United’s exit: impact likely to be small
In early April 2016, a Georgia state insurance office spokesperson confirmed that UnitedHealthcare would exit the exchange in Georgia for 2017, and would also leave the Arkansas exchange. This was not unexpected, given that United had hinted at the possibility of eventually pulling out of the exchanges in the fall of 2015, and had cut broker commissions in most states for 2016 in an effort to reduce sales.
It’s important to note, however, that UnitedHealthcare’s market share in the Georgia exchange was very small in 2015, with fewer than 1,000 enrollees. Their broker commission cuts for 2016 likely translated to a similarly small market share for 2016.
UnitedHealthcare was not historically a significant player in the individual market; they have generally been more focused on the group market instead. In 2013, the vast majority of the individual market in Georgia (82 percent) was split among Wellpoint, Humana, and Aetna.
And although UnitedHealthcare’s plan are for sale in the Georgia exchange in 2016, they’re not particularly competitive. A quick search on Healthcare.gov for a resident in Atlanta shows a total of 68 plans available. The default setting is for the plans to be ranked according to premium, from least expensive to most expensive. And the first UnitedHealthcare plan appears in spot number 37, after the applicant has scrolled through more than three pages of other – less expensive – plan options.
The fact that UnitedHealthcare won’t participate in the Georgia exchange in 2017 is bound to be a headline grabber, due to the name brand recognition that United has across the country. But when we look at the specifics in Georgia – and in the individual market in general – it’s unlikely that United’s departure from the exchange will have a significant impact on plan availability or consumer choices.
UnitedHealthcare did not participate in the Georgia exchange in 2014, but joined the exchange for 2015 and continued to offer plans for 2016. There are currently eight other carriers that offer coverage in the Georgia exchange.
During the 2016 open enrollment period, enrollment in private plans through the Georgia exchange totaled 587,845 people, including new enrollees and renewals. Of the 38 states using Healthcare.gov, only Florida, Texas, and North Carolina had higher enrollment for 2016.
For perspective, Georgia’s enrollment a year prior, at the end of the 2015 open enrollment period, stood at 541,080 people. And the higher 2016 enrollment total is made even more significant when we consider the fact that 2016 is the first year that HHS has accounted for attrition in real-time, during open enrollment.
In prior years, HHS just reported the cumulative total throughout open enrollment, and only began reporting attrition after open enrollment had ended. So people who never paid their initial premiums or cancelled their coverage early in the year weren’t subtracted from the 2015 enrollment report until the March 31 effectuated enrollment report that was published in June 2015. By that point, effectuated enrollment in Georgia’s exchange had dropped to 452,815. There will still be attrition in 2016 – it’s a normal part of the individual market – but the drop-off won’t be as sharp this year, as the February 1 enrollment total already reflects all of the attrition that occurred while open enrollment was on-going.
Open enrollment ended on January 31. Applicants who experience a qualifying event can still enroll in a plan for 2016, or switch to a different plan. Medicaid and CHIP enrollment continue year-round, and Native Americans can enroll in plans through the exchange year-round.
The penalty for being uninsured is significantly higher in 2016 than it was in 2014 and 2015. Uninsured residents who experience a qualifying event will be able to avoid the penalty for the remainder of the year if they enroll during their special enrollment period (the penalty is prorated for the number of months the person is uninsured during the year).
Legislation to protect broker commissions
HB838 passed the Georgia house in February 2016 by a huge margin (144 – 17), and was sent to the Senate, where it was ultimately tabled in late March. If it had been enacted into law, the legislation would have required health insurance carriers to pay broker commissions (at least five percent for group plans and at least four percent for individual plans) when brokers are used to enroll people in health plans.
The bill is in response to several national carriers cutting back or eliminating broker commissions, particularly for plans sold during special enrollment periods in 2016. Humana has reduced broker commissions to three percent for bronze and catastrophic plans as of March 2, 2016, and eliminated commissions entirely for all other metal levels. Anthem has eliminated commissions in Georgia – and nine other states – for plans with effective dates of April 1, 2016 or later, and UnitedHealthcare eliminated commissions as of January 1, 2016.
Carriers have balked at the lax enforcement of special enrollment period eligibility for plans sold through Healthcare.gov, and the commission reductions are an effort by carriers to reduce enrollment outside of open enrollment. To address carrier concerns, CMS announced in February 2016 that Healthcare.gov would begin requiring documented proof of a qualifying event in order to grant special enrollment periods (SEPs), and the new eligibility verification should go into effect within the next several months. If Healthcare.gov is effective in their eligibility verification and carriers stop seeing a sharp disparity in healthcare utilization between open enrollment enrollees and SEP enrollees, they may reinstate commissions in 2017.
Rate hike lower than national average
Healthcare.gov enabled browsing for 2016 plans on October 26, a week before the start of open enrollment. They also released a report showing average price changes for the benchmark plans in each state (benchmark plans can be different from one area of a state to another, since rates and plan availability vary by region). The benchmark plan is the second-lowest-cost Silver plan, but it can be a different plan than the one that held that spot the prior year.
Across the 37 states that used Healthcare.gov in 2015, the average benchmark premium increase for 2016 was 7.5 percent. In Georgia, it was lower, at 6.1 percent. Kaiser Family Foundation did their own analysis using premiums for a 40-yer-old non-smoker in metropolitan areas across the country. In Atlanta, they found a slight decrease (-0.4 percent) in the benchmark premium.
The majority of the carriers that sell individual plans in the Georgia exchange requested rate increases of ten percent or more for at least some of their plans, and the state used outside actuaries to review the rate proposals in an effort to lower them. Industry officials in Georgia noted that “many plans” in the state submitted 2016 rate increases under ten percent, but those weren’t available to the public until rates were finalized.
For 2015, the average rate increase in Georgia was just one percent. For 2016, it’s considerably higher than that, but there are still some carriers with very modest rate hikes for 2016. I requested approved rate changes from the Georgia Office of Insurance and Safety Fire Commissioner; for plans sold in the exchange, the approved filings indicate the following average rate changes:
- Aetna Health: 17.3 percent
- Blue Cross Blue Shield of Georgia: 16.4 percent
- Cigna: 3.73 percent
- Harken Health Insurance (new to exchange for 2016)
- Humana: filing indicated two different approved “overall rate impacts:” 19.8 percent for HMO plans and 21.8 percent for POS plans (just slightly lower than the 19.9 and 21.9 percent rate increases that they originally proposed).
- Kaiser Permanente: 2.7 percent
- Peach State Health Plan (new plans in 2016, so no rate change listed)
- UnitedHealthcare HMO: 13.2 percent (down from the 18.64 percent increase that they originally proposed)
- Alliant: 27 to 29 percent (down from the 37.85 percent they had requested) Alliant’s approved rate filing was not among the data that Georgia provided following my open records request, but the approved rate change was reported by The Telegraph.
Time Insurance exited the health insurance market nationwide at the end of 2015, but Harken Health Insurance has joined the Georgia exchange, so there are still nine carriers offering plans in 2016.
For most people, subsidies have covered a portion of the rate hikes. But subsidies are tied to the benchmark premiums, which only increased by an average of 6.1 percent in Georgia for 2016. Since rate changes for some plans were considerably higher, it was particularly important for enrollees to shop around during open enrollment rather than simply letting their coverage auto-renew.
At the end of 2015 open enrollment, 541,080 Georgians had signed up for qualified health plans (QHPs) through HealthCare.gov, but not all of them paid their initial premiums or opted to keep their coverage long-term. By the end of March, there were 452,815 people with in-force coverage through the Georgia exchange, and enrollment dropped again during the second quarter of the year, with 417,890 effectuated enrollments as of June 30 (Healthcare.gov stepped up enforcement of documentation requirements for immigration and financial status in 2015, which caused many people to lose coverage and/or subsidies).
90 percent of them were receiving premium subsidies, and 67 percent were receiving cost-sharing subsidies (available to people with household incomes up to 250 percent of poverty, as long as they select a silver plan). Georgia’s subsidy utilization was higher than the national average; nationwide, 85 percent of exchange enrollees were receiving premium subsidies, and 57 percent were receiving cost-sharing subsidies as of mid-2015.
Fifty-five percent of Georgia enrollees were new to the marketplace in 2015. Various experts indicated that enrollment exceeded expectations. According to Kaiser, 50 percent of Georgians who were eligible to enroll through the marketplace have selected a health plan.
More than 350,000 of Georgia’s enrollees were from the Atlanta/Sandy Springs/Roswell metropolitan area. Only the Miami/Fort Lauderdale/West Palm Beach area had higher enrollment than the greater Atlanta area.
King v. Burwell – subsidies are safe
Fortunately for exchange enrollees in Georgia – as well as hospitals, insurance carriers, and people who purchase coverage without subsidies – the Supreme Court ruled on June 25 that subsidies are legal in states like Georgia that use Healthcare.gov. If subsidies had been struck down, 415,000 people in Georgia would have lost their subsidies and their coverage would likely have become unaffordable.
It would also have become unaffordable for many people who aren’t receiving subsidies, as the entire individual market would likely have seen a rate increase of 55 percent – in addition to the regular annual rate increases – if subsidies had been eliminated. Since coverage would have become unaffordable for so many, healthy enrollees would have been likely to drop their coverage, leaving a sicker pool of insureds and triggering a “death spiral.” It was possible that the individual market could have shrunk in size by 70 percent if subsidies had dried up.
New insurers join exchange in 2015
Georgia consumers shopping for health insurance on the marketplace had nearly double the number of insurers to choose from in 2015 as they did in 2014. In addition, three companies — as opposed to one in 2014 —offered policies statewide. A health insurance expert at Georgia State University said the influx of statewide competition would help reduce disparity in premium costs seen among different regions of the state.
Nine insurers offered plans in the Georgia health insurance marketplace for 2015, including four who were new to the exchange for 2015. The returning companies from 2014 were: Alliant Health Plans, Blue Cross, Humana, Kaiser Permanente, and Peach State Health Plans. The new entrants to the marketplace for 2015 were Cigna, Coventry, UnitedHealthcare, and Time Insurance.
2015 premiums up just 1 percent
Georgians paid an average of 1 percent more for health plans on the marketplace in 2015 compared with 2014. The overall average was weighted and considered all metal tiers. The average cost of bronze policies was down 4 percent, and the average cost of silver and gold policies was down 1 percent. But the average cost of platinum policies was up 33 percent (very few enrollees nationwide select platinum plans due to their cost).
Given that southern Georgia had some of the highest premium costs in the nation for 2014, the modest average increase was welcome news for the second year of Obamacare.
Facts and figures from 2014 enrollment
More than 316,500 Georgians enrolled in qualified health plans (QHPs) during 2014 open enrollment. That’s nearly 30 percent of the estimated 1,063,000 Georgians considered eligible to enroll in the insurance marketplace by the Kaiser Family Foundation.
Among Georgia residents selecting a QHP, 87 percent qualified for financial assistance, compared to 85 percent nationally. A report released in June 2014 by the U.S. Department of Health and Human Services showed the average monthly premium, after tax credits, for Georgia consumers was $54. Sixty percent of enrollees pay $50 or less per month after subsidies. Georgia’s $54 average is the second-lowest in the nation — after Mississippi, where the average monthly premium after subsidies is just $23.
Ten percent of Georgia residents selected a bronze plan (20 percent nationally), 73 percent selected a silver plan (65 percent nationally), 6 percent selected a gold plan (9 percent nationally), 9 percent selected a platinum plan (5 percent nationally) and 2 percent selected a catastrophic plan (2 percent nationally). Thirty-one percent of Georgia enrollees were between the ages of 18 and 34.
Background on the marketplace in Georgia
Georgia opted to use the federal health insurance marketplace, HealthCare.gov. State government officials such as Gov. Nathan Deal and Insurance Commissioner Ralph Hudgens vocally opposed the Affordable Care Act. Hudgens implemented a requirement that navigators, who help consumers use the marketplace, pass the test that insurance agents are required to take. That requirement is much more stringent than required by the health care reform law, and Hudgens openly stated it was intended as obstructionism. At the end of its 2014 session, the Georgia Assembly passed a bill that prohibits establishing a state-run marketplace, disallows the use of taxpayer money for navigator programs, and forbids government employees from advocating for Medicaid expansion.
Georgia’s director of Enroll America, Dante McKay, said that lack of access to navigators hurt enrollment in rural Georgia counties in 2014. McKay also said the amount of federal funding Georgia received for navigators was among the lowest of all the states on a per uninsured person basis in 2013 — and the amount decreased in 2014.
No Medicaid expansion yet
Georgia has not expanded its Medicaid program, and is among 19 states still refusing federal funding to expand coverage. Gov. Deal has repeatedly said Medicaid expansion would cost the state too much, and the General Assembly passed bills that give it authority over any changes to the state’s Medicaid rules. By not expanding Medicaid, the state is leaving up to 282,000 low-income residents in a coverage gap — unable to qualify for either Medicaid or subsidies through the marketplace.
SB368 was introduced in February 2016, and represents the first time a Medicaid expansion bill has gained a hearing by the General Assembly in Georgia. The bill doesn’t actually mention Medicaid expansion, but instead calls for a “premium assistance” to help purchase private health insurance through the exchange for people with incomes up to 138 percent of poverty, and would require them to pay up to 5 percent of their income. If SB368 were to be approved by the legislature, it would have to also be approved by CMS under an 1115 waiver, since it’s not the same as the straight expansion of Medicaid called for in the ACA.
Uninsured rate declining, but still progress to be made
Georgia’s uninsured rate in 2014 was 19.1 percent; the national average was 13.8 percent. By the first half of 2015, the state’s uninsured rate had dropped to 15.3 percent – still well above the national average, but much better than the 21.4 percent uninsured rate that Georgia had in 2013. There is no doubt that if Medicaid were to be expanded, Georgia’s uninsured rate would drop significantly.
A report published in February 2016 by the Robert Wood Johnson Foundation found that the number of Georgia children without health insurance decreased by 53,000 in 2014. That was the fourth-largest drop in the country, but Georgia still had the tenth-highest uninsured rate among children in 2014, with eight percent of the state’s children uninsured.
A Families USA report published in January 2016 found that among working US adults, the uninsured rate dropped by an average of 19 percent in 2014. But in states that didn’t expand Medicaid, the drop was lower. In Georgia, the reduction in the uninsured rate for working adults was just 13 percent, compared with more than 30 percent in the eight states that had the highest reduction.
Georgia health insurance exchange links