…notice how high the deductible and OOP max are (I’d expect them to be lower for an underwritten plan), and, if I’m reading it right, it looks like “perscription” drug coverage is limited to $7500/year, kicking in after you meet your deductible. Seems like that could really screw you over if you, say, get cancer and need chemo! (Though I do understand that most people with substantial prescription drug costs would never pass underwriting for a plan like this one, it seems like that’s a pretty big gap in “hit by a meteor” coverage, considering that many meteors require lots of drugs.)

  29. 29.

    David Anderson

    @Bob Hertz: Agreed, Core Option 1 looks to be “about” a Silver Plan with richer vision and dental benefits and worse prescription benefits.

    For someone who can pass underwriting, this is good “hit by a meteor” coverage

  31. 31.

    ProfDamatu

    @Bob Hertz: Wow, that brings back memories of the questionnaire I had to fill out (over the phone) when I applied for individual coverage pre-ACA. I don’t think they required lab work, but then, I was under 30 at the time. Interesting that they ask about the last 7 years; I recall being asked the same questions, but phrased as “have you ever” had any of those illnesses. Maybe they’ve finally figured out that you can’t expect people to reliably recall the details of all their medical treatment going back decades! (Or maybe the stats show that if you haven’t had any treatment/seen a doctor for those things in 7 years, your risk is the same as someone who never had the illnesses.) In any event, even if the coverage is fairly decent, it’s definitely the sort of thing that’s going to by definition siphon only good risk out of the market (between the underwriting and the insanely bad prescription coverage, it looks like they really will get only the healthiest).

    I’m also a little surprised that the application flat out states that HIPAA regulations don’t apply; that even if you’ve been continuously covered, they still subject pre-existing conditions to a waiting period. I wouldn’t think that would be legal, unless this is the “not-insurance” insurance. (I also notice that apparently a single woman couldn’t get maternity coverage at all…I’ll just keep my opinion of that to myself.)

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