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A Single Insurer Holds Obamacare's Fate In 2 States

Here's a health law pop quiz: Which two states have the least successful Obamacare exchanges?

You might guess a state in the Deep South where political opposition to the health law has been fierce. Or maybe you'd say Missouri. It passed a state law saying consumer advisers funded by the Affordable Care Act aren't allowed to give advice about plans to consumers.

But those answers would be wrong.

Iowa and South Dakota are the two states where the ACA insurance marketplaces have struggled the most. In both states, just 11.1 percent of residents eligible for subsidized insurance signed up for it — the lowest rates in all 50 states and the District of Columbia, according to data from the Kaiser Family Foundation. (KHN is an editorially independent program of the foundation.)

What happened in Iowa and South Dakota? The answer lies in commerce, not politics.

The individual insurance market in both states is dominated by one insurer, Wellmark Blue Cross and Blue Shield. Wellmark BCBS chose not to sell on the ACA exchanges in the first year, locking out its consumers from buying subsidized plans from the company. And it has decided to stay out of the Iowa and South Dakota exchanges for Year 2.

Before last year's enrollment, Wellmark had 87 percent of the individual market in Iowa and 73 percent of South Dakota's market.

That means Wellmark BCBS is the biggest name in health insurance in both states and that marketing muscle and brand recognition are on the sidelines during the first two years of the health law.

In contrast, Florida Blue, a dominant insurer in that state (but not as dominant as Wellmark BCBS) aggressively marketed its Obamacare plans — with TV and radio commercials and even building retail stores where people could get more information about insurance. In Florida, nearly 40 percent of the people eligible for marketplace insurance bought a plan, 1 in 3 of them buying a Florida Blue plan.

Wellmark BCBS cited technical problems with the back end of HealthCare.gov as a reason it is staying out of the market in 2015. A spokeswoman said data discrepancies in the enrollment process could affect consumer subsidies and eligibility.

"How data is transferred between the system, government entities and ultimately, health insurers continues to be problematic," Wellmark BCBS Public Relations Manager Traci McBee writes in an email. "Because we rely on this information to serve our members, we need to ensure the information we receive is timely, secure and accurate."

Wellmark says despite not selling on the exchange in 2014, it sold more ACA-compliant plans through its website and insurance agents than any of its competitors did in the two states.

Wellmark's Competition in Iowa

Iowa's federally facilitated partnership exchange has two statewide insurers — an Aetna company called Coventry Health Care of Iowa and the nonprofit, consumer-owned CoOportunity Health.

Cliff Gold, chief operating officer of CoOportunity Health, says its Iowa enrollees are "decidedly older and less healthy" than its policyholders in Nebraska, and that's partly because Wellmark decided not to join the exchange.

"If one wanted to cleanse their risk pool, there is no better way to do it than to stay off the exchange where presumably lower-income, less healthy people would come on," says Gold.

Gold says Wellmark's decision to allow Iowans to renew plans that don't comply with the Affordable Care Act was the other major factor.

"It keeps a lot of people out of the open market," says Gold. "All of the old plans have medically underwritten people in them, so they're healthier than average risk pools."

Medical underwriting was the process that insurers used to exclude people with pre-existing conditions before the ACA. Consumers would have to fill out detailed health history forms, and if an insurer didn't want to take on the risk of someone who had high cholesterol or back pain, it didn't have to. Insurers can't do that anymore, but they can work to keep customers they already have — and have already screened.

CoOportunity Health has proposed a 14.3 percent premium rate increase for 2015, which Gold says is double what it would have proposed had Wellmark canceled its non-ACA-compliant policies and entered the exchange.

Its competitor in the exchange, Coventry Health Care of Iowa, says its decisions are not swayed by what Wellmark does. The company's president is committed to selling through the exchange in the future. It has proposed an 8.7 percent average premium increase for its plan holders in 2015.

This story is part of a reporting partnership that includes Capital Public Radio, NPR and Kaiser Health News.