Insurer Drops New York Medicaid Coverage For 53,000 Over Unsustainable Losses

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Blue Cross Blue Shield in New York is dropping out of the state’s Medicaid program due to serious financial losses, dropping 53,000 New Yorkers from coverage.

“We have incurred losses in excess of $40 million over the past three years in these programs,” the insurer’s vice president of state and federal relations Don Ingalls wrote in a memo, The Buffalo News reports. “We have a 20+ year history of supporting these programs and members; however, we cannot continue to do so as the losses ultimately have been funded by other lines of business.”

Medicaid managed care patients in Erie, Chautauqua, Cattaraugus, Orleans, Wyoming and Allegany counties of New York will have until Oct. 31 to find new coverage. Blue Cross Blue Shield is one of the top Medicaid insurers in New York.

Stephen T. Swift, the insurer’s chief financial officer, denied that the decision it driven by Obamacare and said that while the company has been trying to fix the failing Medicaid business for years, it’s just unable to continue taking the losses.

But the cuts come at a very inopportune time for the Medicaid program. New York accepted Obamacare’s full Medicaid expansion and almost 650,000 state residents are eligible for the expansion or a coverage program for children of low-income families, according to the Kaiser Family Foundation.

It’s also possible that the influx of new Medicaid patients under the expansion are sicker and costlier to care for than typical Medicaid patients, putting further pressure on insurance companies that have already been taking hits from Medicaid for years. Chicago health officials have already reported increasing budget pressures as newly insured patients seek pricier care than expected.

With millions more Medicaid enrollees nationwide, a trend of insurers ceasing to offer Medicaid plans is especially dangerous. New York Republican Rep. Chris Collins fears that other insurance companies are likely suffering the same losses from Medicaid coverage and more may move to drop or limit their participation.

“BCBS has lost money by providing Medicaid coverage for the last three years, but was able to absorb those costs with other aspects of its business model. With Obamacare’s massive expansion of Medicaid, the financial impact for companies like BCBS has become unsustainable,” Collins said in a statement. “I fear BCBS is the first of a number of insurers who, due to Obamacare’s Medicaid expansion, will no longer be able to financially support their Medicaid programs.”

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