Colorado has a state-run exchange, Connect for Health Colorado. The state passed legislation in 2011 to create the exchange, and is among just 12 states (including DC) that are running their own exchanges and enrollment platforms for 2017 coverage.
Although some carriers exited the Colorado exchange at the end of 2016 — as was the case in most states — Connect for Health Colorado is still among the most robust exchanges in the country, with seven carriers offering plans.
However, their coverage areas are localized in most cases. 14 of Colorado’s 64 counties have just one carrier (Anthem BCBS) offering plans for 2017, and there are 53 counties that have three or fewer carriers offering plans. The average area in Colorado has 48 plans available for 2017, down from 77 in 2016.
In October 2016, Connect for Health Colorado debuted their new Quick Cost and Plan Finder tool, designed to help enrollees compare plans and out-of-pocket costs.
In the 2016 election, Colorado voters overwhelmingly rejected a state-based single-payer system (details below), which would have been the first of its kind in the country.
The Colorado Exchange and the Trump Administration
With the uncertainty over the future of healthcare reform under a Trump Administration, Connect for Health Colorado has worked to reassure consumers that nothing has changed for the time being. Coverage is still available for 2017, with subsidies for those who are eligible based on their income (up to $97,200 for a family of four). And coverage is still guaranteed-issue, regardless of pre-existing conditions.
Because Colorado has fully embraced the ACA — expanding Medicaid and building a state-run exchange — repeal of the law would hit the state hard. In December 2016, HHS reported that 419,000 Colorado residents had gained health insurance coverage from 2010 to 2015 as a result of the ACA. And at ACA Signups, Charles Gaba has estimated that more than half a million people in Colorado could lose coverage if the ACA is repealed and not replaced with something equally robust.
On the first day of the 2017 legislative session, Senator Mike Enzi (R, Wyoming) introduced a budget resolution in the Senate to start the process of repealing the ACA by defunding it. But the process of repealing and replacing the ACA is not going to be quick. Republican lawmakers have said that their repeal will have an implementation time frame of two to four years, while a replacement is developed and implemented.
And Colorado is considering possible ways to keep the state-run exchange alive, even if the ACA is repealed.
Open enrollment for 2017 coverage began on November 1, and it appears that consumers are certainly eager to enroll in coverage in Colorado. By the end of November, the number of enrollments was 23 percent higher than it had been at the same point a year earlier. The exchange reported that 37,948 people had enrolled in medical and/or dental coverage through the exchange during November.
They confirmed by email that 37,142 of those enrollees had medical coverage (including those with only medical coverage, as well as those who selected both medical and dental plans). A total of 4,643 people had enrolled in dental coverage for 2017 during the first month of open enrollment. Most of those enrollees also selected medical coverage, but 806 individuals have stand-alone dental coverage.
High enrollment volume continued in December, particularly leading up to the December 15 deadline to enroll in a plan with a January 1 effective date. The exchange reported that on December 14, there were 10,000 plan selections, and another 12,000 on December 15.
By December 18, total enrollment in medical plans had grown to 139,509, including people whose coverage was automatically renewed by the exchange. 80 percent of the enrollees already had coverage through Connect for Health Colorado in 2016, while the other 20 percent were new enrollees.
By January 8, the exchange reported by email that enrollment in medical and dental plans had reached 158,960, which was 18 percent higher than it had been a year previously. Of those enrollments, 155,370 enrolled in medical plans, and the rest selected only stand-alone dental through the exchange (many of the people who enrolled in medical plans also purchased dental coverage). 78 percent of the people who had enrolled by January 8 already had coverage through the exchange in 2016, while the other 22 percent are new to Connect for Health Colorado for 2017.
Although Connect for Health Colorado is one of six state-run exchanges that did not extend the December 15 deadline, the exchange announced on December 15 that they would “work with” consumers who were impacted by an outage the exchange experienced earlier that day, to ensure that they would still have coverage effective January 1.
There are thousands of people in Colorado who qualify for a special enrollment period that will run through March 1 because their previous coverage terminated at the end of December (details below). So although open enrollment ends on January 31, there is likely to still be fairly significant enrollment volume during February as a result of the special enrollment period.
Federal audit recommends exchange return $9.7 million to HHS
The Office of the Inspector General (OIG) has been conducting an audit into the exchange’s use of federal start-up funding in 2013 and 2014. In December 2016, the OIG recommended that $9.7 million in start-up funding be returned to HHS. Although news coverage of the audit report has been fairly negative, the money in question was only about 5 percent of the $184 million that Connect for Health Colorado received in start-up funding, and most of the issues are not what the average person would consider improper use of funds.
Their recommendation was based on the fact that their audit determined that a total of $9.7 million had either been used for costs that weren’t allowed to be funded with the start-up grant, had been improperly transferred from one grant to another, or had been improperly documented.
The exchange notes that the period being audited was in their early stages of operation, and that they have worked with auditors over the past few years to rectify problems that were found. They are continuing to work with HHS to determine whether any of the funds must be repaid; for now, it’s just an OIG recommendation, and the exchange has until January 26 to submit an official response to the audit.
20% average rate hike for individual market in 2017
On September 20, the Colorado Division of Insurance released the approved rates for 2017 plans. In the individual market, the Division of Insurance announced that premiums will increase by an average of 20.4 percent (on-exchange, the average is 20.9 percent, while off-exchange, it’s 19.9 percent), but in the small group market, the average increase will be just 2.1 percent.
However, the Wakely Consulting Group worked together with the Department of Insurance to analyze available plans for 2017, and reports that premiums are increasing an average of 24 percent for people who aren’t eligible for subsidies and whose current plans are still available for 2017. People who aren’t eligible for subsidies are more likely to select Bronze plans, and the average rate increase on Bronze plans for 2017 (25 percent) is higher than the average rate hikes for the other metal levels.
Subsidies mitigate rate increases significantly for people who are eligible for them, as does selecting a different plan during open enrollment. The Wakely Report indicates that the average second-lowest-cost silver plan in Colorado (on which subsidies are based) will increase in price by 19 percent in 2017, resulting in average premium subsidies that are $126 per member, per month higher in 2017 than they were in 2016. This highlights how essential it is for people to shop in the exchange if there’s any chance they qualify for subsidies, since subsidies are only available in the exchange. The average subsidy in Colorado in 2017 is projected to be $358 per member per month, as opposed to $232 per member per month in 2016.
The Colorado Department of Insurance reviewed rate filings throughout the summer for the carriers that proposed plans for 2017. In the individual market, seven carriers filed rates for on-exchange plans, down from ten in 2016. During the rate review process, rate hikes were adjusted — both up and down — for nearly every carrier. For the seven carriers that are offering plans in the exchange for 2017, proposed and approved average rate increases are as follows:
- Bright Health Insurance Company (new for 2017 in eight of Colorado’s 64 counties)
- Cigna: proposed 9.5 percent rate increase (approved as-filed)
- Colorado Choice: proposed 36.33 percent rate increase initially, but revised it to 32.3 percent. Approved rate increase is 42.9 percent (Colorado Choice has agreed to be purchased by Melody Health, pending regulatory approval. If the sale is finalized, Colorado Choice would no longer be a non-profit carrier).
- Denver Health Medical Plan: proposed 0.08 percent rate increase; approved rate decrease of 0.46 percent
- Anthem Blue Cross Blue Shield: proposed 26.8 percent rate increase; approved rate increase os 25.8 percent
- Kaiser: proposed 13.6 percent rate increase; approved rate increase of 18 percent
- Rocky Mountain HMO (Mesa County only): proposed 34.6 percent rate increase, but later revised it to 49.5 percent; approved rate increase is 34.9 percent. Rocky Mountain HMO is being purchased by UnitedHealthcare, pending approval by state regulators. Assuming the sale goes through, consumers in Mesa County will still have access to the same Rocky Mountain HMO plans, but the carrier will no longer be a non-profit entity.
Anthem and Cigna are both significant players in the Colorado market. Their proposed merger has been in the works for months, but the US Department of Justice filed a lawsuit in July to block the merger on antitrust grounds. Cigna and Anthem immediately began to fight back against the DOJ lawsuit, but have also had internal disagreements, and the future of the merger is unclear.
In the small group market, five carriers have filed rates and plans for 2017 coverage in the exchange. Their proposed rate changes were much more modest than the proposed rate increases in the individual market. Proposed and approved rate changes are as follows:
- Colorado Choice: proposed 7.38 percent rate increase; approved rate increase is 6.6 percent
- Anthem: proposed 4.1 percent rate increase (approved as-filed)
- Kaiser: proposed 3.7 percent rate increase; approved rate increase is 3.5 percent
- Rocky Mountain HMO: proposed 5.1 percent rate increase; approved rate increase is 16.1 percent
- Rocky Mountain Healthcare Options: proposed 11.2 percent rate increase; approved rate increase is 10.2 percent
In both the individual and small group markets, the carriers that have filed plan proposals for the exchange will also sell their products outside the exchange. In addition, several other carriers in the state have plans that will only be marketed off-exchange in 2017.
Humana, UnitedHealthcare exited individual market
At the end of 2016, Humana and UnitedHealthcare exited the individual health insurance market in Colorado, both on and off-exchange. United exited the exchanges in most of the states where it participated in 2016, and Humana exited several states.
United offered plans in 42 of Colorado’s 64 counties in 2016, but they had one of the two lowest-cost silver plans in just one of those 42 counties.
According to the Colorado Division of Insurance, the carriers’ decisions to leave the individual market impacted about 20,000 people. There were 10,549 Colorado residents with individual market coverage (including on and off-exchange) through UnitedHealthcare, and 9,914 with individual coverage from Humana. In total, that amounts to about 4.8 percent of the 420,000 people who had individual health insurance in Colorado in 2015.
Golden Rule, which is a UnitedHealthcare subsidiary, will continue to offer individual market plans outside the exchange; United and Humana will both continue to offer plans in the group market in Colorado.
RMHP exited most areas, Anthem dropped PPOs
Rocky Mountain Health Plans (RMHP, otherwise known as Rocky Mountain HMO) and Anthem BCBS are continuing to offer plans in the individual market — including in the exchange — in 2017, but their offerings are reduced.
RMHP is offering individual market plans only in Mesa County for 2017. This is the Grand Junction area, and it’s where RMHP is based. Roughly 10,000 people in other areas of Colorado needed to enroll in new coverage for 2017, as their RMHP coverage ended at the end of 2016. RMHP’s exit from the individual market in the mountains and western slope has left many areas in that region with Anthem BCBS as their only on-exchange option for 2017.
Anthem will continue to offer HMO plans throughout Colorado in 2017, but they have discontinued their PPOs. There were 62,310 people with Anthem PPOs in the individual market in Colorado in 2016. All of them had to select a new plan for 2017. They still have access to Anthem plans, albeit HMOs.
All together, including Humana, United, RHMP, and Anthem enrollees, more than 92,000 people had to switch plans at the end of 2016. A special enrollment period applies when coverage is terminated, and it has different effective date rules. So all of those folks had until December 31 to pick a new plan with a January 1 effective date. If they didn’t, their special enrollment period continues for 60 days (through March 1), with an effective date the first of the month following enrollment.
Bright Insurance joining exchange
Although some of the already-established health insurers in Colorado exited the market or reduced their offerings, Bright Health Insurance was approved by the Colorado Department of Insurance to offer individual plans on and off the exchange in 2017.
The individual market in Colorado is dominated mostly by Kaiser Permanente, Anthem Blue Cross Blue Shield, and Cigna, so there was plenty of room for a new carrier to enter the market and cause a shake-up in market share. However, the experience of Colorado HealthOP (detailed below) is a cautionary tale about right-sizing premiums and growth.
Bright is the first new carrier to enter the exchange in Colorado since the exchange opened for business in the fall of 2013. They are offering plans in eight of Colorado’s 64 counties in 2017: Arapahoe, Boulder, Broomfield, Denver, Douglas, El Paso, Jefferson, and Summit counties (there are 16 zip codes in Boulder County, but Bright Health Insurance will only be available in four of them. The other seven counties appear to have coverage county-wide though).
2016 QHP enrollment: 169k, with nearly 146k effectuated
157,317 people had enrolled in private health plans (QHPs) through Connect for Health Colorado by February 2, 2016. Open enrollment ended on January 31, but there was a special enrollment period (SEP) – through the end of February – for people who lost coverage in Colorado at the end of December 2015 (more details below).
By the end of February, enrollment in QHPs through Connect for Health Colorado had grown to 169,156. Total enrollment for 2016 (including SEP enrollment in February) was about 19 percent higher than the 141,639 people who enrolled in QHPs through the exchange during the 2015 open enrollment period.
As of mid-May 2016, the exchange confirmed by email that effectuated enrollment was at 145,930. This is significantly higher than the 116,466 effectuated enrollment number in the most recent Connect for Health Colorado dashboard report from April. The discrepancy was due to a lag time in reporting from carriers between plan selections and effectuations (initial premium payment). The exchange released their
The exchange released their August enrollment report in September, and although it shows cumulative enrollments continuing to increase, the reports never break out the actual number of people who currently have in-force individual market coverage through the exchange.
In addition to QHP enrollments, 54,447 people enrolled in Medicaid through the exchange from November 1 to January 31, 2016, and 3,549 enrolled in CHP+ (Child Health Plan Plus). Enrollment in Medicaid and CHP+ continues year-round, but tends to spike during open enrollment due to the increased outreach and advertising.
25,604 people enrolled in dental coverage through Connect for Health Colorado between November 1 and January 31 (most of them also enrolled in health insurance coverage, but stand-alone dental is available even to people who want to purchase dental coverage by itself).
Bronze is the new black?
Bucking the national trend, bronze plans were the most popular option in Colorado, with 45 percent of enrollees picking bronze during open enrollment (this percentage remained true once the SEP enrollments were tallied). Nationally, silver plans are twice as popular as bronze plans across all of the state-run exchanges, and more than three times as popular as bronze plans in states that use Healthcare.gov.
But Connect for Health Colorado also has a much higher than average percentage of enrollees who don’t qualify for premium subsidies (39 percent, as opposed to a 22 percent average in state-based exchanges and a 15 percent average in Healthcare.gov states). That could account for some of the affinity for bronze plans, since they tend to be popular among healthy applicants who have the financial means to cover the out-of-pocket exposure on a bronze plan.
Bronze plans were also more popular in Colorado than in other states in 2014 and 2015, but 2016 is the first year that bronze plan selections have outnumbered silver in Colorado.
61 percent of QHP enrollees in 2016 are receiving subsidies that average $294 per month. The number of people receiving subsidies has increased by 35 percent over 2015 (more than 103,000 in 2016, versus more than 76,000 in 2015). Subsidies are available to more enrollees in 2016 because total QHP enrollment has increased, but also because average premiums are higher in 2016, so subsidies are necessary for more enrollees in order to keep the price of the benchmark plan at the percentage of income deemed affordable by the ACA.
DOI bans differing commission structures for brokers
In late 2015, many of the nation’s health insurance carriers began reducing or eliminating broker commissions, mostly for plans sold outside of open enrollment (during special enrollment periods triggered by qualifying events) or for benefit-rich plans at the gold and/or platinum level.
The general consensus is that the commission cuts are an effort by health insurance carriers to limit sales in general, or to limit sales of benefit-rich plans, which tend to be more popular among enrollees who have health conditions, and are more expensive to insure. In 2014 and 2015, eligibility for special enrollment periods was very loosely enforced by Healthcare.gov and some of the state-run exchanges (although Colorado’s exchange has always required proof of eligibility for a special enrollment period when people enroll outside of open enrollment), and carriers noted that healthcare utilization tended to be higher for people who enrolled outside of open enrollment.
In December 2015, Colorado’s Department of Insurance issued a regulatory bulletin stating that carriers cannot offer “differing commission structures,” which they defined as different commission levels for different metal levels, different commission structures for plans sold during open enrollment versus outside of open enrollment, or “not paying commissions on certain plans offered in the State of Colorado.” The Department of Insurance warned carriers that none of those actions are allowed, and that carriers that utilize differing commission structures would risk “enforcement actions to remedy those violations.”
The purpose of the state’s regulatory bulletin is to protect consumers’ access to the full range of plans available, regardless of whether the consumer is enrolling during open enrollment or as a result of a qualifying event, and regardless of what metal level plan the consumer needs.
Thousands of people needed new plans for January
There were still 75,000 people with grandmothered plans in the individual market in Colorado in 2015, and all of them had to select new coverage for 2016, as grandmothered plans terminated at the end of 2015 in Colorado. There were also 82,000 people with CO-OP (Colorado HealthOP) plans who had to pick new plans for 2016, as the CO-OP shut down at the end of December.
All of these individuals had until the end of February to enroll in a new plan, as loss of coverage is a qualifying event that triggers a special enrollment period (SEP) that extends for 60 days after the loss of coverage. The special enrollment period also applied to former Health Access Colorado members (New Health Ventures), people who lost Time/Assurant plans, and people who lost Rocky Mountain Health Plans coverage (RMHP is still available in Colorado, but with a smaller service area than they had in 2015).
64,000 of the 82,000 people who had CO-OP plans in 2015 had their coverage through the exchange. As of early January, Connect for Health Colorado reported that only about 25,000 of those people had enrolled in new coverage through the exchange for 2016. The other 39,000 were either uninsured in January or had selected coverage outside the exchange. Colorado HealthOP had by far the lowest premiums in most areas of Colorado in 2015, and particularly for enrollees who don’t receive premium subsidies, the switch to a different carrier meant a sharp increase in premiums for 2016 (in hindsight, the low premiums and generous benefits that the CO-OP offered were clearly unsustainable, but that’s little consolation to the people who must pay significantly more to maintain health insurance coverage this year).
The exchange worked to enroll more of the former CO-OP members during the special enrollment period that extended through the end of February. Ultimately, enrollment in QHPs grew by almost 12,000 people during February.
Should Colorado be a single rating area?
Colorado has significant disparity in terms of healthcare costs – and thus health insurance premiums – from one area of the state to another. Rates in the mountain areas of the state are far higher than rates along the I-25 corridor, and although subsidies make coverage affordable for people who are eligible, there’s no assistance for someone earning more than 400 percent of the poverty level.
As an example, a 59-year old in Pagosa Springs who earns $48,000/year would have to pay $688/month (17 percent of her income) for the least expensive bronze plan available in the exchange. She would be exempt from the ACA’s penalty for being uninsured, and would also have access to slightly less-expensive catastrophic plans, but there’s no reasonably-priced health insurance option in this hypothetical case.
In an effort to address the disparity, Governor Hickenlooper signed HB 1336 into law in May 2016. The bill directed the Colorado Department of Insurance to study the impact of making Colorado one unified rating area, meaning that premiums would rise in the areas where they’re currently lower, and would fall in the mountain areas of the state where they’re currently higher.
The DOI’s report on the impact and viability of a single rating area was presented to the legislative committees in August 2016. The DOI did not recommend that the state become a single rating area, but recommended instead that the state work to find ways to lower the underlying cost of health care, since that’s what drives health insurance premiums. Insurance Commissioner Marguerite Salazar noted that a single rating area strategy could backfire, leading carriers to adjust their plan offerings or even leave the state altogether. A focus group to address the cost of healthcare is currently working, and will present their findings by the end of 2016. For the time being, Colorado remains divided into nine rating areas.
Increased legislative oversight
In March 2016, Governor Hickenlooper signed HB1148 into law. HB1148 gives the legislative oversight committee increased authority to monitor and oversee various aspects of Connect for Health Colorado’s rule-making processes.
The law gives the legislative committee “oversight over rules and policies proposed by the health benefit exchange that affect bidding and awarding contracts, carrier and regulating carrier participation, regulating broker participation and compensation, interacting with other state agencies, managing and compensating the assistance network, or the handling of any type of appeal.”
Enrollment up 19%, but still a long way from target
Connect for Health Colorado has added a feature that directs callers to brokers who can provide plan selection advice and enrollment assistance. The exchange credits the broker assistance program with helping to make the 2016 open enrollment period smoother than the previous two years. By February 29, 2015, a total of 13,172 consumers had used the broker lead tool to get plan selection and enrollment assistance from a broker.
The exchange had been aiming for 217,000 people enrolled in private health plans by mid-2016. That’s the mid-level projection; on the low end, the exchange was targeting 195,000 enrollees in private plans by June. Although enrollment grew by 19 percent over 2015 enrollment, reaching more than 169,000 people by the end of February, it was still well short of the low-end projection for mid-year enrollment.
Now that open enrollment for 2016 is over, enrollment in 2016 coverage is only possible (on or off the exchange) for people who have a qualifying event, although Native Americans can enroll year-round, as can anyone eligible for CHP+ or Medicaid. Loss of coverage is a qualifying event, which is why everyone who lost coverage on December 31 still has until the end of February to pick a new plan (note that coverage is not retroactive in that case – people who enroll in a new plan in February due to loss of coverage in December will have a new plan effective March 1, but will have a two month gap without coverage in January and February).
In addition to individual enrollments, there are 472 small businesses with coverage through Connect for Health Colorado’s SHOP exchange, covering 3,776 employees state-wide. In 2014 and 2015, SHOP coverage was available to businesses with up to 50 employees, but it became available to businesses with up to 100 employees as of January 2016. The exchange clarified by email that employers in Colorado have the following options via the SHOP exchange:
- 1 Plan, 1 Carrier
- 1 Carrier, all plans
- 1 Metal Tier, all carriers
- 2 Metal Tiers, all carriers
As of mid-2016, the option with the most choices (2 metal tiers, all carriers) was the most popular, with 45 percent of employers picking that option. But a quarter of the enrolled small businesses had opted for the most restrictive option (1 plan, 1 carrier).
Voters won’t decide on exchange fees
In January 2016, Republican Senators Kevin Lundberg and Langhorne Cias introduced Senate Bill 2. The legislation contends that Connect for Health Colorado’s market-wide assessment (which also applies to private plans sold outside the exchange) is a tax. Under Colorado law, new taxes require voter approval.
If SB2 had passed, voters would have been tasked with deciding in November 2016 whether Connect for Health Colorado can continue to generate revenue from plans sold outside Connect for Health Colorado. SB2 passed the Senate in late April, but failed in Committee in the House.
2016 rates and plans
On October 23, 2015, the Colorado Division of Insurance announced final rates for the individual and small group market in 2016 – two days after Connect for Health Colorado became the fourth state to enable browsing and window shopping on its exchange site for 2016 plans (California, Idaho, and Maryland already had 2016 plans available for browsing on their exchange sites by that point).
The overall weighted average rate increase for the individual market in 2016 was 9.84 percent, although it’s 12.14 percent if we only count plans sold in the exchange.
For the state-wide small group market, the weighted average rate increase was 3.16 percent, but it’s only 2.42 percent for plans sold in the exchange (note that in Colorado, “small group” means plans with up to 100 employees in 2016; the state had already opted to align state regulations with the ACA, so although President Obama signed legislation to keep the definition of small groups at 50 or fewer employees, Colorado law maintains that the ACA’s small group regulations now applies to all groups with up to 100 employees).
Average rate changes by carriers and full rate sheets for each region of the state are available on the Division of Insurance website (click on “more” under the “approved plans for 2016” section).
The Division of Insurance has also created an at-a-glance map of the state that shows average rate increases by area, for both the individual and small group markets.
Three carriers that offered coverage in 2015 have pulled out of the market in 2016: Colorado HealthOP (more details below), New Health Ventures (Access Health Colorado), and Time Insurance Company (Time only sold off-exchange plans in 2015, and has exited the market nationwide).
But three new carriers are offering health plans in 2016 – albeit only off-exchange: Golden Rule in the individual market; Aetna Health, and Aetna Life in the small group market.
In all, there are 20 carriers offering individual and/or small group plans in Colorado in 2016, including both on and off-exchange plans. Ten of them offer individual plans in the exchange, and five offer small business plans in the Colorado SHOP exchange. There are a total of 188 individual market plans available in the exchange – up from 176 in 2015, despite the fact that two exchange carriers have exited the market. There are 159 small group plans available in the exchange, up from 120 in 2015.
Rate changes for individual plans in the exchange range from a 4 percent increase (Kaiser; they had requested only a 2 percent increase, but the DOI increased that to 4 percent) to a 30.8 percent increase (Rocky Mountain HMO; they had requested a 34.4 percent increase, but the DOI decreased it to 30.8 percent). Because rates have increased across the state, premium subsidies are larger in 2016 in order to maintain the affordability of coverage. The average monthly subsidy in Colorado in 2015 was $221, and it’s expected to increase to $328 in 2016.
In the Denver area, benchmark premiums increased by an average of 32.2 percent for 2016. The benchmark plan is the second lowest-cost Silver plan, and it’s not the same plan from one year to another. The increase in Denver (and across much of Colorado) is due to the fact that Colorado HealthOP had the lowest rates in most parts of the state in 2015, and their plans aren’t available in 2016. When compared with the average benchmark prices in other areas across the country, Denver’s rates are still very much in line with the national average.
Market share within Connect for Health Colorado
In the Connect for Health Colorado individual exchange, three not-for-profit carriers had 90 percent of the market share in 2015:
- Colorado HealthOP, the ACA-created CO-OP, garnered almost 40 percent of the exchange market share in 2015, but is no longer available in 2016.
- Kaiser got 35 percent of the exchange enrollees in 2015; their average rate increase is 4 percent for 2016
- Rocky Mountain Health Plans (also a not-for-profit carrier) had 15 percent of the exchange market share in 2015; their average rates increased by 30.8 percent. And for 2016, Rocky Mountain Health Plans has opted drop its broad-network plans along the Front Range, and instead focus on the Western Slope (Grand Junction area) where the bulk of their insureds are. Their membership was about 40,000 people in 2014, but declined to 26,000 in 2015.
Due to the exit of Colorado HealthOP, the smaller service area offered by RMHP, and the small rate increase on Kaiser plans, it’s likely that Kaiser has the bulk of the market share among Connect for Health Colorado enrollees for 2016.
Colorado CO-OP shut down by regulators
On October 9, 2015, Colorado HealthOP – the state’s ACA-created CO-OP – joined six other CO-OPs that had already failed (and by the end of 2015, 12 of the original 23 CO-OPs had shut down). The Department of Insurance announced that they had made the difficult decision decertify Colorado Health OP from the state-run exchange, effectively shutting down the CO-OP.
Although Colorado HealthOP was the seventh CO-OP to fail, they were the first one to publicly disagree with regulators over the shut-down. In their message to members, the CO-OP called the Colorado Division of Insurance’s decision “both irresponsible and premature” and noted that they were “astonished and disappointed by the DOI’s decision”. The CO-OP had said just the day before that they had three viable solutions for funding, and they noted that they had presented them to the DOI earlier in the week.
Colorado Health OP had said that they were on track to pay back their federal start-up loans in full and ahead of schedule, but that was derailed by the announcement on October 1 that risk corridor payments would be just 12.6 percent of the amount owed to each carrier.
Colorado’s Insurance Commissioner, Marguerite Salazar, noted that
“Our decision is a direct result of this [risk corridor] shortfall by CMS, and I sympathize with the HealthOP, but the Division has requirements and it has to protect consumers. It is a key function of Colorado Divison of Insurance to make sure that insurance carriers are financially stable enough to pay the claims of their policyholders. While Colorado HealthOP can continue to pay claims for the rest of 2015, we cannot allow it to sell or renew policies on the exchange for 2016.”
The DOI explained that although the CO-OP had been under DOI supervision for most of 2015, the carrier had been meeting their reserve requirements until October. But the risk corridor shortfall meant that “the Colorado HealthOP’s rainy day fund will be completely wiped out, and is in fact expected to be in the negative by $34 million by the end of the year .” Because of this, the DOI felt they had no option other than to decertify Colorado Health OP from the exchange.
In a last-ditch effort to be allowed to participate in the 2016 open enrollment, Colorado HealthOP filed a lawsuit in Denver District Court on October 19, requesting an injunction and temporary restraining order against Insurance Commissioner Marguerite Salazar. But by the end of the day, following a closed-door court hearing, the case had been withdrawn (and suppressed by the court) and the CO-OP had agreed to begin the process of winding down their operations by the end of the year.
Colorado HealthOP had about 80,000 people enrolled in individual plans in 2015. All of those members had to sign up for new coverage for 2016. There were also almost 3,000 members enrolled in small group plans, and initially the plan was that they would have to switch to new plans as of their next renewal date. But on November 17, Colorado Insurance Commissioner Marguerite Salazar announced that Colorado HealthOP’s small business plans would also terminate as of December 31, and small businesses with Colorado HealthOP plans had to secure coverage with a different carrier for 2016. Colorado HealthOP published a list of FAQs about the small group announcement.
Increasing eligibility verification
In December 2015, the Office of the Inspector General released a report indicating that Connect for Health Colorado needed some additional eligibility verification procedures, based on a sample conducted in 2014. Although the exchange was effective in determining eligibility for premium subsidies, their eligibility verification was inadequate when enrollees weren’t applying for financial assistance. And the OIG report also noted that the exchange needed to obtain OPM or non-employer-sponsored insurance data from the Data Hub before enrolling people in qualified health plans through the exchange. Connect for Health Colorado agreed with OIG’s recommendations.
Universal healthcare defeated in Colorado
Supporters of universal healthcare in Colorado worked for months to gather signatures in support of ColoradoCare, a universal coverage system that would have gone into effect in 2019 if voters had approved it in the 2016 election. At least 98,492 signatures were necessary in order to get the ColoradoCare proposal on the ballot next fall. On October 22, 2015, the ColoradoCare campaign announced that they had gathered enough signatures; they were delivered to the Colorado Secretary of State on October 23. Supporters were able to gather far more signatures than necessary, and on November 9, 2015 the Secretary of State confirmed that there were nearly 159,000 valid signatures. As a result, the measure was on the ballot a year later, in November 2016.
But voters resoundingly rejected the measure, with just 21 percent in favor, and 79 percent opposed.
ColoradoCare would have been enacted using a 1332 waiver under the ACA, which allows states to chart their own course for healthcare reform, as long as they do so in a way that covers at least as many people as the ACA would have, keeps coverage affordable and at least as comprehensive as it would be under the ACA, and doesn’t increase the federal deficit. If those general guidelines are satisfied, the state can receive funding from the federal government equal to what would have been provided to the state’s residents in premium tax credits, cost-sharing subsidies, and small business tax credits. In Colorado, those funds, together with Medicaid waiver funds, were projected to total $11.6 billion in 2019. Total costs to run a zero-deductible, universal coverage program in Colorado were estimated at $35.6 billion for 2019. The $25 billion difference would have been generated through a 10% income tax. Employees would have paid only a third of the total tax, with their employers kicking in the remaining two-thirds (ie, employees would have paid 3.33 percent of their gross pay).
According to Gallup polling, Colorado’s uninsured rate was 17 percent in 2013, and had dropped to 10.6 percent as of the first half of 2015. The Colorado Health Access survey found even better results, indicating that the uninsured rate in the state had dropped to just 6.7 percent in 2015. Clearly, the state is heading in the right direction, but ColoradoCare proponents wanted — and still do want — to go a step further and make coverage truly universal.
Vermont had been using a 1332 waiver to establish a single payer system starting in 2017, but those plans were abandoned in December 2014 amid concerns that the program’s costs were going to exceed projections.
2016 fiscal year budget
On June 8, the Connect for Health Colorado board approved a budget for the 2016 fiscal year, which began in July 2015. Although it incorporates increased sales projections and higher fees, exchange leadership is bracing for operating losses of $4.6 million a potential $13.3 million deficit in the 2016 fiscal year.
The exchange is projecting $40.3 million in revenues, and nearly $53.7 million in expenses, including operating costs as well as $8.8 million in “additional IT expenses.” Previous exchange leaders had stated that Connect for Health Colorado could operate on a $26 million annual budget, but that has turned out to be a significant under-estimation.
Lawmakers in Colorado are also considering using Section 1332 waivers to change how Connect for Health Colorado is structured, but there hasn’t yet been any consensus in terms of how to change it, or the scope of those changes.
Higher exchange fees in 2016
The remainder of Connect for Health Colorado’s $177 million in federal funding was exhausted by the end of 2015. The exchange must be self-sustaining starting in 2016, and board members noted in 2015 that higher fees were necessary in order to generate sufficient revenue.
In 2014 and 2015, the fee was 1.4 percent of premiums, which was significantly lower than the fees charged by other exchanges with similar enrollment counts (generally 2.5 to 3.5 percent; in states that use Healthcare.gov the fee is 3.5 percent). In May 2015, Connect for Health Colorado recommended increasing that fee to at least 3.5 percent of premiums. They also recommended increasing the monthly individual market fee from $1.25 to $1.80 per policy (including off-exchange policies).
Both of these changes were approved by the exchange board of directors on May 14. The exchange board was scheduled to meet next on June 8, but they moved up their schedule in order to vote on the fee increases as soon as possible after they were proposed. The fee increases went into effect January 2016; the new fee is 3.5 percent of premiums for all plans sold through Connect for Health Colorado, and $1.80 per policy per month for all private plans in the state (Senate Bill 2, described above, would have allowed voters to determine whether Connect for Health Colorado can continue to impose a fee on plans sold outside the exchange; it did not pass).
Together, the two fee hikes are projected to increase revenue for Connect for Health Colorado (over FY 2015 revenue) by about $7.8 million. $5.8 million of that would come from the increased fee on policies sold within the exchange, and the remaining $2 million would be generated by the additional fee on all policies sold in the private market in Colorado.
No money from Medicaid, but that could change
Unlike other state-run exchanges, Connect for Health Colorado does not receive compensation from CMS for enrolling applicants in Medicaid, despite the fact that the exchange enrolled nearly 80,000 people in Medicaid during the 2015 open enrollment period (Medicaid enrollment continues year-round). CEO Kevin Patterson is working to change that, and hopes to secure millions of dollars in Medicaid reimbursements to supplement existing revenue sources for the exchange.
The four other state-run exchanges with similar enrollment totals all receive at least a third of their funding – and as much as more than half of their funding – from Medicaid. But Connect for Health Colorado doesn’t get any funding from Medicaid (and agents/brokers who enroll people in Medicaid through Connect for Health Colorado don’t receive any compensation, unlike other states).
The exchange can request reimbursement from CMS for expenses incurred to enroll people in Medicaid, and the 2016 revenue projection includes $2.5 million in recouped funds from CMS. That still pales in comparison with the $15 million to $29 million that other similarly-sized exchanges are reimbursed annually by Medicaid.
2015 enrollment: Exchange grows, but total individual market shrinks
Colorado is one of only two states – Massachusetts is the other – where total individual market enrollment declined in 2014. Nationwide, individual market enrollment, including on and off-exchange policies as well as grandfathered and grandmothered plans, increased by 46 percent in 2014. But in Colorado, enrollment dropped by 4 percent. This was despite the fact that Colorado’s population grew by nearly 84 thousand people from mid-2013 to mid-2014 – only three states had a higher percentage growth in population.
However, the state-run exchange, Connect for Health Colorado, saw private plan enrollment grow to 141,639 people during the 2015 open enrollment period – an increase of about 10 percent over the total at the end of the 2014 open enrollment period. By April 2015, total enrollment in medical plans had grown to 145,506, and 88 percent of those enrollments had been effectuated by the beginning of May.
In July, Connect for Health Colorado released an enrollment update for 2015 with data through the end of June, and total effectuated enrollment stood at 138,502. But that included SHOP enrollments as well as people who purchased dental-only coverage. The report also includes the number of effectuated medical plan enrollments with and without premium subsidies and cost-sharing subsidies (74,583 with subsidies, and 59,617 without). These are medical-only plans, so adding the two amounts together, we get 134,200 people with in-force medical coverage through the exchange as of the end of June. And that number had grown to 137,372 by the end of July.
Ninety percent of Colorado’s exchange enrollees picked nonprofit health plans in 2015: 40 percent chose Colorado HealthOP, the ACA-created CO-OP, 35 percent selected Kaiser Permanente, and 15 percent went with Rocky Mountain Health Plans. Kaiser got 46 percent of exchange enrollees in 2014, and auto-enrollment likely helped their retention, despite the fact that Colorado HealthOP offered the lowest rates in all but one of the rating areas in Colorado for 2015.
Of those who enrolled during open enrollment, more than 94,000 were returning customers, and about 47,000 were new to the marketplace in 2015. See detailed enrollment metrics such as enrollment by age group, average premiums with and without tax credits, and much more.
New leadership and comprehensive audit
As of May 2015, Kevin Patterson became the new interim CEO of Connect for Health Colorado, taking over from Gary Drews. Drews was at the helm since August 2014, although he did not apply to be the permanent CEO. The Board approved Patterson to be the exchange’s permanent CEO in October 2015, and the legislative oversight committee voted unanimously to confirm Patterson’s position as permanent CEO on October 27, 2015.
Governor Hickenlooper signed Senate Bill 19 into law in April 2015, allowing for a comprehensive performance audit of Connect for Health Colorado. The evaluation will be much more than a standard financial audit, and includes a “complete and thorough audit of the operation of the exchange.” But as of late 2015, the audit had not yet been performed.
The Connect for Health board approved a $66.4 million budget for the fiscal year running from July 1, 2014, to June 30, 2015. The budget included a $1.25 per-policy-per-month assessment on insurance carriers (this has increased to $1.80 in 2016), which officials say will allow the marketplace to maintain an operating reserve of $13 million. The assessment applies to all policies, not just those sold through the marketplace. According to Health News Colorado, the 2015 budget included:
- $29.5 million for technology
- $13.6 million for the customer service center
- $7 million for salaries, legal and accounting fees, and travel
- $6 million for the assistance network
- $4.8 million for marketing, communication and outreach
- $2.3 million for consulting and operations
However, the exchange went back to the board repeatedly for more money.
In September 2014, the board approved $3.5 million for additional technology licensing fees.
In November 2014, Connect for Health sought a $4 million increase for the service center, explaining that the money was needed to handle higher than anticipated call volume due to a big change in subsidy amounts between 2014 and 2015. The board did not immediately approve the requested increase. Rather, it approved $875,000 at the time and an additional $300,000 in December.
In January 2015, the Connect for Health board of directors approved $322,000 in emergency spending to address enrollment system problems. The emergency spending was needed to fund workarounds to help people complete the enrollment process, but did not address the underlying problem.
In early February, Connect for Health requested $2.8 million — again for the service center. The board deferred making a decision.
Connect for Health Colorado enrollment in 2014
In 2014, Connect for Health Colorado far exceeded the qualified health plan (QHP) enrollment target of 92,000 set by the Centers for Medicare and Medicaid Services (CMS). Connect for Health Colorado announced more than 129,000 people had signed up for QHPs as of April 23. Through special enrollment periods, QHP enrollment grew to 137,000 as of mid-2014. In addition, nearly 182,000 people qualified for the state’s expanded Medicaid program.
Only 60 percent of those Coloradans who purchased private insurance qualified for assistance to offset the cost. Nationally, 85 percent qualified for financial assistance. Colorado’s relatively low rate of financial assistance and the high premiums in some areas of the state explain why 40 percent of 2014 plans sold in Colorado were bronze plans compared to 20 percent nationally.
The Colorado Division of Insurance announced that transitional or “grandmothered” health plans had to be discontinued at the end of 2015. As of 2016, all plans in the state are either fully ACA-compliant, or grandfathered (effective dates prior to March 23, 2010).
Despite the fact that many other states are still allowing grandmothered plans to remain in force until the fall of 2017, there was controversy in Colorado over the fact that grandmothered plans were allowed to renew at all after January 1, 2014. Lawmakers in Colorado passed a bill in 2013 (House Bill 13-1266) that aligned Colorado healthcare law with the ACA. It required Colorado plans to be compliant with the ACA as of their issue or renewal date starting on January 1, 2014. Ultimately, the Division of Insurance used their regulatory power (also provided for in HB 1266) to allow the renewal of grandmothered plans in 2014, but there were questions as to whether or not they overstepped their bounds in doing so.
Background on Colorado’s exchange
Gov. John Hickenlooper informed the federal government in October 2012 that Colorado intended to run its own health insurance marketplace, and the state received federal approval of its plan in December 2012.
Unlike politicians in most other states, Colorado legislators voted on a bipartisan basis to move ahead with a state-run exchange. Legislation to establish the state marketplace passed in May 2011 and was signed by Hickenlooper in June 2011. In early 2013, marketplace was given the brand name “Connect for Health Colorado.”
Colorado’s marketplace is governed by a 12-member board and led by CEO Kevin Patterson.
A limited performance audit conducted by the Colorado Office of the State Auditor in 2014 found problems with how Connect for Health Colorado handled its finances. The audit found that Connect for Health Colorado lacked adequate financial controls, such as not properly tracking payments and not following federal requirements for administering contracts. Auditors made four recommendations for improvements. Connect for Health officials accepted the recommendations and said they would implement them.
Citing the 2014 audit findings, the Colorado Senate in early 2015 passed two bills for increased oversight of the exchange. SB 19 authorized an in-depth performance audit, while SB 52 authorized committee review of any proposed bonuses for Connect for Health staff members. SB 19 passed the House 64-1 on March 16, but a House committee rejected SB 52 in late February.
HB 1066 did not make it out of the House Health, Insurance and Environment Committee. That bill sought to end operation of Connect for Health Colorado.
Colorado health insurance exchange links
Connect for Health Colorado
State Exchange Profile: Colorado
The Henry J. Kaiser Family Foundation overview of Colorado’s progress toward creating a state health insurance exchange.