Obamacare is facing a new challenge after a wave of insurance companies have said they're leaving the health law's marketplaces — dwindling patient choices from the insurers who remain.
Blue Cross-Blue Shield nonprofit insurers are largely staying in Obamacare markets, but to contain costs, some are moving toward HMO plans with narrower networks. The shift is part of a growing trend on the exchanges as plans with broader networks are losing money.
An Obamacare regulation also is driving some Blue Cross insurers away from preferred provider organization plans, or PPOs, that allow patients to choose their doctor outside of the insurer's network. An HMO requires a patient to use a doctor inside the network and get referrals for specialists.
Aetna announced earlier this week it is leaving Obamacare exchanges in all but four states next year. It is the latest insurer to pull out because of financial losses, with Humana and UnitedHealth exiting Obamacare markets in 2017.
Experts say part of the reason for the losses could be insurers' broader networks, especially as the Obamacare enrollee population was sicker than expected.
"Since [the insurers] have broader networks they could be getting worse risks," said Jeff Holahan, institute fellow at the left-leaning Urban Institute. "If you have had problems, such as cancer, you will not want to be in a limited network plan."
Other experts have said there has been a general shift in the marketplace away from PPOs and toward narrower networks.
"Now that insurers can no longer exclude people with pre-existing conditions, they're finding it difficult to make money on plans with broad networks of doctors and hospitals and out-of-network coverage," said Larry Levitt, senior vice president for nonpartisan Kaiser Family Foundation.
Blue Cross has a large presence on the exchanges, offering plans in 46 states and the District of Columbia, according to the Blue Cross-Blue Shield Association. The nonprofit insurers are owned by insurance giant Anthem, which has said it is committed to the healthcare law.
A January report from the association found that the number of narrow network plans are increasing on the exchanges, and some Blue Cross insurers have even decided to jettison PPO plans and just offer HMOs.
HMO and exclusive provider organization networks that don't cover care outside of their networks increased from 41 percent in 2015 to 52 percent of plans offered on the exchanges this year, the association said.
In 2015, the lowest-cost silver plan in 47 percent of all counties was an HMO product, but that increased to 58 percent this year, the report noted. Silver plans are in the middle of Obamacare's plans.
Some Blue Cross insurers have decided to drop PPO plans altogether, putting the blame on the Obama administration.
Last year, Illinois announced it is eliminating the broader network plan option for its Obamacare exchange.
The reason was insurers must set their individual plan rates based on the total medical cost for all individual members, whether they have an HMO or PPO.
"If the costs of one plan are high, it raises the rates of all our individual plans," the insurer said. "In our effort to keep affordable plan options, we decided to not offer the broad PPO, which was our highest cost plan."
Other insurers have said the same thing.
Blue Cross-Blue Shield Texas dropped its PPO plan last year because it couldn't raise the rates for that plan while keeping HMO plan rates the same.
The insurer said if it had kept both plans "it would have added dramatic costs for every member with an individual plan. There were no options that kept the PPO sustainable and still allowed for other plans to be offered across the state."
Blue Cross in Minnesota decided in June to not offer PPO plans in 2017, forcing 103,000 customers to find a new plan on the exchange. The insurer will offer only an HMO plan.
The reason is the individual market has become "volatile," with costs and prices "escalating at unprecedented levels," the company said.
"Based on current medical claim trends, Blue Cross is projecting a total loss of more than $500 million in the individual segment over three years," Blue Cross added.