Bright Health Group is a major ACA insurer. For 2022, it covers about a million people on the ACA marketplaces. Bright is a start-up that was backed by venture capital and went for an initial public offering in 2021. They had a big valuation but have lost 90% of their market capitalization as everyone realizes that health insurance is a really boring business where the core of the model is to charge slightly more in premiums than claims and limited allowed overhead. Bright has lost billions of dollars since it first started selling insurance. I have not harped on Bright too much relative to Oscar despite a lot of similarities to their business model and outcomes because Bright has not loudly claimed to have reinvented both the wheel and the insurance industry with leading edge full stack disruption like Oscar routinely has proclaimed.
Bright had announced earlier in the year that it was pulling out of a few of their smaller markets. In August, Bright stated to the SEC in a regulatory filing that there were concerns about the viability of the company as a going concern. Alarm bells had been ringing over the summer in the regulatory agencies and now they were on constant overload. One of the challenges of an insurer compared to a widget-maker is that insurers are required to tie up a lot of capital as reserves so free cash available is almost always way less than total cash available.
Bright “solved” or at least pushed off their cash and capital crisis on Tuesday:
Bright Health Group, Inc. (“Bright Health”) (NYSE: BHG) today announced its decision to further focus its business on its Fully Aligned Care Model and will no longer offer Individual and Family Plans through Bright HealthCare, or Medicare Advantage products outside of California and Florida in 2023…
With this announcement, in addition to the previously announced market exits, Bright HealthCare will not offer Individual and Family health plans in Alabama, Arizona, Colorado, Florida, Georgia, Nebraska, North Carolina, Texas, and Tennessee after 2022(1), or Medicare Advantage plans outside of California and Florida. This focused footprint reduces Bright Health’s overall regulated capital need and is expected to release excess regulated capital of approximately $250 million upon settlement of all medical liabilities and approval from state regulators.
WOW!
This is a big deal. Bright is leaving the ACA markets.
What does this mean?
First, anyone who is covered by Bright will have their coverage through 11:59:59 on 12/31/22. That is not changing.
However, people will need to change their plans for 2023.
Of the 9 states that Bright just announced they’re bailing on, I have current enrollment estimates for 5 of them:
–Colorado: ~35,000
–Georgia: ~15,000
–North Carolina: ~170,000
–Texas: ~262,000
–Tennessee: ~51,000— Charles Ghoul-ba 🎃 (@charles_gaba) October 11, 2022
The best thing that anyone who is currently covered by Bright SHOULD do in four weeks is to make an active choice and to make that choice fairly early so that there is plenty of time to compensate for errors, oopsies and frictions.
The Centers for Medicare and Medicaid Services (CMS) has a process in place to automatically re-assign and re-enroll people into new insurers when their current year insurer leaves a region. This process prioritizes placing people into plans that have the same plan type (HMO vs PPO etc) and metal level as what they previously had. It does not guarantee the best premium. An automated re-enrollment process is important as Coleman Drake and I showed in some of our prior research. Some of our other research done in conjunction with Dr. Petra Rasmussen shows that the current methods may lead to a lot of people being placed into inferior plans. Ongoing work with Coleman Drake, Sih-Ting Cai and Dr. Dan Sacks shows that a small premium acts as a significant administrative burden to enrollment. Research led by Dr. Adrianna McIntyre has shown that the transition from zero to not-zero premiums will lead to significant drop-off in re-enrollment.
From a policy perspective a lot of people who normally would not be exposed to administrative burdens and frictions will be exposed to burdens and frictions. CMS and the state based marketplaces should be actively seeking ways to minimize these burdens and frictions. One way is a new Special Enrollment Period (SEP) that goes live on 1/1/23 where people whose insurers left their market can get extra time and an extra chance to enroll. This is a big deal and likely to be very helpful for some people.
The other side of BRIGHT leaving is net of subsidy premiums are likely to be cheaper for some people. BRIGHT, in 2022, was either the cheapest Silver plan or the 2nd cheapest Silver plan in over 100 counties including several large counties on Healthcare.gov. The 2nd Cheapest Silver plan sets the premium benchmark. With BRIGHT leaving, there are a lot of places whose benchmark premium will be a smidge to a lot higher than everyone thought it would have been last week.
Baud
Almost all red states. Interesting.
rikyrah
Thanks for this information. Will spread the word
Torrey
Thank you for this informative post. With apologies for my dimwittedness, but could you please explain the first and last sentences of your final paragraph? “Net of subsidy premiums are likely to be cheaper for some people” sounds like those whose premiums are subsidized will be paying less in premiums. That seems inconsistent with the last sentence, which indicates that benchmark premiums will be higher. The last sentence seems to be saying that the insured will be paying more. Or are these different groups of insured people?
H.E.Wolf
Thank you for your post! Same question as Torrey, re: the effect on premiums.
TaMara
Here in CO, my friends were part of Oscar (I think), and once Oscar said it was leaving the market in 2023, health providers stopped taking the insurance. So a quick call to the Colorado Connect for Health (our version of ACA) and they were allowed to change their insurance this summer, just in time for one of them to have a diagnostic procedure that they couldn’t get while on the other health insurance. Just an FYI, if that happens to someone on Bright.
Brit in Chicago
Nice of those VCs to subsidize health insurance for a year; too bad they weren’t willing to keep on doing it.
David Anderson
@Baud: BRIGHT had a decent size presence in Colorado and California. The Southern Red States just have the biggest addressable markets due to no Medicaid Expansion.
David Anderson
@Torrey: This is the joy of price linked subsidies.
Gross premiums will increase.
Almost no one pays gross premium.
Almost everyone now pays net of subsidy premium.
The subsidy is based on the price of the 2nd cheapest Silver plan. A higher benchmark means that plans priced below benchmark are likely cheaper or approaching zero than if there is a lower benchmark. Plans priced above benchmark are also net of subsidy cheaper because the gaps are smaller.
It is weird and counter-intuitive and a good chunk of my research agenda is exploiting this weirdness.
germy shoemangler
TaMara
@germy shoemangler: Yup. Privatized insurance and healthcare is a crime. The stories I have from a friend who is a labor and delivery nurse about how “cost-cutting” continually put moms and babies at risk. Not to mention burning out nursing staff.
Miss Bianca
@TaMara: God, am I glad we live in CO. And also glad that I’m not insured by Bright!
Mike E
Heh, I just enrolled (10/1) in a Bright health plan after leaving my position in July. My agent sent me the notification yesterday about their pulling out of the NC market so now I’m tasked with not only getting different coverage but I have to get a job to qualify for coverage here to begin with! Thanks, Obama! /s
Ruckus
Most health insurance is evil.
It is not about making you healthy, it is about making them wealthy. It’s a lot of money moving around and they get a cut. And the more they get into making it harder for you to use that insurance the more money they can make. I use the VA because it is about my health, not about my insurance. The care is decent if not always great, the docs for the most part are damn good and their support staff impress me. The VA is national healthcare for a not insignificant sized group and those without combat experience have co pays – like me, which vary depending upon income. Some years I’ve paid a significant amount and as I posted here not long ago, when SFB was fucking up everything else he also fucked up the VA for those of us who have copays. The VA is not all about the money, although money is a requirement for operation. The healthcare of a nation should be, at the minimum, good. Better if it is great. But our healthcare system is, like most everything done in this country, about money. There is a lot of money moving around in any healthcare system for a lot of reasons, but people making money off of controlling your healthcare or not providing it because you don’t have enough money for them is not good healthcare. As an example I’ve had MRIs when I used the “normal” public insurance healthcare system. Very expensive and my healthcare had a say. I’ve had a hell of a lot more MRIs in the VA because they assist the docs in checking my health, not because they make money for someone.
Mai Naem mobile
I have a friend who’s on Bright here in AZ. Bright’s plan looked really cheap for what you were getting. I looked at it for myself but kind of decided it sounded too good. I am honestly not surprised. I don’t know what other people do but in the metro Phoenix area, I find the plans that have Banner Hospitals in their network tend to have decent networks. It doesn’t mean Banner Hospitals are necessarily good, just that they are a barometer of decent rate negotiation on their end.
Torrey
@David Anderson: Thank you. But, if you’ll forgive an additional question: is “net of subsidy” the gross premium minus the amount of the subsidy? Seems like it ought to be, but one can’t be sure with technical terminology.
Torrey
@Ruckus: Reading your very apt description, it just occurred to me that that is very close to the kind of skimming and beak-wetting that is being blamed for the poor performance of the Russian army’s equipment. Hmmm.
eldorado
give everyone a membership card and have them present that card to the doctor
that’s it. that’s the plan.
Ruckus
@Torrey:
As corrupt as part of the US may or may not be, Russia is far, far, far, far worse. In a country where the average wage is $20K, there are a far too many billionaires. Including the shithead at the top who is supposed to be one of the worlds richest people, with an annual salary of $140K. He doesn’t make that money and have the power and money he does if he follows the law. And that’s because he is the law. Russia is like the government being the Mafia. vlad is the Don. Everything radiates from him. It’s not just the military equipment, it is the entire country, including most of the people. The only reason to help the top of the pile is to hopefully keep from being stomped on too harshly. Or killed outright. Why else would you suppose that something approaching a million people have fled and left everything behind, it’s because staying is a very possible death sentence.