Humana's departure comes at a time of great uncertainty for Utah's experimental insurance marketplace, which was slow to catch on but posted steady gains in enrollment this year. State officials hope to preserve its unique design while receiving mixed signals from the Obama administration about whether that's possible.
Exchanges are the cornerstone of the president's signature health overhaul. And though Utah is ahead of the game with one of two operating exchanges nationally, it needs tweaking to meet federal standards.
Participating is expensive for insurers, which have had to handle applications manually. "It creates a work mechanism for us that's completely different than we have inside the company," said Regence BlueCross BlueShield regional vice president Jennifer Cannaday at a recent advisory board meeting for the exchange.
The costs are significant, "they are not sustainable," and they will require a technological fix that currently doesn't exist, Cannaday said.
Still, Patty Conner, director of the Utah Health Exchange, downplayed immediate ripple effects of the loss of Humana.
The insurer claims only 480 of the exchange's 4,000 customers, all of whom will transition to other insurers as their policies come up for renewal.
More carriers means more plans and greater customer choice, which is what people say they like most about the exchange, said Conner. "But we already have a lot of choices, and a lot of duplication of plans."
Of the 140 plans sold on the exchange, fewer than 30 are Humana's, she said.
Ernie Sweat, an independent broker on the exchange, agrees but notes that choice comes in two forms.
"There's plan choice, the ability to not force the same benefits down everyone's throat, and provider choice," which are both still intact, he said.
But "it looks bad" for a carrier to be a leaving, said Sweat, who hopes others don't follow. Without Regence BlueCross BlueShield and SelectHealth, which own more than 60 percent of the state's health insurance market, the exchange would cease to function, he said.
Also, Sweat explained that without Humana there are only three carriers pricing policies on the exchange, which could mean higher rates.
Utah's exchange pools risk. When a business applies for coverage, two carriers are randomly assigned to do the underwriting, or assessing the risks and estimated costs of insuring the group. They set a score that the insurers use to set their prices.
The scores are commonly 30 percentage points apart, Sweat said. So an employer winds up with a straight average unless he or she calls for a mediator, or an assessment from a third carrier.
Insurers in the exchange then use that score to price their policies and the company's employees individually decide which to purchase.
One less insurer in the mix could undermine the blind fairness of the risk-pooling, said Sweat, while stressing, "there's no data to support or refute that."
Conner acknowledged this is a concern, and said she would support legislation this year to open up the exchange to more carriers. Insurers who chose not to participate last year were locked out for 24 months under the law.
As resources allow, Humana may consider re-joining the exchange, said a company spokesman Ross McLerran.
But for now, the insurer is pursuing a new wellness program, HumanaVitality, which pays people rewards such as movie tickets and airline flights for healthy behaviors, such as quitting smoking and losing weight.
Humana also has been acquiring managed care organizations and adding to its Medicare portfolio, boosting sales and its stock value.