Is a Decision to Drop Bronze Plans in Virginia a Sign of Things to Come?

When a CareFirst BlueCross BlueShield subsidiary decided recently to stop selling bronze plans in Virginia, it raised the question: is this the beginning of the end?

For some time, there has been concern about bronze plans for 2 reasons: the bargain-basement price comes with coverage that calls for large out-of-pocket costs, leaving the most price-sensitive consumers exposed if there’s a major health event, like cancer. Under the Affordable Care Act, bronze plans must pay 60% of coverage costs; silver plans, the next product level, must play 70% of costs.

But the bigger concern is that the bronze tier attracted the youngest, healthiest consumers, who paid less premium, while older and sicker consumers migrated to higher-level plans. That’s made it challenging for payers to make money off generally, but off the bronze plans especially.

According to Kaiser Health News, the lack of growth in the bronze tier—the number of plans increased less than 1% from last year—suggested insurers were looking for a way out of a money-losing product. Information from the Robert Wood Johnson Foundation found that the number of silver plans grew 2.9%.

Already, there are questions whether other insurers will follow CareFirst’s lead. In Virginia, the payer plans to transition bronze plan members into silver plans next year while offering bronze plans in other states, according to the KHN report and Fierce HealthPayer.

A senior director from Leavitt Partners told Fierce HealthPayer that if bronze plans went away, it could be destabilizing for the market; these price-sensitive enrollees might stop buying coverage altogether, said Sean Mullin.

For some time, insurers in several states have said they are seeing more high-cost enrollees than they expected. In late March, the Blue Cross Blue Shield Association issued a report on healthcare utilization among new enrollees under the ACA; the report found new enrollees needed significantly more medical care than existing clients in both individual and employer-based plans. Costs for these new enrollees were 19% higher than those in employer plans in 2014 and 22% higher in 2015.

Not everyone thinks dropping bronze plans is a good long-term strategy for payers. Keeping these healthier enrollees might be beneficial, rather than risk losing them altogether.