Insurers Once on the Fence Plan to Join Health Exchanges in '15

In a sign of the growing potential under the federal health care law, several insurers that have been sitting on the sidelines say they will sell policies on the new exchanges in the coming year, and others plan to expand their offerings to more states.

'Insurers continue to see this as a good business opportunity,' said Larry Levitt, a health policy expert at the Kaiser Family Foundation. 'They see it as an attractive market, with enrollment expected to ramp up in the second year.' Eight million people have signed up for coverage in 2014, and estimates put next year's enrollment around 13 million.

In New Hampshire, for example, where Anthem Blue Cross is the only insurer offering individual coverage on the state exchange, two other plans, both from Massachusetts, say they intend to offer policies next year. Harvard Pilgrim Health Care, a nonprofit insurer with 1.2 million members, said it expected to participate in the exchanges in both New Hampshire and Maine for the first time and to add Connecticut to the mix in 2016.

UnitedHealth Group and Cigna, which were notable in their caution about the exchanges last year, are expected to enter more markets this year. In Washington State, United is among four new insurers that have told state regulators they are interested in offering plans in 2015.

Cigna's chief executive, David Cordani, said in an interview that the company's 'bias' was to expand beyond the five states where it now offers coverage on the exchanges. But he cautioned that the company, which sells plans mainly through large employers, would be selective about picking new markets. 'We don't see it as a land-grab opportunity,' he said.

Assurant Health, a unit of a for-profit specialty insurer in New York, sold policies off the exchanges in 41 states last year and said it now intended to offer plans in some exchanges. Assurant is joining the exchanges 'to serve more consumers and provide additional choice for customers purchasing on and off the exchange,' Mary Hinderliter, a spokeswoman, said in an email. 'We are evaluating exchanges on a state-by-state basis and continue to finalize our strategy,' she said.

Companies must decide in the coming weeks whether they want to participate in the online exchanges run by the federal government, and states may have their own deadlines.

Federal officials said they were heartened by the continued interest from insurers. 'We are still early in the process but it's a positive sign that after just one open enrollment season we are already seeing new entrants and more competition in the marketplace,' said Erin Shields Britt, a spokeswoman for the Department of Health and Human Services.

The critical question about premiums - what insurers want to charge in 2015 and what regulators will allow them to charge - will not be settled for months, and insurers do not have enough experience to know if the prices they set for 2014 will cover the medical costs of the people enrolled in their plans. As a result, some insurers expressing interest now may back out later, and regulators could refuse to license a new entrant.

Premiums varied widely in many markets during the last enrollment period, which ended in March. But as a handful of states have released insurers' proposed premiums for 2015, the difference appears to be narrowing, said Brett Graham, a senior executive for Leavitt Partners, a consulting firm, and he has not seen any insurers leave the market.

Early filings in Washington and Virginia show potential rate increases in the single digits.

WellPoint, which has a large presence on the state exchanges, says it has no plans to leave any of its markets, and Aetna has also indicated it will most likely be in about the same number of markets. Humana says it has not yet decided what it will do.

Several smaller insurers say there are opportunities for expansion, especially in those states where competition is limited. In New Hampshire, for example, Harvard Pilgrim offers employer coverage in the state and had already planned to begin selling individual policies through the state exchange.

'It's not really a place where very large-scale carriers are going to make a decision to come in,' said Beth Roberts, a senior vice president for the insurer. 'It's a perfect opportunity for growth for us.'

Harvard Pilgrim says it waited a year because of the logistical hurdles involved in offering coverage in the state, not for any lack on interest on its part. 'It was really an issue of not having the ability to ramp up as quickly as we needed,' Ms. Roberts said.

The other insurer planning to join the exchange, Minuteman Health, is one of the 23 nonprofit cooperatives set up under the law to increase competition. In Massachusetts, Minuteman distinguished itself through its low prices, the result of a narrow network of hospitals and doctors. In New Hampshire, the co-op said it hoped to win customers by focusing on those individuals who do not yet have insurance. 'The game there is to try to knit together the best access while having a competitive price point,' said Thomas D. Policelli, the co-op's chief executive.

Idaho has a similar dynamic, where the Blue Cross plan has long been dominant, according to Jerry Dworak, the chief executive of the Montana Health Co-op, which managed to seize 40 percent of the exchange market in that state. Blue Cross of Idaho, where Mr. Dworak once worked, captured the bulk of the exchange business. 'We came to the conclusion Idaho really needed a co-op to compete with the Blues,' he said.

In West Virginia, where there is also a dearth of competitors on the exchange, the Kentucky Health Cooperative has said it plans to offer coverage next year.

In a few markets, Blue Cross plans, which traditionally are the largest players in any given market, remained bystanders last year. But there are signs of change. Wellmark, the Blue Cross for Iowa and South Dakota, has said it plans to offer coverage on the exchanges this year, while Blue Cross of Mississippi said it had not yet decided.

The advantage of having a large player join the fray extends beyond the additional competition, Mr. Levitt said, to its ability to attract more overall customers through heavy marketing.

More health systems also seem interested in offering plans for 2015, at least from early signs, said Erica Coe, a health care expert for McKinsey & Company, a consultant that analyzed the competitive landscape in 2014. While some providers, like North Shore-LIJ Health System in New York, entered the exchanges last year, more are expressing interest in states like Virginia and Indiana.

The market dynamic is such that insurers who wait a year or two may not be disadvantaged, Mr. Levitt said. People buying coverage in the individual market tend to be focused on price and may quickly switch plans if better deals become available. 'If they come in low, they could really alter the landscape,' he said.