Enrollment in individual health care plans, now dominated by the Affordable Care Act exchanges, fell 15.4 percent in the first quarter for the parent of Blue Cross and Blue Shield of Illinois.
At the end of March, Chicago-based Health Care Service Corp. had 1.39 million individual members, compared with 1.64 million as of Dec. 31.
The decline in individual members is even greater when compared with the first quarter of 2015. A year ago, HCSC had nearly 1.9 million individual market members.
Despite the decline in individual enrollment, the insurer set aside $431.5 million in reserves during in the first quarter to account for losses expected in its 2016 ACA business, according to first-quarter financial statements filed this week with the Illinois Department of Insurance.
The downward enrollment trend is significant because HCSC is an industry leader in the public exchanges set up by the health insurance law forged by the Obama administration. The ACA provides subsidies to make coverage more affordable for lower-income people who don't have employer-sponsored insurance.
In 2014 and 2015, HCSC participated in exchanges in its five core markets: Illinois, Texas, Oklahoma, New Mexico and Montana.
Since the start of the exchanges, insurers typically have seen enrollment in the individual market spike in the first quarter because people shop for health plans in the last three months of the year. For example, HCSC's individual membership rose 19 percent from the end of 2014 to March 31, 2015.
HCSC spokesman Greg Thompson said in an email that the individual marketplace is very fluid, as people change jobs, move and shift to group or government plans, causing enrollment to vary throughout the year. People also don't pay their premiums and lose coverage.
But after suffering heavy losses in its ACA-compliant plans, the company also took steps heading into 2016 to control costs.
The company eliminated its popular PPO plans in its two largest exchange markets, Illinois and Texas, which some industry observers saw as an effort to reduce sign-ups. The change made customers furious because the plans, while expensive, gave consumers a large network of doctors and hospitals.
In Illinois, Blue Cross had 173,000 members enrolled in the PPO, out of its approximately 500,000 total members in the state's individual market.
HCSC replaced the PPO in Illinois with a plan that didn't provide access to some of the top hospitals in the Chicago area. Anecdotal evidence suggests that some Blue Cross members with PPO plans switched to a different insurer.
Thompson said the company can't say definitively that eliminating the PPO was a factor in the decline in individual enrollment.
The first-quarter results don't break down the company's individual membership by state. Thompson declined to provide state-level data because the company only releases that information once a year.
HCSC also pulled out of New Mexico's insurance exchange for 2016 after the state's insurance regulator rejected the company's proposed 51 percent rate increase. The company only had about 31,000 individual members in the state at the end of last year.
Blue Cross is by far the largest insurer in the Illinois individual market, with about an 83 percent market share at the end of 2015, according to Mark Farrah Associates, a health industry aggregator and web publisher.
Businesses would normally love such market dominance, but at HCSC, not so much. In a recent federal court hearing, Steve Hamman, a senior vice president at HCSC, testified that its market share on the Illinois exchange is "too big."
HCSC's total medical membership, including individual, group, Medicare and Medicaid plans, decreased from 9.7 million at the end of 2015 to 9.2 million at the end of March, a 5 percent decline. Enrollment does not include health plans HCSC administers on behalf of self-insured companies.
In its group commercial business, HCSC's enrollment fell 5.3 percent, to 3.06 million members as of March 31, compared with 3.24 million at the end of 2015. Growth in company's government plans offset some of the membership losses on the commercial side.
Despite the 5 percent decrease in enrollment, HCSC's revenues in the first quarter were flat at $7.6 billion.
The increase in reserves led to a $441.6 million loss in the quarter, compared with a loss of $337.4 million a year ago.