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Delaware health insurance marketplace: history and news of the state’s exchange

Thanks to new reinsurance program, rates could drop by 20% for 2020; Delaware has also codified ACA consumer protections into state law

Highlights and updates

Delaware exchange overview

State legislative efforts to preserve or strengthen provisions of the Affordable Care Act

How hard is Delaware fighting to preserve the Affordable Care Act’s provisions? Compare to other state efforts.

Delaware’s exchange is a partnership between the state (Choose Health Delaware) and HHS, with residents enrolling through HealthCare.gov. Delaware is responsible for plan management and consumer assistance while the federal government handles all other functions.

Two health insurance companies offered coverage in the exchange in 2017, but that dropped to just one – Highmark BCBS of Delaware – in 2018, and Highmark continues to be the only insurer offering plans in the state’s exchange in 2019.

Highmark already covered more than half of Delaware’s exchange enrollees as of 2017, but nearly 12,000 people with Aetna coverage had to select new plans from Highmark for 2018.

Delaware has received federal approval to implement a reinsurance program for 2020, and has also enacted legislation to codify ACA consumer protections into state law. Highmark has proposed a premium reduction for 2020, and the rate decrease will be even more significant now that the reinsurance program has been approved.


Delaware codifies ACA consumer protections into state law

In August 2019, Delaware Governor John Carney signed SB35, codifying various ACA consumer protections into Delaware state law and joining several other states that have taken similar action over the last few years. Although the ACA remains the law of the land, Delaware’s new law ensures that if the ACA is ever repealed or changed, its consumer protections will remain in effect in Delaware.

This includes provisions such as guaranteed-issue coverage (regardless of medical history), coverage for essential health benefits, a ban on lifetime and annual benefit maximums, limits on out-of-pocket costs, and rules regarding the factors that insurers can use to set premiums.

Governor Carney also signed legislation that ensures adult Medicaid enrollees in Delaware will have dental coverage.

Delaware has received federal approval for a reinsurance program

In June 2019, Governor Carney signed HB193 into law, paving the way for Delaware to create a reinsurance program in order to stabilize the state’s individual insurance market. The legislation calls for an assessment on insurers in the state, plus federal pass-through funding to cover the cost of the reinsurance program.

Reinsurance programs work by paying a portion of high-cost claims, which reduces costs for insurers (Delaware’s reinsurance program will pay 75 percent of claims that are between $65,000 and $215,000). Because their claims costs are lower, insurers can charge lower premiums. This results in higher enrollment among people who have to pay full-price, and it also means that the federal government spends less on premium subsidies, as the subsidies don’t have to be as large in order to bring net premiums down to an affordable level.

States can use a 1332 waiver in order to request pass-through funding, which means the state (instead of the federal government) gets to keep the savings that result from the premium subsidies being smaller. The state then uses that money to fund the reinsurance program. Several states have implemented reinsurance programs over the last couple of years, and have seen improvement in their individual markets as a result.

Delaware estimates that the reinsurance program will cost about $44 million in 2020, and that 80 percent of that will be covered by the federal pass-through funding, with the state generating the other 20 percent via the health insurer assessment (1 percent in years when the ACA’s Health Insurance Provider Fee is assessed, and 2.75 percent in years that it isn’t).

Delaware submitted a 1332 waiver proposal to CMS in July 2019, and it was approved in mid-August. With the reinsurance program in place, Delaware expects premiums in the individual market to be 13.7 percent lower in 2020 than they would otherwise have been, and expects enrollment in the individual market to increase by as much as 2.3 percent. The lower premiums will primarily benefit people who don’t get premium subsidies; those who do receive subsidies generally won’t see much of a change in their net premiums, as the subsidies will shrink commensurately with the premiums.

Proposed 2020 rate decrease (and reinsurance will reduce rates even more)

Highmark has proposed an average rate decrease of 5.85 percent for 2020. The filing, which was submitted in June before the state’s reinsurance legislation was enacted, notes that it does not account for the reinsurance program (including the insurer assessment that would fund the program as well as the impact of the reinsurance program itself), and that a new filing would need to be submitted if and when the reinsurance program was approved.

But the 1332 waiver proposal that Delaware submitted to CMS in July noted that if the reinsurance program is implemented, premiums are expected to be 13.7 percent lower in 2020 than they would otherwise have been, and up to 20 percent lower in future years than they would otherwise have been (the waiver proposal is for a five-year program).

Regulators are still reviewing Highmark’s 2020 filings, but the expectation is that revised rates will be approved instead, and will be significantly lower than the rates Highmark had submitted earlier in the year. Assuming Highmark’s proposal is actuarially justified, premiums in Delaware’s individual market could drop by up to 20 percent in 2020 (that’s the 5.85 percent decrease Highmark has already proposed, plus another 13.7 percent decrease for the reinsurance program).

For perspective, unsubsidized premiums in Delaware are among the highest in the country in 2019. The average unsubsidized premium in Delaware is $842/month, versus $612 across all of the states that use HealthCare.gov.

2019 enrollment: Down 8 percent from 2018, and down 20 percent from 2016

22,562 people enrolled in plans through Delaware’s exchange during the open enrollment period for 2019 coverage, which ended on December 15, 2018. That was an enrollment drop of nearly 8 percent from the year before, and it was down about 20 percent from Delaware’s peak enrollment, which was in 2016. Enrollment in Delaware’s exchange has dropped each year since 2016.

The enrollment drops in recent years have not been unexpected. For 2019, two significant factors were the elimination of the individual mandate penalty after the end of 2018 and the Trump Administration’s decision to sharply reduce funding for exchange marketing and enrollment assistance, after already implementing funding cuts the year before. In many states, the expansion of short-term plans also played a role in declining enrollment for 2019, but Delaware regulators implemented emergency regulations that limit short-term plans to just three months in duration, eliminating the option for people to use them as long-term coverage alternatives to ACA-compliant plans. There was a window, however, from early October until the end of November, when residents in Delaware were able to purchase longer short-term plans, and some may have done so in order to obtain coverage for much of 2019.

Enrollment in individual market plans through Delaware’s exchange has reached the following totals during open enrollment each year:

Although enrollment in the exchange has dropped about 20 percent since 2016, Delaware’s 1332 waiver proposal notes that total individual market enrollment in the state (including on-exchange and off-exchange enrollment) has dropped by 37 percent since 2016.

2019 rates and plans: Highmark silver loaded instead of broad loading

Delaware was one of five states where the cost of cost-sharing reductions (CSR) was added to premiums for plans at all metal levels in 2018, rather than just silver plan premiums. For 2019 coverage, the rate and form filing submission window in Delaware ran from May 9, 2018 to June 20, 2018.

In April 2018, the Department of Insurance published an extensive guide to 2019 rate and form filing submissions, but it did not address the CSR loading issue. The Department of Insurance clarified that they were not leaving the decision entirely up to Highmark, and had been involved in numerous meetings with the insurer about 2019 coverage.

Highmark, which also offers coverage in the exchanges in Pennsylvania and West Virginia, recorded their first profitable year in the ACA-compliant market in 2017, after losing a billion dollars in the ACA-compliant market from 2014 through 2016.

When the rates were publicized in early August, Highmark had requested a 5.7 percent average premium increase for 2019 (this was a revised filing; their initial proposed rate increase that still shows up on ratereview.healthcare.gov was 13 percent). And when the Delaware Department of Insurance published final rates later in August, the approved average rate increase for Highmark was just 3 percent.

Part of the reason Highmark revised their rates was that the Delaware Insurance Department has been working on regulations to limit short-term health insurance plans to three months in duration and prohibit renewals. Highmark’s initial filing had included higher rates (a 1 percent load) to offset the fact that the risk pool was expected to be sicker once the federal regulations were relaxed to allow much longer short-term plans. But Delaware regulators stepped in to prevent that, and the result is a more stable individual market, since healthy people won’t have the option to leave the ACA-compliant market and switch to year-long short-term plans instead.

The final rate approval notice clarifies that the cost of CSR was added only to silver plan rates for 2019, as opposed to the broad load strategy that was used for 2018. And the approved rate notice also clarified that the cost of CSR was not added to premiums for plans purchased outside the exchange, which means that Highmark only added the cost of CSR to on-exchange silver plans. That’s the best approach for consumers, as it allows people who don’t qualify for premium subsidies to purchase an off-exchange plan (if they want a silver plan) and not have the added cost of CSR baked into their premiums.

2018 coverage: Aetna out, Highmark left as the only insurer; 25% average rate increase included adding cost of CSR to all premiums.

Highmark Blue Cross Blue Shield of Delaware had the majority of the market share in the state’s exchange in 2017, and they became the only available option as of 2018.

Aetna confirmed in May 2017 that they planned to exit all four of the exchanges where they offered coverage in 2017, including Delaware, at the end of the year. The Delaware Department of Insurance reported that Aetna insured 11,854 people via exchange plans in 2017 (about 42 percent of the exchange enrollees), all of whom needed to pick a new plan for 2018.

In response to Aetna’s market exit announcement, Trinidad Navarro, Delaware’s Insurance Commissioner, said “I would hope that our elected officials in Washington will come up with solutions to guarantee that health insurance in Delaware and elsewhere is both available and affordable. Continuing funding for Cost-Sharing Reductions is a first step in the right direction.

The Trump Administration’s lack of commitment to funding the ACA’s cost-sharing reductions (CSR) was a driving factor in the rates that insurers filed for 2018. Insurers in most states — including Delaware — added the cost of CSR to premiums for 2018. That ended up being a prescient decision, as the Trump Administration announced in mid-October that CSR funding would end immediately.

Highmark initially proposed an average rate increase of 33.6 percent, but ultimately agreed to a 25 percent average rate increase in October. Their rate filing noted that the average rate increase would have been about 16.8 percent if CSR funding had continued and if the federal government was robustly enforcing the individual mandate (the mandate was still in effect in 2018, although it’s been eliminated as of 2019. But insurers were concerned in 2017 that the Trump Administration might not adequately enforce the mandate for 2018, leading to higher premiums in many areas).

The Delaware Department of Insurance confirmed that the cost of CSR was added to premiums at all metal levels for 2018 (ie, a broad load). And Highmark’s rate template indicated that average rate increases for all of their plans were in a very narrow range of about 23 – 26.5 percent, with the average increase for silver plans is roughly the same as the average increase for plans at other metal levels.

Ultimately, only a handful of other states opted to add the cost of CSR to plans at all metal levels: ColoradoMississippiWest Virginia, and Indiana. For 2019, Delaware and Colorado both switched to adding the cost of CSR only to silver plans, although Mississippi, West Virginia, and Indiana have continued to use a broad load strategy.

Highmark had about 91,600 members enrolled in exchange plans across Delaware, Pennsylvania, and West Virginia in 2018 (including all of the exchange enrollees in Delaware, since Highmark is the only insurer offering exchange plans in the state. That’s down from about 350,000 exchange enrollees in those three states in earlier years of exchange implementation, when the insurer was actively pursuing that market. But amid concerns about financial losses in the exchange markets, Highmark scaled back, reduced network sizes, and generally became much less aggressive in their approach to exchange market share. In 2017, however, for the first time, Highmark made money on its exchange business, after losses in the prior years. Exchange plans make up a tiny fraction of the insurer’s overall book of business, which includes 4.6 million members.

2017 rates

Two companies offered health insurance through Delaware’s exchange for 2017: Aetna and Highmark Blue Cross Blue Shield of Delaware. Aetna had a PPO division and an HMO division, which were listed as separate entities for rate filings. Although Aetna exited the exchanges at the end of 2016 in most of the states where they had been participating, Delaware was one of four states where continued to offer exchange plans in 2017 (although they ultimately exited all four states at the end of 2017).

In Delaware, the approved average rate increases for 2017 were:

  • Aetna Health (HMO): 23.6 percent
  • Aetna Life (PPO): 22.8 percent
  • Highmark BCBS of Delaware: 32.5 percent

A public comment period on the proposed rates ran through July 15, 2016. The rates that were approved were very similar to what the carriers had requested when they originally filed rates for 2017.

Initially, Delaware Insurance Commissioner Karen Weldin Stewart had approved a lower-than-requested rate for Highmark, and forwarded that on to CMS for review. But in light of the carriers opting to leave exchanges in numerous states around the country, CMS urged Delaware to accept Highmark’s initial rates, and the state agreed. As a result, no carriers left the Delaware exchange at the end of 2016, while most other states saw at least some insurers exit their exchanges.

Higher subsidies offset the bulk of the rate hikes for exchange enrollees who are subsidy-eligible, which accounts for the large majority of enrollees.

2016 rates

A study released in December 2014 by The Commonwealth Fund showed just a 3 percent increase in average marketplace premiums for Delaware between 2014 and 2015. The weighted analysis looked at rates across all metal tiers and in urban/suburban/rural areas of most states.

But rate increases the following year, for 2016 coverage, were much more significant. On September 29, 2015, Stewart announced final rates for 2016, after vowing earlier in the year that the Insurance Department in Delaware would “vigorously examine” the 2016 rate proposals they received from the state’s two exchange insurers, hoping to find ways to reduce the final rates.

  • Highmark Blue Cross Blue Shield of Delaware initially requested an average rate increase of just over 25 percent in the individual market, although they increased their proposed rate increase to 33 percent in August. State regulators ultimately approved a 22.4 percent average rate increase for Highmark’s individual market plans, and Highmark had almost 95 percent of the individual market share in Delaware, including both on and off-exchange enrollments.
  • Aetna proposed raising rates by an average of nearly 17 percent for 2016, which was approved by regulators.

In 2014, Highmark garnered more than 90 percent of the exchange market share. For 2015, they only increased their average rates by 4 percent. Highmark’s rates increased significantly for 2016, but their market share was still at about 30,000 people (on and off-exchange) with paid-up plans as of February 25, 2016, which was similar to what it had been a year earlier.

No discrimination against transgender enrollees

In March 2016, Delaware became the 15th state to prohibit health insurance companies from discriminating against transgender enrollees. The rules apply both on and off exchange, and in the individual and group market.

The bulletin issued by Insurance Commissioner Karen Weldin Stewart specifically notes that while the plan that constitutes the Essential Health Benefits benchmark plan in Delaware for 2016 did have an exclusion for “change of sex surgery” (except for correcting a congenital defect), the bulletin detailing the ban on transgender discrimination supersedes the benchmark plan design, and that insurers may not issue such a blanket exclusion.

Specialty drugs costs are capped under Delaware law

Delaware is one of several states that have taken steps to limit patients’ out-of-pocket costs for prescription drugs. Delaware law limits specialty drugs to $150/month copays or coinsurance. The regulations apply on and off-exchange, and to employer-sponsored plans that are regulated by the state (self-insured plans are regulated by the federal government under ERISA instead).

And Delaware insurance plans are not allowed to designate all drugs in a particular drug class as specialty drugs, so patients shouldn’t have a situation in which their only available drugs are specialty drugs.

Delaware opts to stay with federally-run exchange

In the months leading up to the Supreme Court’s 2015 ruling on King v. Burwell, Delaware devised a back-up plan. Because Delaware uses the federally-run marketplace (the state has a partnership exchange, which is a variation of the federally-run exchange), subsidies were in jeopardy in the state. If the King plaintiffs had prevailed, an estimated 18,000 people would have lost their subsidies in Delaware.  And statewide, the entire individual market would have seen spiraling premiums over the next few years as healthy individuals dropped coverage that became unaffordable without subsidies.

To avoid that outcome, the state submitted a proposal for transitioning from a state-federal partnership exchange to a federally-supported state-based marketplace (Oregon, Nevada, Arkansas, Kentucky, and New Mexico use that model as of 2019, with state-run exchanges that utilize Healthcare.gov for enrollment). And on June 15, 2015, HHS issued conditional approval for Delaware’s plan (Pennsylvania and Arkansas also got conditional approval for state-run exchanges as contingency plans in case the Court had sided with King).

At that point, Delaware was the only state with a Democratic governor and Democratic majority in both congressional chambers that didn’t have a state-run exchange, in large part because the state’s small population would make it financially difficult to sustain an exchange.

But then on June 25, the Supreme Court ruled that subsidies are legal in every state, including those that use the federally-run marketplace, meaning that subsidies would continue to be available in Delaware regardless of whether the state runs its own exchange. Initially, it was unclear whether Delaware would continue with their plan to implement a supported state-based marketplace. The state issued a press release immediately after the King verdict was announced, stating that they would continue to evaluate the possibility of transitioning the exchange, and make a decision later in the summer.

But in August 2015, Delaware officials announced that they would continue to operate as a state-federal partnership exchange, noting that it would be more cost-effective than operating their own exchange.

Delaware health insurance exchange links

Choose Health Delaware
800-318-2596

HealthCare.gov
800-318-2596

Health Benefit Exchange information
Exchange information from the Delaware Health Care Commission

Who Serves on the Delaware Health Care Commission?

State Exchange Profile: Delaware
The Henry J. Kaiser Family Foundation overview of Delaware’s progress toward creating a state health insurance exchange.


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.