In an email that was sent to brokers an agents after hours last night, Blue Cross Blue Shield of IL (BCBSIL) announced they will be pulling from the Individual marketplace all products utilizing their large PPO network starting Jan 1, 2016.  The email indicated that this will affect roughly 170,000 Illinois members, all of whom will no doubt be scrambling to look at options on Nov 1st when the marketplace opens.

The reason for abandoning this product was as follows:  "Based on the actual medical cost numbers we were able to calculate for the first time this year, we found that the broad network broad PPO product is not sustainable at its current price. The amount of a rate increase that would have been needed to cover the costs of the broad PPO would have been too high to justify offering it to the market."

Currently the company has 3 network offerings: HMO, Blue Choice PPO, and Blue PPO.  They will continue to offer the HMO and have made plans to expand the limited Blue Choice PPO network. 

Meanwhile, BCBSIL filed for a 38% increase on the smaller PPO network which will be available next year.   While this plan is currently the cheapest PPO on the market, that may not be the case after this increase.  The company claims that in the individual market segment in 2014,  BCBSIL paid out more in claims than it collected in premiums.  I have been posting articles in this blog for several months now indicating that insurance carriers across the US are asking for very large premium increases (30% and above) due to such losses.  And we have seen some new Co Op carriers close their doors due to losses. 

So what is the future of the individual health insurance industry if the largest carrier in the state pulled their large PPO product off the market and is asking for a 38% increase on the remaining PPO products?    If you have an answer to this, please let me know!  I'd love to hear it!