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District of Columbia health insurance exchange / marketplace

2 carriers will offer 26 individual plans in 2016; Assessment to fund exchange creates controversy

Looking ahead to 2016

DC Health Link currently offers 31 individual plans from three carriers (Aetna, CareFirst, and Kaiser).  For small businesses – including Congressional enrollment – there are currently 185 plans available, from four carriers (the three that offer individual plan, as well as United Healthcare).

In both markets, there will be fewer plans available in 2016; some carriers will be offering new plans for 2016, while other plans that are currently available will no longer be offered in 2016.  The individual market will include just two carriers in 2016 (CareFirst and Kaiser), as Aetna is terminating the six individual market options that they currently offer.  There will be 26 plans available in the individual market in 2016 – 11 from Kaiser, and 15 from CareFirst.  Kaiser’s plans are all HMOs, while CareFirst will offer a mix of HMOs and PPOs.

Aetna has begun sending letters to “hundreds” of DC insureds, letting them know that the carrier “can no longer meet the needs of [its] customers while remaining competitive in the market” and that their current coverage will terminate at the end of the year.  Aetna’s enrollees will be able to choose replacement coverage from among the 26 plans that will be offered by CareFirst and Kaiser next year.  DC Health Link Director Mila Kofman has noted that Aetna’s individual market share was small, so their exit won’t impact most of the exchange’s enrollees.

For the individual market, you can follow these links to see how the proposed 2016 rates compare with the current 2015 rates.  If we look at average prices for a 40-year-old, CareFirst’s PPO has a proposed rate hike of 13 percent, while their HMO has a proposed rate hike of 11 percent.  And Kaiser has proposed increasing the average HMO rate for a 40-year-old by 8.4 percent.

CareFirst has significantly more market share than Kaiser in 2015, despite the fact that Kaiser has lower premiums (CareFirst also dominated the market in 2014).  As proposed, CareFirst will continue to have higher premiums than Kaiser in 2016.  The Department of Insurance, Securities and Banking (DISB) created a chart where people could see how the proposed rate changes would impact plans at each metal level that are currently available and will continue to be available next year.

The small group market will have 136 plans available, and all four carriers will continue to participate in the small group market.  There are about 19,800 people enrolled in small business plans through DC Health Link, which is drastically more than most states have enrolled. But that number is comprised mostly of Congress members and their staffers, who account for 16,100 of the small business enrollees in DC (the Grassley Amendment to the ACA dictates that Congress and Congressional staffers can only be offered coverage through the exchange – as opposed to the FEHBP that’s available to other federal government employees).

For the small group market, here are the 2015 rates, and here are the proposed 2016 rates. A year-over-year premium change breakdown is also available, although it only includes plans that are available in 2015 and will continue to be available in 2016 (77 of the current small group plans are being terminated, and 17 new plans are being added).

Open enrollment begins on November 1, for coverage effective January 1, 2016.  Rates are still being reviewed by the Department of Insurance, which noted that last year, three carriers in the DC exchange ended up revising their rates and offering lower rates than they had initially proposed for 2015.

Funding plan creates controversy

The District of Columbia’s health insurance marketplace, DC Health Link, was identified as the nation’s second most expensive on a per enrollee basis, and its long-term funding plan triggered a  lawsuit.  The exchange’s current budget is about $28 million, but Kofman has requested $32.5 million for the 2016 fiscal year, in order to cover the cost of adding 19 full-time positions to their staff (instead of relying on contract workers).

DC Health Link’s funding plan was formed to meet requirement that all state-run exchanges be self-sufficient by 2015. A number of state-run exchanges have placed a tax on premiums sold through the exchange.

However, given the District’s small population, a premium tax would have to be very high to sustain DC Health Link — 17 percent according to a Washington Post article. Accordingly, the D.C. Council approved a one percent tax on premiums for all health-related insurance plans sold in the District — not just those sold on the exchange.

The tax is designed to apply to plans that can’t be sold on the exchange, including hospital indemnity plans, disability coverage, and long-term care plans (there is no off-exchange market for standard health insurance in DC, and grandmothered plans have not been allowed to remain in force in the District; but “health-related” plans has a much wider scope, and includes many products that were never intended to be sold in the exchange).

Many insurers that sell health-related insurance products outside of the marketplace are vehemently opposed to the plan, but the exchange has defended the tax by pointing out that people who have access to health insurance are more likely to buy the supplemental products sold outside the exchange.  They view the exchange as a sales booster for other health-related insurance products, and want those carriers to bear part of the revenue burden for the exchange.  And the funding proposal has strong support from the exchange’s insurers, as well as local advocacy and business groups.

But the American Council of Life Insurers filed a lawsuit in July 2014, claiming the tax is unconstitutional and a violation of the ACA. A U.S. District Court judge dismissed the suit in November 2014, writing that the ACA gave state-run exchanges broad authority to establish funding mechanisms.

In December 2014, the American Council of Life Insurers appealed the November ruling to the U.S. Court of Appeals for the D.C. Circuit.  In late January, the DC Council passed a temporary version of the exchange’s proposed funding model, imposing the one percent tax on all health plans and health-related plans.  Then in May, the Council approved the assessment to take effect immediately in order to fund the exchange’s 2016 fiscal year.  The assessment will eventually undergo congressional scrutiny in order to become permanent.

The assessments will be collected annually, beginning in the summer of 2015.  On July 21, the board approved a measure that lays out exactly what products are exempt from the assessment, and also provides a means for assessed carriers to appeal their assessments.

2015 enrollment data

As of June 9, DC Health Link was reporting cumulative individual enrollment of 22,889 people (and 19,124 people in SHOP plans).  But  that includes people who enrolled in 2014 and didn’t keep their coverage for 2015.  At ACAsignups, Charles Gaba has broken down the enrollments by year, and came up with 19,891 as of April 28, and another 535 people had enrolled by June 7, bringing the total to 20,426.

But HHS reported that 14,960 people in DC had effectuated (in-force) coverage in place as of the end of March (attrition is to be expected – not everyone pays the initial premiums due, so some plans are never effectuated).  Gaba estimates that number may have climbed to about 15,200 by early June.

Of the people who enrolled in individual private plans during the 2015 open enrollment period, 26 percent are new to the exchange for 2015, and just under 11 percent are receiving premium subsidies. This is dramatically lower than the rest of the country (85 percent of exchange enrollees nationwide are receiving premium subsidies), but DC does not allow the sale of off-exchange plans, so everyone who needs to purchase individual insurance in DC must do so through the exchange, regardless of whether they qualify for premium subsidies. Vermont is the only other state that requires individuals to purchase coverage through the marketplace.

DC Health Link also announced that as of June 9, Medicaid enrollment through the exchange had reached 83,465 people since October 1, 2013.  Not all of those people have remained on Medicaid however.

Open enrollment for 2015 is over, including the special enrollment period (SEP) for District residents who learned when they filed their 2014 federal tax returns that they were being penalized for not having health insurance. The SEP ran from March 15 through April 30.  Since then, individual coverage has only been available to applicants who have a qualifying event.  There are some exceptions though: Native Americans can enroll year-round, as can applicants who are eligible for Medicaid/CHIP.  Small businesses can enroll in SHOP plans year-round as well.

2015 rates

The D.C. DISB approved 2015 premiums in September 2014. For individual plans, average rate changes by carrier vary from a 6.1 percent decrease to a 7.6 percent increase. For small group plans, the range is -17.2 percent to  12.7 percent. See the DISB website for details.

Analysis by the Commonwealth Fund shows that the average increase for individual/family plans in 2015 is 11 percent. The analysis considered all marketplace carriers and metal levels.

Looking back on 2014 enrollment

During 2014 open enrollment, 10,714 people signed up for individual or family coverage through DC Health Link.

At 45 percent, the District led the nation in the percentage of people ages 18 to 34 signing up for private health plans during 2014 open enrollment. Nationally, the figure was 28 percent.

The selection of health plans was quite evenly spread across the metal levels in the District. Twenty-nine percent of health plan enrollees selected bronze plans, 25 percent selected silver plans, 22 percent selected gold plans, and 19 percent selected platinum plans. An additional four percent selected catastrophic plans, which are available only to those under 30 or those who qualify for a hardship exemption. Nationally, 2014 enrollment was heavily skewed to silver plans, with 65 percent of enrollees selecting these mid-level plans.

Who’s shopping on the SHOP?

DC Health Link is the designated marketplace for members of Congress and their official office staff following a rule issued by the Office of Personal Management, which oversees benefits for federal employees. Congress and their staffers are eligible to continue receiving the federal employer contribution toward their coverage so long as they select a plan through DC Health Link. In 2014, the vast majority of people enrolling through the DC Health Link SHOP were members of Congress and their staff.

An organization named Judicial Watch filed a lawsuit challenging the DC Health Link’s SHOP acceptance of enrollment by Congress and staffers. The case was dismissed in February, but Judicial Watch immediately appealed. Louisiana Sen. David Vitter also filed a suit challenging Congressional use of the DC Health Link small business exchange.

Use of the SHOP is mandated for District small businesses in a decision that drew strong criticism and pushback. Exchange officials said the mandate was necessary given the small population in the District. Without requiring small employers to participate, officials said, enrollment simply wouldn’t be high enough to sustain exchange operations. Small business protested the decision. The board maintained the requirement, but did allow some businesses until 2015 to comply.

In January 2015, brokers and small business were reporting technical problems with DC Health Link. Officials said the problems surfaced a year after the SHOP launch as volume increased. DC Health Link and its call center vendor added staff to help with the higher volume.

History of the District’s exchange

The District of Columbia was an early adopter in moving to implement a health insurance exchange. The Health Reform Implementation Committee (HRIC), formed at the direction of Mayor Vincent Gray, issued its final recommendations in October 2011. The D.C. City Council adopted many of the committee’s recommendations and passed a bill to create the District of Columbia Health Benefit Exchange Authority, which Gray signed it into law in January 2012. The District of Columbia received federal approval to operate a state-based exchange in December 2012.

In June 2013, the exchange was rebranded as DC Health Link.

District of Columbia health insurance exchange links

DC Health Link

DC Health Benefit Exchange Authority

Implementing Health Insurance Exchanges: District of Columbia
The Henry J. Kaiser Family Foundation overview of the District of Columbia’s progress toward creating a state health insurance exchange.