Connecticut marketplace highlights and updates
- Open enrollment for 2020 plans continues until January 15, 2019.
- Average individual market rates increasing by less than 4% in 2020; still two insurers selling plans via Access Health CT.
- For 2019 coverage, the average rate increase was 2.72%; two insurers offer plans in the exchange.
- Pregnancy is now a qualifying event in Connecticut.
- Lawmakers plan to consider reinsurance again in 2020, after rejecting it during the 2018 and 2019 legislative sessions.
- Enrollment peaked in 2016, but has hovered between about 110,000 and 116,000 for the last five years.
- Insurer participation in Access Health CT: From three insurers, to four, to two. Anthem and ConnectiCare continue to offer plans.
- Insurers didn’t pay broker commissions in 2017, but Access Health CT began requiring them to do so as of 2018, in order to ensure consumers would have access to enrollment assistance.
Connecticut exchange overview
Access Health CT is a successful state-run exchange that has dodged many of the technical problems that plagued other exchanges over the first few years of operation. But two of their four carriers exited the exchange at the end of 2016, so Access Health CT has had just two insurers offering plans for the last few years.
ConnectiCare has the majority of the exchange’s enrollees (as has been the case since 2016), with more than 72 percent of Access Health CT enrollees picking ConnectiCare for 2018 coverage.
Access Health CT is an active purchaser exchange, which means that the exchange can negotiate prices with the insurers and actively pick which plans they want to make available on the exchange (as opposed to a clearinghouse exchange model, in which all plans that meet the minimum requirements can be sold on the exchange).
Connecticut has a robust small group insurance market, but most of the insurers only offer plans outside the exchange. Only Anthem and ConnectiCare offer on-exchange small business (SHOP) plans. But there are six insurers that offer small group plans outside the exchange.
According to the Connecticut Health Foundation, the ACA has reduced the uninsured rate in Connecticut by 45 percent, and created access to coverage for 160,000 people (mostly via Medicaid) who would not have been able to afford coverage without the ACA.
Enrollment window for 2020 coverage extended until January 15, 2020
Open enrollment for 2020 health plans was initially scheduled to end on December 15, but AccessHealth CT issued a last-minute extension, giving residents another month to enroll. Applications received between December 16 and January 15 will have February 1 effective dates.
The exchange had also announced that people who began their application on the 15th but weren’t able to complete it or weren’t able to get through to the call center would still have an opportunity to finish their enrollment and get a January 1 effective date. The exchange indicated that they will reach out to these consumers to help them finish the process.
Lawmakers working on a plan for reinsurance ahead of the 2020 legislative session
In the 2018 legislative session, Connecticut lawmakers considered legislation to implement an individual mandate (H.B.5039 and H.B.5379) and to seek federal funding for a reinsurance program (H.B.5114, which would also have implemented an individual mandate), but none of those bills passed. Reinsurance (SB136) was considered again in 2019 but did not advance out of committee.
Although reinsurance has successfully been used in nearly a dozen states as a means of reducing individual market premiums and stabilizing the market, the biggest question mark for lawmakers tends to revolve around funding. The states that have implemented reinsurance programs thus far have all used 1332 waivers in order to capture federal pass-through funding. [Reinsurance results in lower premiums, and the lower premiums result in smaller premium subsidies. A 1332 waiver allows the state to use the savings generated by the smaller premium subsidies, instead of having the federal government keep it.]
But states also have to contribute some funding of their own; the most common approaches are to allocate money from the state’s general fund, or to impose an assessment on insurers and/or medical providers in the state. As 2019 draws to a close, lawmakers in Connecticut have been meeting to discuss options for reinsurance funding. They are working towards a bipartisan agreement so that legislation can be settled during the 2020 session, which begins in early February.
During the 2019 legislative session, lawmakers in Connecticut had also considered the creation of a public-option health plan that would have competed with private plans in the state’s individual and small group markets. That legislation was strongly opposed by the private insurance industry and did not pass.
The public option is not being considered by the lawmakers who are working on options for 2020 health care reform legislation, and it appears that an individual mandate is not on their shortlist either.
Of the individual mandate bills that were previously considered in Connecticut, HB5039 was the more straightforward, with an individual mandate penalty resembling the ACA’s penalty, but slightly smaller: Only adults would have been subject to the penalty, and it would have been 2 percent of household income or $500 per uninsured adult (as opposed to the ACA’s 2.5 percent of household income or $695 per uninsured adult).
H.B.5379 incorporated ideas proposed by Yale economist, Fiona Scott Morton. It would have been a much more radical individual mandate, with penalties of up to $10,000 (applicable to households earning just over $100,000 a year) for people who chose to remain uninsured. H.B.5379 would have capped the penalty at the lesser of 9.66 percent of income or $10,000, and would have directed the penalty into a healthcare savings account, administered by the exchange, from which the household could then withdraw money to pay for health care.
Individual market rates increasing by an average of 3.65% in 2020; still 2 insurers in the exchange
Individual market insurers in Connecticut proposed an average rate increase of 7.78 percent for 2020, including on- and off-exchange plans. But the Connecticut Insurance Department announced in September 2019 that the approved rate increase would be just 3.65 percent. For the two insurers that offer plans via Access Health CT, the following average rate increases were approved for 2020:
- Anthem: 6.5 percent average increase (Anthem had proposed a 15.2 percent average increase). Anthem has roughly 38,308 members on these plans in 2019 (based on 459,703 member months; there are 21,892 policyholders)
- ConnectiCare Benefits, Inc.: 2 percent average increase (ConnectiCare had proposed a 4.9 percent average increase). ConnectiCare had 73,028 members as of 2018.
The 3.65 percent average increase applies across the full individual market in Connecticut, which includes some ConnectiCare plans that are only sold outside the exchange.
Open enrollment for 2020 health plans runs from November 1 to December 15, 2019. That’s aligned with the enrollment window in states that use the federally-run exchange, and it’s the same schedule that Access Health CT had planned to follow last year (for 2019 enrollment). But on December 15, 2018, just hours before open enrollment had been scheduled to end, Access Health CT announced a one-month extension for 2019 enrollment, giving people until January 15, 2019 to sign up for 2019 coverage. It’s unclear if they’ll issue another extension for 2020 enrollments, but for now, the deadline is set as December 15, 2019.
Connecticut had issued a similar last-minute extension the year before, but it was only one week long. However, Access Health CT’s December 2018 extension of open enrollment referenced the court ruling in Texas v. United States, in which a federal judge in Texas ruled that the ACA is unconstitutional, with the decision coming just one day before the end of open enrollment. That court case was appealed, so it had no immediate effect and did not change anything about open enrollment or 2019 coverage. Access Health CT’s extension announcement clarified that “last night’s ruling by a federal district court judge in Texas does not affect the ability for Connecticut residents to sign up for and use 2019 health insurance plans through Access Health CT.”
During the open enrollment period for 2020 health plans, the Texas v. United States case is still looming large, with an appeals court decision expected in the near future.
New legislation makes pregnancy a qualifying event as of 2019
Under the ACA, various life changes are considered qualifying events, and they trigger special enrollment periods, either in the exchange or in the entire individual market (all of these qualifying events are explained in detail in our guide to special enrollment periods). The qualifying events are similar to those that already existed for the employer-sponsored market, but there are some qualifying events that are specific to the individual market (prior to 2014, qualifying events weren’t necessary in the individual market, since people could apply year-round — but insurers could reject applicants based on medical history, and that’s no longer allowed).
The birth of a baby is considered a qualifying event under federal rules, but a pregnancy is not. HHS considered the possibility of changing this a few years ago, but clarified in 2015 that they had decided against making pregnancy a qualifying event.
But in New York, legislation took effect in 2016 that makes pregnancy a qualifying event. And pregnancy will also be a qualifying event in Connecticut, starting in 2019. SB206 passed 139-10 in the Connecticut House, and 35-0 in the Senate during the 2018 session. Governor Malloy did not sign it, but it became law automatically, without his signature, since he also did not veto it.
The new law calls for a special enrollment period that lasts for 30 days from the time a woman’s pregnancy is confirmed by a licensed health care provider. The special enrollment period only applies to ACA-compliant individual market plans, and is only available for women who do not already have minimum essential coverage. So it does not allow a pregnant woman to switch from, say, a bronze plan to a gold plan when she finds out she’s pregnant.
The bill was sent to Governor Malloy on May 18. The Connecticut Senate’s office did not anticipate any objection from the governor, given the overwhelming support the bill had during the legislative session. But Malloy had previously expressed concerns about a pregnancy-related special enrollment period, and opted to let the bill become law without his signature, as of June 1.
The text of the legislation states that the special enrollment period applies to “pregnant individuals not more than thirty days after the commencement of the pregnancy, as certified by any licensed health care provider acting within the scope of such health care provider’s practice.” This is a bit ambiguous, and there was extensive debate in the Connecticut House in terms of whether that meant that the 30-day window would start when the pregnancy began (many women don’t realize they’re pregnant until more than 30 days after the pregnancy commences), or when the pregnancy is confirmed by a medical provider. But Senator Kevin Kelly (R-Stratford), who was a co-sponsor of the bill and is the Senate Republican chair of the Insurance and Real Estate Committee, confirmed that the special enrollment period would start when the pregnancy is confirmed by a medical provider, and would last for 30 days.
Now that the legislation has been enacted, pregnancy is a qualifying event in Connecticut’s individual insurance market as of January 2019.
Enrollment in Access Health CT: 2014-2019
As was the case in most states, enrollment in private plans (QHPs) through Connecticut’s exchange grew significantly in 2015. Since then, for the last five years, Access Health CT’s enrollment has hovered between about 110,000 and 116,000 people. Here’s a summary of how many people have enrolled in QHPs each year during open enrollment:
- 2014: 79,192 people enrolled
- 2015: 109,839 people enrolled
- 2016: 116,019 people enrolled
- 2017: 111,542 people enrolled
- 2018: 114,134 people enrolled
- 2019: 111,066 people enrolled
There was an overall decline in enrollment across states that use HealthCare.gov in 2017, although states that run their own exchanges (which includes Connecticut) saw an average increase in enrollment. Declining enrollment is linked to a variety of factors, including higher prices and insurer exits from the exchange (both of which were an issue in Connecticut). But Connecticut also had no insurers paying broker commissions for on-exchange enrollments in 2017, which may have hindered enrollment by reducing the number of people available to assist with the process.
But Access Health CT’s enrollment increased in 2018, despite a shorter enrollment period and GOP efforts to sabotage the ACA throughout 2017. Open enrollment for 2018 plans in states that use HealthCare.gov ended on December 15, 2017. And Access Health CT explained in June 2017 that the state’s insurers wanted all enrollees to have full-year plans for 2018, indicating that they were unlikely to extend open enrollment into January. But they ultimately granted a one-week extension that allowed people a little additional time to sign up, while maintaining full-year coverage for all enrollees.
In addition to the extra week at the end of open enrollment Access Health CT significantly increased access to in-person enrollment assistance during the fall 2017 open enrollment period. The exchange previously had two in-person enrollment assistance centers (in New Haven and New Britain), but spread their in-person assistance centers out across the state as of the start of open enrollment in November 2017, offering in-person assistance in Bridgeport, Danbury, East Hartford, Hartford, Milford, New Britain, New Haven, Norwich, Stamford, and Waterbury.
Average 2019 rate increase just 2.72% – far smaller than insurers had proposed
In July 2018, the Connecticut Insurance Department published a summary of the rate change proposals that were filed for 2019. At that point, the proposed average rate increases were 9.1 percent for Anthem and 13 percent for ConnectiCare, for an overall average proposed rate increase of 12.3 percent.
That was less than half the size of the percentage rate hike that applied in 2018, but the Connecticut Insurance Department’s review of the proposed rates resulted in final 2019 premiums that were significantly lower than insurers had proposed. The approved average rate changes for individual market plans in Connecticut’s exchange were:
- Anthem: 2.7 percent decrease
- ConnectiCare Benefits, Inc.: 4 percent
Overall, the average approved rate increase for the individual market (including ConnectiCare’s off-exchange-only plans) was just 2.72 percent, as opposed to the 12.3 percent average that the insurers had requested. The Insurance Department notes that while it is true that the elimination of the individual mandate penalty at the end of 2018 would have a deleterious effect on the individual market, insurers in Connecticut already accounted for that in their 2018 premium increases (it was fairly common for insurers to base 2018 premiums on the assumption that the individual mandate, while still in place, might not be strongly enforced in 2018, or that the public would perceive that it wasn’t being enforced, resulting in some healthy enrollees leaving the market).
So the Insurance Department felt that significant additional rate increases were not necessary for 2019 due to the impending penalty elimination. And state regulators also determined that there would be only “marginal impact” on premiums due to the expansion of short-term health plans and association health plans, due in part to the state’s efforts to regulate those plans.
In the small group market, the Connecticut Insurance Department also reduced the size of the average rate increases during the review process. Insurers had proposed an average rate increase of 10.22 percent, and regulators reduced it to 3.14 percent.
In 2018, Access Health CT required insurers to offer one standardized silver plan. They were allowed to offer up to three non-standardized plans as well, but the standardized plan had to be the lowest-cost silver plan the insurer offered. For 2019, that was modified to require two standardized silver plans. Insurers would be allowed to offer one additional non-standardized silver plan, but one of the standardized plans would have to be the lowest-cost silver plan the insurer offered. In June 2018, however, the Access Health CT board voted unanimously to eliminate the requirement that the lowest-cost silver plan had to be one of the standardized options. This allows insurers more flexibility in designing their non-standardized plans, but the board also discussed the potential ramifications in terms of premium subsidy amounts (subsidies will be smaller for everyone if a carrier opts to offer a lower-cost non-standardized silver plan) as well as the potential for people who pay full price to have access to lower-cost silver plans in 2019.
Connecticut HB5210, which was signed into law in May 2018, mandates the ACA’s essential health benefits for individual and small group plans sold in the state, regardless of whether any future changes are made the federal level. The legislation also expands coverage for contraceptives by requiring coverage for all FDA-approved contraceptive measures, rather than just the FDA-approved contraceptives for women, which is what federal regulations require. There’s an exception in the legislation for HSA-qualified high deductible plans (HDHPs), since plans that cover male contraception before the deductible are not considered HSA-qualified under IRS rules (the IRS has granted a transitional period, through 2019, when they’re not enforcing this, since several states have recently mandated pre-deductible male contraceptive coverage).
Average approved 2018 rate increase for Anthem and ConnectiCare = 29.3%, assumed CSR funding would be eliminated
Connecticut was among the states with the earliest rate filing deadline for 2018 coverage; rates and forms had to be filed with the Connecticut Insurance Department by May 1, 2017. Access Health CT confirmed by phone that both Anthem and ConnectiCare filed rates for 2018 exchange plans, although ConnectiCare filed a revised rate proposal in mid-May (both the original and revised filing are available in SERFF). The Connecticut Insurance Department had a public hearing about the rates in June, and maintained a public comment period from May 8 through July 1.
On September 13, the Connecticut Insurance Department announced that rates had been approved for both insurers.
Both insurers initially filed rates based on the assumption that cost-sharing reductions (CSR) would continue to be funded by the federal government. But amid ongoing uncertainty on that issue, the Connecticut Insurance Department eventually asked both insurers to refile new rates based on the assumption that CSR funding will not continue in 2018. Insurers were instructed to apply the additional cost of providing CSRs to the premiums for silver plans sold via Access Health CT (CSRs are only available on silver, on-exchange plans). Ultimately, the Trump Administration eliminated CSR funding in October 2017, so the Insurance Department’s decision turned out to be wise. And loading the cost of CSR only onto silver plans is the approach that protects the majority of consumers.
The final average rate increases that were approved by the Connecticut Insurance Department on September 13 are as follows:
- Anthem: 31.7 percent. Anthem has 35,000 policy-holders in 2017. Anthem had initially proposed a 33.8 percent average increase, and revised it to 41 percent after regulators asked the insurers to base their rate proposals on the assumption that CSR funding would be eliminated. The Insurance Department deemed that rate increase excessive. But the average rate increase that was ultimately approved by state regulators, was only a little lower than Anthem had proposed initially, despite accounting for unfunded CSRs.
- ConnectiCare Benefits, Inc.: 27.7 percent. ConnectiCare had 50,907 policy holders in 2017. ConnectiCare had originally proposed an average rate increase of 15.2 percent, but that was revised to 17.5 percent in May. The significantly larger approved rate increase was due to the new assumption that CSR funding would be eliminated. But it’s worth noting that the Connecticut Insurance Department only approved about half of the additional rate increase for silver plans that ConnectiCare had proposed to cover the cost of unfunded CSRs. The insurer had based its proposed additional rate increase on modeling that projected a migration away from silver plans if their rates climb relative to other metal levels, but the Insurance Department only allowed them to use actual enrollment experience to determine the necessary rate increase (Note that ConnectiCare Inc. and ConnectiCare Insurance Company are separate entities that offer plans outside the exchange).
- Anthem has fewer silver plan enrollees than ConnectiCare — relative to each insurer’s overall membership — which means that the loss of CSR has more of an impact on ConnectiCare’s business, necessitating a larger rate increase.
Based on the Insurance Department’s projected enrollment numbers for each carrier, the approved weighted average rate increase was 29.3 percent, assuming everyone kept the same plans in 2018.
When the rates were approved, the Connecticut Insurance Department’s spokeswoman, Donna Tommelleo, explained that “if certainty is given to federal CSR funding, it is the Department’s hope that states are given flexibility to approve rates that do not include the added amount for non-payment of CSRs.” But ultimately, certainty on the CSR funding question did come — but it was confirmation that CSR funding would indeed end. As a result, the rates that were approved for 2018 in Connecticut should end up being adequate, but not excessive.
2018 premiums would have been lower if CSR funding had been allocated
Throughout early and mid-2017, one of the most pressing concerns for market stability in 2018 was ongoing funding for the ACA’s cost-sharing subsidies. Insurers are required to provide better coverage to low-income enrollees who pick silver plans, and the federal government is supposed to reimburse insurers for doing so — to the tune of about $7 billion a year. In mid-2017, there were nearly 43,000 Access Health CT enrollees receiving cost-sharing subsidies. And during open enrollment for 2018 coverage, more than 53,000 people selected plans with cost-sharing subsidies.
But cost-sharing subsidies were the subject of a lawsuit since 2014, and the Trump Administration threatened to eliminate the funding throughout the time in 2017 when insurers were setting their rates for 2018 coverage. Not surprisingly, this caused considerable uncertainty in the market.
Without federal funding for CSRs, insurers either have to increase premiums (beyond the amount they would otherwise have to increase premiums), or exit the market altogether. To clarify, insurers are still required to provide cost-sharing reductions to eligible enrollees, even after the federal funding has been eliminated.
As described above, the Connecticut Insurance Department asked Anthem and ConnectiCare to submit supplemental rates for silver plans that were ultimately approved. The approach of putting all of the CSR load on silver plans is consistent with what the Congressional Budget Office deemed most useful to consumers. That’s because it allows the vast majority of the higher premiums to be offset by larger premium subsidies, while allowing people who don’t get premium subsidies to purchase bronze or gold plans (or platinum, where they’re available) that don’t include the increased premiums to cover the cost-sharing reductions. People who do receive premium subsidies but not cost-sharing reductions are also able to purchase bronze or gold plans that provide better values with the larger premium subsidies, since the premium subsidies are based on the cost of a silver plan but can be applied to any metal-level plan.
Because of the Insurance Department’s rate review process and ability to disapprove excessive rates, the overall weighted average approved rate increase for 2018 was only marginally higher than insurers had proposed earlier in the year, when the assumption was that CSRs would continue to be funded (29.3 percent, versus 24.2 percent).
But it’s notable that rates would have ended up lower than the initially proposed 24.2 percent increase due to the rate review process. The federal government’s failure to provide certainty to insurers regarding CSR funding (and ultimately, the government’s decision to eliminate the funding) resulted in sharply higher average premiums in the individual market for 2018. In states like Connecticut that opted to put the entire CSR load onto on-exchange silver plans (most states took the same approach), most of the additional cost has been borne by the federal government, in the form of higher premium subsidies (premium subsidies are based on the cost of the second-lowest-cost silver plan, so as those rates grow, premium subsidies also grow)
Throughout 2017, Access Health CT’s then-CEO, Jim Wadleigh, has expressed concern about the possibility that the exchange’s insurers might not return for 2018. In April 2017, Wadleigh said that he was “worried that [Access Health CT] could be seen as the first marketplace not to have carriers in 2018” and he reiterated that concern in August (this did not come to pass, as both ConnectiCare and Anthem continued to offer plans in the exchange in 2018).
In late August 2017, state regulators and the exchange added a two-week extension to the deadline for insurers to make a commitment to being in the exchange for 2018. Anthem and ConnectiCare were given until September 15 to commit to offering plans in the exchange for 2018; the previous deadline was September 8 (that deadline was already an extension; it had started at July 1, and subsequent extensions had pushed it out to September 1 and then September 8). Connecticut regulators had to finalize rates by September 30, a month ahead of the start of open enrollment.
ConnectiCare warned the exchange in May 2017 that if the Republican efforts to repeal the ACA continued to advance, the insurer would be forced to withdraw from the exchange (ultimately, GOP efforts to repeal the ACA did not pass, although GOP lawmakers did succeed in eliminating the individual mandate penalty starting in 2019). Anthem had already expressed reservations about ongoing exchange participation in 2018 (not just in Connecticut, but in all the states where they offer exchange plans; ultimately they pulled out of several states and scaled back their participation in others), and had told Wadleigh in an email in March 2017 that it was “highly probable” that they would withdraw from the market at the end of 2017, due to ongoing market uncertainty.
But both insurers ultimately did remain in the exchange for 2018, albeit with average rate increases of about 29 percent, and sharply higher premiums for silver plans.
Rate changes for 2017
The two exchange carriers in Connecticut have the following average rate increases for 2017:
- Anthem: 22.4 percent (Anthem’s proposed rate increase was 26.8 percent. But the Connecticut Insurance Department rejected that rate proposal, and instructed the carrier to resubmit a new filing in early September).
- ConnectiCare: 17.4 percent
For the entire individual market in Connecticut, the average rate increase was 24.8 percent for 2017. That’s higher than either of the average rate hikes for the exchange plans, because some carriers that only offer off-exchange plans had higher average rate increases. Five carriers — Aetna, Anthem, Cigna, ConnectiCare, and Golden Rule — offered plans outside the exchange for 2017.
1.6 percent weighted average rate increase for 2016
In May 2015, the Connecticut Insurance Department released the 2016 rate filings that carriers in the state had filed. UnitedHealthcare’s rate request for their off-exchange plans was a whopping 33 percent, but it was an outlier, and it was also only for off-exchange coverage. For the four carriers that offer plans on Access Health CT, the weighted average requested rate increase was initially 7.7 percent.
But over the next two months, the requested rate changes in Connecticut were adjusted downwards twice, ending up at 2.9 percent for plans sold through Access Health CT (and 5.2 percent marketwide, including off-exchange plans).
In September 2015, regulators released final rates for Connecticut, reducing the rate hikes even further. The final weighted average 2016 rate hike was just 1.63 percent for plans sold on Access Health CT, ranging from a 1.3 percent decrease for ConnectiCare, to a 7.2 percent increase for Healthy CT.
Market-wide, including off-exchange plans, the Connecticut individual market had a weighted average rate increase of 3.53 percent for 2016. In Connecticut’s small group market, things look even better: a market-wide weighted average rate decrease of 2.9 percent.
2015 health plans and premiums
Regulators in Connecticut pushed back on the 2015 rates proposed by insurers. Connecticare and Anthem both requested increases of more than 10 percent, which regulators reduced to 3.1 percent or less. HealthyCT received approval to reduce its rates an average of 8.5 percent.
According to the Commonwealth Fund, 2015 rates on Access Health CT decreased 1 percent on average for individual coverage and 2 percent on average for family coverage. Although Connecticut had the 4th highest premiums in the nation in 2014, there were eight states where the average benchmark premiums in the exchange were higher than Connecticut’s in 2015.
Insurer participation in Access Health CT
2015 — 2016: UnitedHealthcare joined the exchange in Connecticut for 2015, bringing the total number of participating insurers to four: ConnectiCare, Anthem, Healthy CT, and UnitedHealthcare. All four continued to offer plans in 2016, although ConnectiCare gained market share in 2016—covering about 53 percent of the exchange’s enrollees—while the other insurers’ market share shrank that year.
2017: Insurer participation dropped to just two carriers—Anthem and ConnectiCare—as of 2017. Those two insurers have continued to offer plans ever since, and will do so again in 2020.
UnitedHealthcare exited Access Health CT at the end of 2016, as was the case in most of the states where they had offered plans. But they only had 1,477 enrollees in the individual market through Access Health CT, and just 124 people covered under small group plans through the Access Health CT SHOP exchange. Their market share was dramatically smaller than the other three carriers that offered plans in 2016.
But HealthyCT also exited Connecticut’s market at the end of 2016, and their exit had a more significant impact. HealthyCT had escaped the initial wave of CO-OP failures in the fall of 2015, but when it was determined that they would owe $13.4 million in risk adjustment payments in 2016, it became evident that they could not remain solvent.
HealthyCT lost $28 million in 2014, and although the rate of losses slowed in the first half of 2015, they still lost $9.5 million by mid-2015. In order to be successful, start-up health insurance carriers must experience enrollment growth, but with premiums that are high enough to cover claims and administrative expenses. Admittedly, that’s a tough target to hit. In 2014, HealthyCT had projected 25,000 enrollees but they had less than a third of that amount — just 7,966 members — at the end of 2014. That year, HealthyCT’s rates were among the highest on Access Health CT, hampering their enrollment goals.
But the CO-OP lowered premiums for 2015 to among the lowest offered through Access Health CT. As a result, their membership grew considerably. They had 31,212 members in mid-2015, and enrollment had increased to 36,000 by early November. Their 2016 rates were not as competitive as they were in 2015, but their rate increase was still modest, at 7.2 percent.
Unlike many other CO-OPs, HealthyCT wasn’t counting on the risk corridors payout that they were owed for 2014. So when CMS announced in October 2015 that carriers would get just 12.6 percent of what they were owed, the blow wasn’t as significant for HealthyCT as it was for some of the other CO-OPs. Unlike most CO-OPs, HealthyCT also sold coverage in the large group market, which meant they had a stronger off-exchange presence than carriers that just sell individual and small group plans. HealthyCT also built its own provider network, instead of having to pay to rent a network from another carrier, as was the norm for many CO-OPs.
But ultimately, the risk adjustment program proved to be the final nail in the coffin for HealthyCT. In the summer of 2016, the CO-OP owed $13.4 million to HHS under the risk adjustment program, and could not pay it and remain solvent. The carrier stopped issuing policies in mid-2016, and all exchange enrollees with HealthyCT plans had to select coverage from another carrier during the open enrollment period for 2017 coverage.
HealthyCT had 13,000 individual market members, and 11,299 of them had coverage through Access Health CT. Their coverage continued through the end of 2016, but they needed to select 2017 coverage from another insurer during open enrollment.
ConnectiCare remained in the exchange in 2017, although they nearly exited
ConnectiCare filed three separate 2017 rate proposals with the Connecticut Insurance Department (one in the spring, one on August 1, and another one later in August). In early September, Connecticut regulators announced that they had approved ConnectiCare’s second rate proposal, with an average increase of 17.4 percent. But they denied the carrier’s subsequent request to raise rates by 27.1 percent, saying that the filing came in too late (they also rejected Anthem’s proposed 26.8 percent rate increase, directing the carrier to recalculate their numbers).
ConnectiCare had defended their proposed 17.4 percent rate hike during their hearing in early August, but later determined that even that level of rate increase would not cover their anticipated costs in 2017, and filed a new rate proposal on August 23. State regulators did not consider it, because they said the filing came too late.
Because state regulators refused to allow their last rate proposal (a 27.1 percent average increase) to be implemented for 2017, ConnectiCare filed a lawsuit against the Connecticut Insurance Department and has said that they would exit the Connecticut exchange if they were held to the already-approved rate increase of 17.4 percent. ConnectiCare insured 47,600 people on their individual market exchange plans in 2016.
The day after the lawsuit was filed, a judge refused to grant ConnectiCare an injunction to prevent the already-approved rates from taking effect. That was on Friday, September 9. On Monday, September 12, ConnectiCare announced that they would exit the exchange at the end of the year, but noted that if they won their appeal regarding their latest proposed rate increase, they would like to re-enter the exchange for 2017. Without ConnectiCare, Access Health CT would have had just one carrier (Anthem) in 2017.
The Connecticut Insurance Department noted that they were reviewing the decision as of September 12. But by September 13, ConnectiCare had announced that they were reversing their decision, and would remain in the exchange for 2017. They agreed to the 17 percent average rate increase that the Insurance Department approved, and dropped their appeal for the higher rates. They were allowed to raise the price of their off-exchange plans by an average of 38 percent (those plans are a separate product, called Solo).
No broker commissions in 2017, but exchange began requiring them in 2018
Although two carriers offered plans through Access Health CT in 2017, neither of those carriers paid broker commissions for exchange plans in 2017 (both continued to pay commissions for off-exchange plans).
Connecticut regulators had previously stepped in to prevent carriers from cutting broker commissions for 2016, noting that the commissions were included in the filed rates. But for 2017, neither exchange carrier included broker commissions in their rate filings for on-exchange plans.
About 40 percent of Access Health CT’s enrollments were done with the help of brokers for 2016, but most brokers were unable—or understandably unwilling—to work for free in 2017 (brokers do not receive any compensation other than the commissions paid by insurers, unless they’re paid as in-house, salaried staff for another entity). The exchange maintained an in-house staff of 21 salaried brokers and they worked to assist enrollees for 2017. But by January 2017, Access Health CT could tell that the lack of broker support was hurting their enrollment and customer service efforts.
As a result, in late January 2017, the Access Health CT board of directors voted to require insurers to pay broker commissions for on-exchange plans, although they didn’t stipulate that the commissions had to be the same as off-exchange commissions (video of the board meeting is here; the discussion about broker commissions begins around the 8:30 mark, and the vote is around the 31-minute mark).
The board voted to require commissions for all on-exchange plans, and also to require commission parity between on and off-exchange plans. But Anthem filed rates for 2018 that included $5 per member per month commissions on-exchange, and $15 per member per month commissions off-exchange (this was included in the rate filing that was approved in September). This still effectively incentivizes brokers to enroll people off-exchange, but the customer service situation for Access Health CT should be better than it was during enrollment for 2017 coverage. ConnectiCare’s rate filing indicated a slight increase in administrative costs (which includes commissions), from 13 percent of premiums in 2017 to 13.9 percent of premiums in 2018. But that includes all administrative costs, which obviously encompasses much more than commissions.
Special enrollment periods now require proof of qualifying event
Outside of open enrollment, coverage is only available for purchase – on or off-exchange – if the applicant has a qualifying event (Native Americans can enroll year-round without a qualifying event, as can anyone eligible for Medicaid -HUSKY – or CHIP).
This has been the case since 2014, but Access Health CT did not require proof of eligibility for special enrollment periods in 2014 and 2015. As a result, people who enrolled outside of open enrollment tended to use more healthcare services and were more likely to subsequently drop their coverage than people who enrolled during open enrollment. Starting in 2016, Access Health CT said they would require proof of a qualifying event in order to grant a special enrollment period. They further tightened up the requirements in 2017.
Healthcare.gov had the same lax enforcement of special enrollment period eligibility in 2014 and 2015, but they also tightened up the process of verifying qualifying events in 2016, in an effort to reduce the possibility of adverse selection taking place outside of open enrollment. Since the summer of 2017, the HealthCare.gov is requiring most people who apply outside of open enrollment to provide proof of their qualifying events before their application can be processed.
History of Connecticut’s exchange
Connecticut was one of the early adopters in implementing a health insurance marketplace. Gov. Malloy signed legislation in 2011 to create the Connecticut Health Insurance Exchange, which was rebranded as Access Health CT in February 2013. The U.S. Department of Health and Human Services (HHS) approved Connecticut’s blueprint for a state-run exchange in December 2012.
Access Health CT describes itself as an active purchaser, but did not negotiate 2014 rates with health plans. Connecticut’s Fairfield County made the Kaiser Family Foundation list of the top 10 most expensive health insurance markets in 2014. Prompted by concerns over high premiums, Connecticut legislators revisited the issue during the 2014 session. SB-11 would have allowed Access Health CT to negotiate with insurers for plans sold in 2016. However, the bill did not pass (although perhaps counter-intuitively, premium analyses from 2014, 2015, and 2015 have found that state-run exchanges that use a clearinghouse model – as opposed to an active purchaser model – have lower overall average premiums).
Access Health CT has been one of the nation’s most successful marketplaces. Connecticut subsequently launched a consulting business through which other states can license Access Health CT’s technology or pay Access Health CT to manage various marketplace functions. And Access Health CT’s former CEO, Kevin Counihan, was tapped to take over as the CEO of the federal exchange, HealthCare.gov.
In addition to launching its own health insurance exchange, Connecticut also opted to expand Medicaid under the ACA, using federal funds to increase income eligibility for the program to 138 percent of the poverty level.
Access Health CT was the first exchange to actively reach out to people who are newly-naturalized citizens, letting them know about their coverage options and the special enrollment period that applies for people who gain citizenship.
Access Health CT began sending representatives to the naturalization ceremonies in US District Courts in New Haven, Bridgeport, and Hartford, so they can be on hand to provide information to the newly-naturalized citizens. Roughly 15,000 people become citizens in Connecticut each year.
In 2016, Access Health CT noted that the exchange had enrolled over 700,000 people in coverage so far and had played a significant role in reducing the state’s uninsured rate to 3.8 percent (the enrollment total includes Medicaid and CHIP. In addition to private health plans, 138,908 residents enrolled in Medicaid/CHIP through the exchange during the 2014 open enrollment period, and 277,336 did so during the 2015 open enrollment period; Medicaid/CHIP enrollment continue year-round, but tend to spike during open enrollment).
Connecticut health insurance exchange links
Access Health CT
State Exchange Profile: Connecticut
The Henry J. Kaiser Family Foundation overview of Connecticut’s progress toward creating a state health insurance exchange.
Connecticut Health Reform Central
Information about exchange planning and development
Louise Norris is an individual health insurance broker who has been writing about health insurance and health reform since 2006. She has written dozens of opinions and educational pieces about the Affordable Care Act for healthinsurance.org. Her state health exchange updates are regularly cited by media who cover health reform and by other health insurance experts.