Any business worth its salt can find a way to make a buck in a market with sufficient consumer demand.
Wellmark’s reported uncertainty in its ability to “break even” in the health reform-created insurance marketplace would seem puzzling for a company with 70 percent of the Iowa market.
According to an Aug. 31 Des Moines Register report (“Wellmark undecided on insurance exchange,” by Tony Leys), Iowa’s largest insurer is unsure it will participate in the health insurance marketplace created by the health reform law, citing concerns about its ability to “break even.”
This marketplace could be the place where as many as 156,000 Iowans* seek to purchase health insurance. Those with household income below 400 percent of the federal poverty line (about $89,000 for a family of four) will receive tax credits from the federal government to help cover the premium cost. And small businesses, which will also be eligible to purchase insurance in the exchange, will receive tax credits if they cover at least half of their employees’ premiums.
The stars are aligned to create consumer demand in the new insurance marketplace. Wellmark’s concern about breaking even probably should not be lawmakers’ first concern. The point of the exchange is to enhance the marketplace, not keep it restricted.
Two groups heretofore are woefully underserved by the current health insurance market — individuals and families who don’t receive health insurance benefits at work, and Iowa’s small businesses. The exchange’s structure and governance should assure that Iowa individuals, families and small businesses can find affordable health insurance options.
In a strong, consumer-oriented exchange, small businesses, individuals and families will want to participate. Why would Wellmark not want a share of that playing field?
*Note: Data comes from the 2009 American Communities Survey (ACS), analyzed online using the University of Minnesota’s Integrated Public Use Microdata Series (IPUMS-USA). The ACS is conducted on an ongoing basis by the Census Bureau. Those 156,000 Iowans have household income in excess of 133 percent of the federal poverty level – the cut off point for Medicaid eligibility under health reform.
Posted by Andrew Cannon, Research Associate