2016 rates and plans
On October 23, 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 is 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 is 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 will apply 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 are pulling out of the market in 2016: Colorado Health OP (more details below), New Health Ventures, and Time Insurance Company (Time only sold off-exchange plans in 2015, and is exiting the market nationwide).
But three new carriers will be offering health plans in 2016 – albeit they will only offer off-exchange plans: Golden Rule in the individual market; Aetna Health, and Aetna Life in the small group market.
In all, there will be 20 carriers offering individual and/or small group plans in Colorado in 2016, including both on and off-exchange plans. Ten of them will offer individual plans in the exchange, and five will offer small business plans in the Colorado SHOP exchange. There will be a total of 188 individual market plans available in the exchange – up from 176 in 2015, despite the fact that two exchange carriers are exiting the market. There will be 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 are increasing across the state, premium subsidies will be 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 Connect for Health Colorado individual exchange, three not-for-profit carriers have 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 won’t be available in 2016.
- Kaiser got 35 percent of the exchange enrollees in 2015; their average rate increase will be 4 percent for 2016
- Rocky Mountain Health Plans (also a not-for-profit carrier) has 15 percent of the exchange market share in 2015; their average rates will increase 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.
Colorado CO-OP shut down by regulators
On October 9, Colorado Health OP – the state’s ACA-created CO-OP – joined six other CO-OPs that have failed thus far. 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 Health OP is the seventh CO-OP to fail, they’re 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 has 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 thus far. 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 Health OP 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 Health OP currently has almost 80,000 people enrolled in individual plans. All of those members will need to sign up for new coverage for 2016. There are also almost 3,000 members enrolled in small group plans, and they will need to switch to new plans as of their next renewal date (note that this is currently under review by the state; the small group enrollees may simply be given a special enrollment period at the end of 2015 instead).
Universal healthcare coming to Colorado?
Supporters of universal healthcare in Colorado have been working for months to gather almost 99,000 signatures in support of ColoradoCare, a universal coverage system that would go into effect in 2019 if approved by voters in the 2016 election. The signatures are necessary in order to get the ColoradoCare proposal on the ballot next fall. On October 22, the ColoradoCare campaign announced that they had gathered enough signatures; they were delivered to the Colorado Secretary of State on October 23. Assuming the Secretary agrees that there are at least 98,492 valid signatures from registered voters (it appears that will be the case, as supporters were apparently able to gather 156,000 signatures), the measure will be on the 2016 ballot and the fate of the program will rest with Colorado voters.
ColoradoCare will hold rallies throughout the state on October 23 – in Denver, Fort Collins, Colorado Springs, and Grand Junction.
ColoradoCare would be 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, are projected to total $11.6 billion in 2019. Total costs to run a zero-deductible, universal coverage program in Colorado are estimated at $35.6 billion for 2019. The $25 billion difference would be generated through a 10% income tax. Employees would pay only a third of the total tax, with their employers kicking in the remaining two thirds (ie, employees would pay 3.33 percent of their gross pay).
According to Gallup polling, Colorado’s uninsured rate was 17 percent in 2013, and has 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 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 last December amid concerns that the program’s costs were going to exceed projections.
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 during 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 is 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 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 30, 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 includes 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.
At the end of March, HHS reported that Colorado had 122,976 individuals with effectuated coverage in force, so the latest Connect for Health Colorado report indicates an increase of more than fourteen thousand people from April through July, including those who had already enrolled by the end of March but hadn’t yet paid their first premium at that point (if they hadn’t paid, they weren’t included in the HHS report).
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.
The exchange is projecting 217,000 enrollees by June 2016 – an aggressive goal, but the state’s decision to cancel all non-ACA-compliant plans by the end of 2015 should help boost exchange enrollment in 2016.
2016 fiscal year budget
On June 8, the Connect for Health Colorado board approved a budget for the 2016 fiscal year, which began on July 1. 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.
Exchange approves higher fees
The remainder of Connect for Health Colorado’s $177 million in federal funding will be exhausted this year. The exchange will have to be self-sustaining once the federal funds run out, and board members have noted that higher fees are necessary in order to generate sufficient revenue.
Currently, the fee is 1.4 percent of premiums, which is 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). On May 10, 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 will go into effect January 2016; the new fees will be 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.
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.
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, 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.”
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 includes a $1.25 per-policy-per-month assessment on insurance carriers (the exchange has proposed that this be increased to $1.80), 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 includes:
- $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 has gone 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
Connect for Health Colorado, the state-run health insurance exchange, 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 must be discontinued at the end of 2015. Beginning in 2016, individuals must enroll in either ACA-compliant plans or in grandfathered plans (i.e., plans that don’t cover the ACA’s essential health benefits, but were in effect prior to 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 is 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 have been 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 interim CEO Gary Drews. Drews stepped in for Patty Fontneau, who took a position with CIGNA. Connect for Health expects to announce a permanent replacement by March 2015.
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 will 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.