King v. Burwell – Utah subsidies safe
Subsidies are safe for 107,000 people in Utah following the Supreme Court’s ruling that subsidies are legal in every state, regardless of whether the state or HHS is running the exchange. Utah is among the states where premiums for current subsidy recipients would have increased the most significantly – by an average of 520 percent – if subsidies had been eliminated. Many of those people would have had no option but to join the ranks of the uninsured if their coverage had become unaffordable.
In addition, the American Academy of Actuaries had projected that premiums for everyone in the individual market in impacted states would increase by at least 35 percent, meaning that even people who aren’t receiving subsidies are much better off now that the Court has upheld subsidies in every state.
Utah already has a state-run exchange for small businesses (Avenue H), but has always used the federally-run exchange (Healthcare.gov) for individuals. Leading up to the Supreme Court ruling, state lawmakers did not appear eager to make changes to the state’s current exchange set-up, although it was a possibility if subsidies had been eliminated in the federally-run exchange. Thanks to the Court’s ruling, it’s no longer an issue, as subsidies are available either way.
But Governor Herbert is no fan of Obamacare, and although he’s pushed for Medicaid expansion (noting that not expanding Medicaid is leaving federal dollars on the table instead of putting them to work for Utah residents), he expressed disappointment following the Supreme Court’s ruling to preserve subsidies.
Twenty individual plans from five carriers in Utah (plus three small group plans) have requested 2016 rate increases in excess of ten percent. But many of those plans are sold outside the exchange – only three carriers (Aetna, Arches, and BridgeSpan) are requesting double digit rate increases for some of their on-exchange plans.
Rate proposals with an increase of less than ten percent aren’t shown on Healthcare.gov’s rate review tool, and it’s also important to remember that rates haven’t been finalized yet, and won’t be until the fall, just before open enrollment begins again. It will be important – as always – for consumers to shop around during open enrollment, because rate fluctuations might mean that the carrier that presented the best value in 2015 has been replaced by a competitor for 2016.
140,612 people had enrolled in private health plans in the Utah exchange as of January 9, including existing 2014 plans that were auto-renewed. 71,959 of those enrollees were renewing plans from last year, including 33,840 who “actively” renewed their coverage (as opposed to auto-renewal). Total enrollment for 2015 – including renewals – is about 166 percent of the total enrollment in the exchange at the end of the 2014 open enrollment period.
Of the 140,612 people who had enrolled in private plans in Utah by the end of open enrollment, 88 percent qualified for premium subsidies.
Between November 15 and February 22, another 29,017 exchange enrollees in Utah were eligible for Medicaid or CHIP, based on the pre-ACA eligibility guidelines that are still in use in Utah. The state has been actively working to expand Medicaid for the last two years, but it has not been finalized yet.
Open enrollment for 2015 has ended, so most people need a qualifying event in order to enroll in a plan for the remainder of 2015 (Native Americans and applicants who qualify for Medicaid/CHIP can enroll year-round). The next general open enrollment period will begin on November 1, 2015, for coverage effective January 1, 2016.
Overall, individual rates in the Utah exchange increased by an average of just 5.7 percent for 2015 (an analysis by the Commonwealth Fund puts the increase slightly lower, at 5 percent). For small groups, the average increase is even smaller, at 3.5 percent. Rate increases are slightly higher in rural areas (about 7 percent), but overall, the state is seeing a respite from the double digit rate hikes that have been common for many years. Across the entire individual market, including on and off-exchange policies, the weighted average rate increase in Utah is 7.6 percent.
The modest rate increases are especially good news considering rates in Utah were already lower than the national average. For 2014 plans, across all age groups, the average lowest cost bronze plan in Utah is $201/month before subsidies, compared with a national average of $249.
A report released in February 2014 found that Davis and Salt Lake were among the least expensive regions to purchase health insurance in the US in 2014; the two county region ranked 7th on a list of the ten least expensive health insurance areas.
The benchmark plan (second lowest cost silver plan) in most areas in Utah is only slightly more expensive than the benchmark plan in 2014, and in some cases, even less expensive. But the Salt Lake area is an exception according to a November report issued by the NY Times. They show the benchmark plan in the Salt Lake area an average of 14.3 percent more expensive in 2015 than it was in 2014. On the other hand, a Kaiser Family Foundation analysis published in November found that a 40 year old enrollee in Salt Lake would pay just 2.7 percent more for the benchmark plan in 2015 compared with the benchmark plan in 2014.
Carriers in the Utah exchange
For 2015, six health insurance carriers are offering a total of 108 policies (up from 96 in 2014) through Utah’s federally-run individual exchange: Altius Health Plans, Arches Mutual Insurance, BridgeSpan Health, Humana Medical Plan of Utah, Molina and SelectHealth.
The carriers themselves are unchanged from 2014, although they are offering more plans in 2015. In addition to the exchange options, six carriers (including three new ones) are offering 148 different plans outside the exchange.
In 2014, some health plans in the Utah exchange offered plans with dental riders available as an add-on purchase. In 2015, the Department of Insurance is requiring that plans either be sold with or without dental and pediatric dental – it’s no longer something that consumers will have to add to a policy, rather the plans will simply come with it if consumers opt for dental coverage.
As of April 19, 2014, the number of people who had finalized their private plan selections in the Utah exchange had grown to 84,601. An additional 50,268 people had enrolled in the state’s existing Medicaid program through the Utah exchange by April 19.
In June, HHS released a report showing the average pre-subsidy and after-subsidy premiums in each of the 36 states that have federally-facilitated marketplaces (FFM). Utah had the lowest average pre-subsidy premiums, at $243 per month ( the next lowest was $272 per month in Arizona, and rates reached as high as $536 per month in Wyoming).
But in a demonstration of how well the ACA’s premium tax credits level the field when it comes to health insurance premiums, the 86 percent of Utah enrollees who received a subsidy paid an average after-subsidy premium of $84, nearly the same as the $82 average across all 36 FFMs.
Enrollment assistance available
The Utah Health Policy Project and the Urban Indian Center of Salt Lake were both awarded navigator grants by CMS in September and are providing enrollment assistance during the current open enrollment period. Take Care Utah is a navigator organization that provides enrollment assistance around the state, and the People’s Health Clinic in Park City has navigators and enrollment assistance available at least once per week throughout open enrollment (schedule here).
Medicaid expansion agreement reached…
On July 17, Utah’s state leadership announced that they had reached an agreement on Medicaid expansion, but there is still much work to be done before it becomes a reality. Governor Herbert, Lt. Governor Spencer Cox, and legislative leaders have worked out a plan to use Medicaid funds to purchase private coverage for newly-eligible Medicaid enrollees. The plan is a replacement for Herbert’s Healthy Utah plan and the House’s Utah Cares plan – neither of which were approved by lawmakers during the 2015 legislative session.
The state still has to submit a waiver to HHS and receive approval in order to obtain federal Medicaid expansion funding. They also have to receive legislative approval for the plan, and they need hospitals and pharmaceutical companies to agree to financially back the plan, since it relies on them to fund the state’s portion of the Medicaid expansion cost (the federal government will always pay at least 90 percent of the cost of expansion, but starting in 2017, states are on the hook for a small percentage of the cost of Medicaid expansion).
…after many months of disagreement
The path to Medicaid expansion in Utah has been long and winding. In October 2014, Governor Gary Herbert announced that he had reached a deal with HHS – after months of negotiations – to expand Medicaid in Utah using his “Healthy Utah” approach that would be unique to the state rather than following the guidelines laid out in the ACA.
Governor Herbert’s proposal was similar to the plan that state leaders ultimately settled on in July 2015, incorporating aspects of programs that have been implemented in several other states, including Iowa, Arkansas, and Pennsylvania. Healthy Utah would have been a privatized version of Medicaid expansion, using Medicaid funds to purchase private insurance through the exchange for eligible enrollees (those between 100% and 138% would have paid a small portion of the premiums).
In early December, Governor Herbert unveiled his proposal for the state legislature. But in mid-December, the Utah Legislature’s Health Reform Task Force opted against recommending Healthy Utah to the general assembly, and instead proposed their own version of Medicaid expansion, known as Utah Cares. Their option is more expensive (because it doesn’t benefit from the generous federal funding that Healthy Utah would), and would cover only a fraction of the people who would be covered by Herbert’s plan. Essentially able-bodied adults would still be ineligible for Medicaid under the Task Force’s plan – coverage would only be available for people who are mentally ill, too sick to work, or disabled.
In January, Utah’s Speaker of the House, Republican Greg Hughes, said that some form of Medicaid expansion needed to happen during the 2015 legislative session, noting that “we have resolved to do something.” But Utah’s Republican lawmakers were concerned about the long-term cost of expanding Medicaid, and have party-line reservations about expanding an “entitlement program” for low-income adults. Several of them have been leaning towards a more modest version of Medicaid expansion than Herber’s Healthy Utah plan.
Ultimately, the legislature didn’t approve either option during the 2015 session, so there was no forward progress for Healthy Utah or Utah Cares. Governor Herbert insisted that the state find a way to use the federal Medicaid expansion funds to provide healthcare for low-income Utah residents, and he assembled a group of four leaders from the state legislature to meet during the summer and work out a compromise by the end of July. Some members of the group felt that deadline was overly ambitious, but they ended up reaching an agreement ahead of schedule, in mid-July.
The group members noted that the Supreme Court’s ruling to uphold subsidies removed one of the last hurdles in the way of developing a Medicaid expansion proposal, since they no longer had to worry about coverage evaporating for tens of thousands of other Utah residents, or about the stability of the private insurance market. This was crucial, since the expansion program they ended up proposing utilizes Medicaid funds to purchase private health insurance for newly-eligible enrollees.
Gov Herbert: anti-ACA, but a proponent of Medicaid expansion
Utah has been politically divided on the ACA, with some lawmakers championing HCR10, a non-binding resolution detailing the “devastating impacts of the ACA” that was signed by Governer Herbert in April 2013. But on January 23, Gov. Herbert announced that Utah would look for a way to expand Medicaid, saying that “doing nothing is not an option” and noting that there are 60,000 people in Utah who would be left in a coverage gap if the state did not expand Medicaid (a University of Utah study in 2014 pegged this number at 77,000 people).
Gov. Herbert’s “block grant” approach to Medicaid expansion failed to win enough support in the 2014 legislative session in Utah. But the governor kept working with HHS to get his plan approved, and neighboring states have been watching his progress to see if a similar approach might work for them too.
In late June 2014, a poll indicated that 88 percent of Utah residents favor Gov. Herbert’s “Healthy Utah” plan over doing nothing at all to assist low-income residents in securing health insurance. And 70 percent of the poll respondents prefer the Governor’s privatized version over a straight Medicaid expansion as outlined in the ACA.
But even though an overwhelming majority of the state’s population would like to see some form of Medicaid expansion, expansion of the program is still uncertain given that it must be approved by state lawmakers. Unfortunately, that leaves about 34,000 (possibly as many as 77,000) Utah residents in the coverage gap, unable to qualify for Medicaid, and also ineligible for subsidies to purchase private insurance in the exchange.
The Utah Department of Insurance accepted the Obama Administration’s March offer to allow pre-2014 (but non-grandfathered) health plans to be extended into 2015 or even 2016, and by mid-June, the state’s two largest insurers had also accepted the offer.
Regence Blue Cross and Blue Shield and SelectHealth – covering a total of 60 percent of the individual health insurance market in Utah – both allowed their members with pre-2014 plans to renew their coverage in the fall of 2014, and they may be able to do so again in the fall of 2015.
Insureds with these plans can opt to switch to an ACA-compliant plan instead, either during general open enrollment or when their plan renews (renewal of an individual plan outside of general open enrollment is a qualifying event that triggers a special enrollment period).
Avenue H – Utah’s state-run SHOP exchange
Along with Massachusetts, Utah has a health insurance exchange that predates the Affordable Care Act. However, unlike the exchanges called for by the Affordable Care Act, Utah’s exchange is not open to individual consumers to purchase health insurance. That fact has led to a series of discussions and negotiations between the state and the U.S. Department of Health and Humans Services (HHS) — and ultimately, a unique approach that is attracting interest from other states.
The Utah Health Exchange for small businesses was established in 2009 and rebranded as Avenue H in October 2012. Avenue H offers a “fixed contribution” approach for small employers. An employer contributes a fixed amount toward each employee’s health insurance. An employee then uses the exchange website to pick an insurer and policy to fit his or her individual or family needs. According to an article in The Salt Lake Tribune, by August 2013, about 350 businesses were providing health insurance to about 7,800 people through Avenue H.
In 2015, small-businesses have their choice of 75 plans from three carriers on Avenue H (Arches Mutual Insurance, SelectHealth and UnitedHealthcare of Utah), and 576 plans from seven companies that are selling small group plans outside the exchange.
Exchange history – a unique approach
Gov. Herbert asked President Obama to direct the U.S. Department of Health and Human Services (HHS) to approve Utah’s exchange and to consider it a “minimum standard” for an ACA-compliant state-based exchange. In January 2013, HHS granted conditional approval for Utah’s exchange while maintaining that it must be expanded to serve individual consumers.
Herbert continued to lobby for HHS to accept the Avenue H “as is” and proposed in February that the state continue running its small business exchange and that the federal government operate the individual exchange. In May, HHS and Utah reached an agreement for this dual-model approach, and Utah moved forward with two separate exchanges – small business run by the state and individual run by HHS – when open enrollment began for individual policies in October.
New Mexico has also adopted a hybrid approach, but the specifics are different.
Contact the exchange
Use the federal marketplace to enroll in individual or family coverage beginning Oct. 1, 2013
More Utah health insurance exchange links
Utah’s exchange for small businesses (Small Business Health Options Program, or SHOP)
Health Insurance Division Consumer Service
Assists consumers who have purchased insurance on the individual market or who have insurance through an employer who only does business in Utah.
State Exchange Profile: Utah
The Henry J. Kaiser Family Foundation overview of Utah’s progress toward creating a state health insurance exchange.