- DC’s COVID-19 special enrollment period continues until the COVID public health emergency in DC ends (small groups can also enroll, through 2022, even if they don’t meet the normal participation and contribution requirements).
- Open enrollment for 2022 health coverage: November 1, 2021 through January 31, 2022.
- Average rate changes for 2022: 5% for individual market plans; 3.5% for small group plans.
- DC offers SEPs for pregnant women and people whose credit/debit card was declined and resulted in a coverage termination.
- Open enrollment has been permanently extended, runs from November 1 to January 31 each year.
- DC has an individual mandate that took effect in 2019.
- DC currently has a “modified” merged risk pool, but for most purposes the individual and small group markets are separate.
- Fewer than 17,000 people enrolled for 2021, down from more than 22,000 in 2016.
- DC sharply limited short-term health insurance and insurers have stopped selling short-term plans in the District.
District of Columbia exchange overview
In DC, coverage in the individual and small-group markets is only available through DC Health Link, the state-run exchange; there’s no option to select an off-exchange plan. As described below, DC has a modified merged risk pool for the individual and small group market.
During the open enrollment period for 2021 coverage, which ran through January 31, 2021, 16,947 people enrolled in individual market plans through DC Health Link. Of the people who signed up for individual plans via DC Health Link for 2021, only about 7% were receiving premium subsidies. This is by far the lowest percentage in the country; nationwide, premium subsidy eligibility tends to hover around 85% of all exchange enrollees (but the American Rescue Plan likely increased the percentage of enrollees receiving subsidies, as it eliminated the income cap for subsidy eligibility through the end of 2022).
The low number of subsidy-eligible enrollees in DC is likely due to a combination of the fact that there is no off-exchange market in the District (so residents who aren’t subsidy-eligible still buy their plans in the exchange), the median household income is among the highest in the country, and Medicaid eligibility is quite generous (so lower-income applicants who would get subsidized QHPs in other states are eligible for Medicaid instead in DC).
According to US Census data, the uninsured rate was just 3.5% in DC in 2019 (but up from 3.2% in 2018); only Massachusetts had a smaller percentage of its residents without health insurance.
Permanently extended open enrollment: November 1 – January 31
For 2022 coverage, open enrollment began November 1, 2021 and will continue through January 31, 2022. Enrollments had to be completed by December 15 to have coverage effective January 1. Enrollments completed by January 15 will have coverage effective February 1, while enrollments completed in the latter half of January will have coverage effective March 1.
DC has permanently adopted a November 1 through January 31 open enrollment schedule, and will continue to use it in future years. For 2020 coverage, the exchange extended enrollment through February 5. A similar extension was granted the year before, for 2019 coverage. Enrollment ended on January 31 for 2021 coverage, but a special enrollment period due to the COVID pandemic has been underway ever since in DC (more details below).
Special enrollment period continues until the end of the COVID public health emergency
When the COVID pandemic began, nearly all of the state-run exchanges established special enrollment periods for uninsured residents. The open enrollment period for 2020 health coverage had already ended when the pandemic started, and public health officials wanted to make sure as many people as possible had health coverage during the public health crisis.
DC Health Link was among the exchanges where a COVID-related special enrollment period began in 2020. But unlike most of the other state-run exchanges, where the enrollment window lasted a month or two, DC’s has been ongoing ever since the spring of 2020. It will continue to automatically be extended until the end of the month when the COVID public health emergency in DC is allowed to expire (the rest of the state-run exchanges offered another COVID-related special enrollment period in 2021, in line with the special enrollment period that HealthCare.gov offered in 2021. But DC’s COVID-related special enrollment period never ended).
The special enrollment period allows uninsured people to sign up for individual market coverage through DC Health Link, and also allows employees of businesses insured through DC Health Link’s SHOP exchange to sign up for health coverage through their employers, without having to wait for their employer’s annual open enrollment period.
Once the American Rescue Plan was enacted, DC Health Link fully opened the enrollment window (as opposed to limiting it only to people who were uninsured), allowing people the opportunity to switch plans if necessary in order to best take advantage of the newly enhanced premium subsidies. DC Health Link confirmed that if people switched plans in 2021 during the COVID/American Rescue Plan enrollment window, any money they’ve spent toward their deductible and out-of-pocket limit would transfer to the new plan, assuming they enrolled in another plan from the same insurer.
For DC Health Link enrollees who had already provided financial information to the exchange, the additional premium subsidies were automatically applied as of the May 2021 invoice.
As a result of the pandemic, DC Health Link is also allowing small groups to enroll, through at least the end of 2022, even if they don’t meet the participation and/or contribution requirements that are normally in place.
Pregnancy now a qualifying event in DC
DC Health Link allows pregnant women to enroll in health coverage through the exchange year-round, with a special enrollment period triggered by the confirmation of the pregnancy by a health care provider. The coverage can be retroactive to the first of the month that the pregnancy is confirmed. From the date the pregnancy is confirmed by a health care provider, the woman has 60 days to enroll in an individual market plan through the exchange, or 30 days to enroll in a small group plan that her employer obtains via DC Health Link.
Special enrollment period for people who lose their coverage due to a declined credit/debit card
DC Health Link has also created a special enrollment period for people who lose their coverage because their credit/debit card auto-payment is declined, unless the reason for the decline is a lack of adequate funds or voluntary termination of the auto-payment by the enrollee.
Individual mandate effective as of 2019
DC has enacted an individual mandate that took effect as of January 2019. Massachusetts, New Jersey, California, and Rhode Island also have individual mandates (Vermont also has an individual mandate, but has not implemented any sort of penalty for non-compliance). DC’s individual mandate includes a penalty that’s collected on uninsured residents’ district tax returns. More details about how DC’s individual mandate came to be are described below.
In early 2020, DC opened a one-time special enrollment period for people who found out about the mandate and penalty when they filed their 2019 tax return in 2020. This allowed people an opportunity to enroll in coverage for the rest of 2020 and minimize the penalty they would owe on the tax return they filed in 2021.
Which health insurance carriers offer 2022 coverage in the DC marketplace?
There are several insurers that offer exchange plans in DC, although most of them offer plans for small businesses, as opposed to individual/family plans (unlike most exchanges, DC’s exchange has a robust small business market, due largely to the fact that small group plans cannot be purchased outside the exchange in DC). And most of the insurers have both HMO and PPO entities.
The following insurers offer individual/family plans in the Washington, DC exchange as of 2022:
- Group Hospitalization and Medical Services (CareFirst PPO)
- CareFirst Blue Choice (CareFirst HMO)
- Kaiser of the Mid-Atlantic States.
The District of Columbia’s small-group insurers include:
- Aetna Life (PPO)
- Aetna Health (HMO)
- CareFirst HMO
- GHMSI/CareFirst PPO
- Optimum Choice (a UnitedHealthcare HMO)
- UnitedHealthcare of the Mid-Atlantic (HMO)
- UnitedHealthcare Insurance Company (PPO)
Approved rate changes for 2022: Increase of 5% for individual; 3.5% for small group
The DC Department of Insurance, Securities, and Banking has published the proposed rate changes that insurers submitted for 2022 health plans. For the individual market, the weighted average proposed rate change was a 7.7% increase.
But as has been the case in prior years, the approved rate increases mostly ended up being smaller than the insurers had proposed, with an overall average increase of 5% for the individual market. And for the small group market, the overall average approved rate increase was 3.5%, down from the 6.2% increase that the insurers had proposed.
The following average rate changes were approved for DC’s individual market insurers:
- Group Hospitalization and Medical Services (CareFirst PPO): 4.8% average rate increase. GHMSI had 8,648 enrollees in the individual market.
- CareFirst Blue Choice (CareFirst HMO): 8% proposed average rate increase. CareFirst had 5,175 enrollees in the individual market.
- Kaiser of the Mid-Atlantic States: 0% proposed average rate change. Kaiser has 2,604 enrollees in the individual market.
The insurers offer a total of 27 different plans in the individual market, for people who need to buy their own coverage.
As noted above, only about 7% of DC Health Link’s individual market enrollees were receiving premium subsidies as of early 2021 (again, that’s likely quite a bit higher now and through at least the end of 2022, due to the American Rescue Plan). Although DC Health Link’s default is to have subsidy-eligible consumers receive 85% of their calculated subsidy up-front each month (and reconcile the difference on their tax returns), most of the District’s subsidy-eligible enrollees take more than 85% of their subsidy up-front.
For the small group market, average premiums decreased by half a percent for 2021 as opposed to the 1.9% average rate increase that insurers had proposed. For 2022, the District’s small group insurers have proposed an overall weighted average rate increase of 6.2%, but the average approved increase was just 3.5%. (Keeping in mind that although the exchanges in most states primarily serve individual market customers, that is not the case in DC; DC’s small business exchange enrollment is much higher than their individual market enrollment.)
Modified merged risk pool
In most states, the individual and small group market risk pools are completely separate. But in Massachusetts, they’re merged (they used to be merged in Vermont as well, but that’s changed as of 2022). DC has what’s often referred to as a “modified merged risk pool.” Essentially, the two risk pools are merged for the purpose of setting the index rate. But then the index rate is adjusted to be specific to each market, based on factors that are not uniform across the two markets.
So things like risk adjustment transfers, network size, morbidity, broker fees, and medical trend end up resulting in DC’s individual and small group markets having different rates and rate changes (the individual market tends to be more volatile, as is the case nationwide). Because morbidity is a factor that allows the rates to be adjusted after the index rate is set, the “modified merged risk pool” in DC is essentially much more similar to the separate risk pools in most other states, and is quite different from the truly merged risk pools in Vermont and Massachusetts.
For 2020, however, DC instructed insurers to file two sets of rates — one consistent with the District’s existing approach, and the other based on merging the individual and small group markets for the purpose of risk adjustment calculations.
DC has implemented programs to ensure that all residents have access to health coverage, regardless of their income or health status. Medicaid coverage in DC is available to residents with income up to 216 percent of the poverty level. In addition, DC Health Alliance, Cover All DC, and Immigrant Children’s Program are available to DC residents regardless of immigration status.
DC Health Alliance and Immigrant Children’s Program are available at no cost, while Cover All DC allows residents to purchase full-cost private health insurance, even without a qualifying immigration status. The ACA prevents undocumented immigrants from buying coverage in the exchange, even without financial assistance, so DC created Cover All DC in order to provide an avenue for those residents to purchase coverage.
In the summer of 2019, the DC Health Link board of directors approved $650,000 for navigator/enrollment assister funding, $300,000 for outreach assistance (mostly via DC-area chambers of commerce), and $350,000 in funding for Metro Bus advertising.
2021 enrollment, plus a look back at enrollment in previous years
During the open enrollment period for 2021 health plans, 16,947 people enrolled in individual market plans through DC Health Link — down from 17,538 people the year before. As described above, DC has an ongoing special enrollment period related to the COVID-19 pandemic. This window, which allows uninsured residents to enroll in coverage, continues through the end of the pandemic emergency period.
Here’s a look back at individual market enrollment via DC Health Link (totals indicate the number of people who signed up each year during open enrollment):
- 2014: 10,714 people enrolled
- 2015: 18,465 people enrolled
- 2016: 22,693 people enrolled
- 2017: 21,248 people enrolled. By mid-April, more than 19,000 people had effectuated coverage. Although enrollment at the end of open enrollment was lower than it had been a year earlier, effectuated enrollment was higher at the end of March; as of March 31, 2016, effectuated enrollment had been 17,266.
- 2018: 19,289 people enrolled (According to the October 2018 board meeting, the exchange had a total of 93,553 enrollees at that point, but 77,596 of them had small-group coverage)
- 2019: 18,035 people enrolled
- 2020: 17,538 people enrolled
- 2021: 16,947 people enrolled
In most states, individual market enrollment in the exchange far surpasses small-group enrollment. But in DC, small group enrollment is much higher than individual market enrollment. There are no off-exchange small group plans in DC, and members of Congress and their staff use DC Health Link’s small group plans instead of the Federal Employees Health Benefits Program, which adds about 11,000 enrollees to DC Health Link’s small business plans.
Rate changes in previous years
Here’s a look back at how premiums have changed in DC’s exchange over the years:
2015: Single-digit rate changes
The D.C. DISB approved 2015 premiums in September 2014. For individual plans, average rate changes by carrier varied from a 6.1 percent decrease to a 7.6 percent increase. For small-group plans, the range was a 17.2 percent decrease to a 12.7 percent increase. See the DISB website for details.
2016: Another round of single-digit rate hikes
Aetna discontinued their six individual market plans in DC at the end of 2015, leaving just CareFirst and Kaiser for enrollees shopping for 2016 coverage. Regulators from the DISB reduced proposed rates across the board before approving them. Average approved rate increases ending up being 2 percent for CareFirst HMOs, 4.6 percent for CareFirst PPOs, and 6.6 percent for Kaiser.
CareFirst had significantly more market share than Kaiser in 2015, despite the fact that Kaiser had lower premiums (CareFirst also dominated the market in 2014). But Kaiser’s premiums increased by a slightly higher percentage than CareFirst’s, which helps to even out the premiums. Across the whole individual market — not including Aetna’s enrollees, which was a very small portion of the market — the average rate increase for 2016 was just 4.25 percent, which was far below the national average.
2017: Average rate increases ranged from under 2% to nearly 23%
DC DISB published a press release in May 2016 with details about the proposed rate changes that had been filed for 2017. In late September, they put out another press release with the approved average rate changes, which ranged from a 1.8 percent increase for CareFirst PPO to a 22.8 percent increase for CareFirst HMO.
For 2017, small-group rates in DC only increased by an average of 0.36 percent. By December 2016, SHOP exchange enrollments in DC had grown to 58,823, and by April 2017, it had reached 67,000. For comparison, California (which has 58 times as many people as DC) had 29,544 people covered under SHOP plans.
2018: Average increase of about 15.6%
Rate increases for 2018 were approved in October 2017 by DC regulators, with an increase of nearly 20 percent for CareFirst’s individual market plans (HMO and PPO) and 13 percent for Kaiser.
As initially filed, the proposed weighted average rate increase was 26.1 percent. But due to a smaller-than-proposed increase for CareFirst’s HMO, regulators reported that the average approved rate increase would be 15.64 percent for the individual market, before accounting for premium subsidies.
As described below, the lack of federal funding for cost-sharing reductions was fairly insignificant in DC, as very few DC Health Link enrollees receive CSR benefits.
In the small-group market, some insurers’ rate proposals were approved as filed, while others were adjusted during the rate review process. The approved average rate increases ranged from 5.6 percent for UnitedHealthcare to 15.5 percent for CareFirst/GHMSI. As initially filed, the small-group market was facing an average rate increase of 11.4 percent, but the final approved rates represent an average increase of 7.26 percent.
2019: Average rate increase of 13% in the individual market (down from the 15.5% that insurers proposed)
Proposed 2019 rate changes for DC health plans were published in early June 2018. In September, the DC Department of Insurance, Securities, and Banking published the final approved average rate changes for 2019, which ranged from a 9.9 percent increase for CareFirst PPO to a 20 percent increase for Kaiser. As proposed, the 2019 rates would have amounted to a weighted average increase of 15.5 percent. But the final approved rate hike amounted to a weighted average increase of 13 percent instead.
In the small group market, the proposed rate increases were small or non-existent for the three largest insurers (based on enrollment), but quite significant for the insurers that have a smaller market share. However, the final average approved rate changes were generally much smaller than insurers had proposed, ranging from no change to about a 10 percent increase.
It’s noteworthy that although DC’s individual mandate wasn’t finalized until September, it appears that the insurers based their proposed premiums for 2019 (filed in June 2018) on the assumption that the mandate would end up being implemented in the District. Both Kaiser and CareFirst noted in their rate filings that they were not adding a premium load for the elimination of the federal mandate penalty. That likely explains why the approved rate increases in DC were not significantly smaller than the proposed increases, despite the fact that the official approval of the District’s individual mandate happened between when rates were initially filed and when they were approved.
CareFirst also clarified that they were also not adding any sort of premium load as a result of the Trump Administration’s efforts to expand short-term health insurance plans.
The District of Columbia has enacted emergency legislation that limits the duration of short-term health plans to three months, prohibits renewals, and prevents short-term plans from excluding pre-existing conditions or basing eligibility on medical history. Similar permanent legislation was subsequently enacted, and the insurers that previously offered short-term health insurance in DC have stopped doing so.
Read more about short-term health insurance in DC.
2020: Average rate increase of 7.6% in the individual market
In April 2019, the DC Department of Insurance, Securities, and Banking instructed insurers to file two sets of rates for 2020: One based on the current risk adjustment protocol in D.C., in which risk adjustment is calculated separately for individual market plans and small group plans, and a second set of rates that would apply if the District were to combine the two markets for risk adjustment purposes (as described above, D.C. has a “modified” merged risk pool already, but risk adjustment calculations — and most other factors — are determined separately for the two markets.
Not surprisingly, proposed rates were much lower under the combined risk adjustment scenario, as that’s generally an idea that passes risk from the more volatile individual market to the more stable small group market.
In September, DC DISB published a summary of the final rates, as well as an overview of how rates would change for plans that existed in both 2019 and 2020. For the individual market, DC Health Link’s insurers implemented an average rate increase of 7.6% for 2020.
For the small group market, DC Health Link’s insurers implemented an average rate increase of 8.4% for 2020.
With the exception of Kaiser, all of DC Health Link’s small group insurers proposed higher 2020 rates under the merged risk adjustment model, whereas proposed rates for the individual market would have been lower under the merged risk adjustment model.
At their October 2018 meeting, DC Health Link’s board of directors reported in December 2017 that 4,960 small businesses were enrolled in plans through DC Health Link’s small business marketplace, with a total of 77,596 covered members.
2021: Average rate increase of 0.2% for individual market plans
In May 2020, the DC Department of Insurance, Securities, and Banking published the proposed rate changes that insurers had submitted for 2021 health plans, which amount to a weighted average proposed rate increase of 3.8%.
But a much smaller overall average rate increase was ultimately approved, due to a significant reduction in the approved rate changes for CareFirst HMO. DCDISB announced in early October 2020 that the approved average rate increase for the individual market would be just 0.2 percent for 2021.
Group Hospitalization and Medical Services (CareFirst PPO) increased premiums by an average of 1.6%. CareFirst Blue Choice (CareFirst HMO) increased premiums by an average of 0.1%. And Kaiser decreased premiums by an average of 2%.
For the small group market, average premiums decreased by half a percent for 2021 as opposed to the 1.9% average rate increase that insurers had proposed (keeping in mind that although the exchanges in most states primarily serve individual market customers, that is not the case in DC; DC’s small business exchange enrollment is much higher than their individual market enrollment)
DC has an individual mandate as of 2019
In the summer of 2017, the DC Health Link board created an ACA Working Group, comprised of insurers, small businesses, brokers, consumer advocates, and health care providers, with the goal of coming up with changes and improvements that DC could make at the local level to stabilize its insurance market and ensure that affordable coverage would continue to be available in the District.
In January 2018, the Working Group reconvened in order to address two new issues: President Trump’s October 2017 Executive Order that called for Association Health Plans to be expanded, and the December 2017 GOP tax bill that repealed the individual mandate (with a delayed implementation; the individual mandate will be repealed as of 2019).
In mid-February, the Working Group unanimously voted to recommend that DC implement its own individual mandate. The following week, the DC exchange board approved a resolution calling for an individual mandate in DC, and noting that without an individual mandate, enrollment in individual market plans in DC was projected to drop by 15 percent in 2019, with an associated premium increase of about 7 percent (healthy people would drop coverage, leaving a risk pool with overall poorer health and a smaller population over which to spread the costs, resulting in higher premiums for everyone). As of 2018, with the federal individual mandate in place, 96 percent of DC’s residents had health insurance.
In March 2018, DC Mayor, Muriel Bowser, unveiled her proposed Fiscal Year 2019 Budget, which included $1.1 million for implementation of an individual mandate in DC. That money would cover technology adjustments, changes to the DC tax code, and efforts to publicize the local individual mandate.
The city council considered Mayor Bowser’s budget and published their own proposed budget in mid-May. The DC City Council’s proposed Budget Support Act of 2018 included an individual mandate, with a penalty for non-compliance, effective as of January 2019 in DC. The city council approved the budget in June, with the individual mandate intact.
Republicans in Congress tried to intervene at that point, however, with a measure (which passed the House in July) that would have blocked the District from using local funding to implement an individual mandate. But the measure failed in the Senate in early August, paving the way for DC to move forward with their individual mandate.
The DC Budget was transmitted to Mayor Bowser in mid-August, and she signed it on September 5 (the final budget is here). The mandate, dubbed the “Individual Taxpayer Health Insurance Responsibility Requirement,” took effect in January 2019.
The mandate called for in the DC budget is much like the ACA’s federal mandate, but with some specifics to tailor it to DC’s needs. This chart provides an overview of how DC’s proposed mandate compared with the federal mandate, as of early 2018. But some changes were made along the way. For example, the early draft called for an exemption for people who have a gap in coverage of three months or less — instead of less than three months, as is the case under the federal mandate — but that modification was not included in the final version of the District’s mandate; people who are uninsured for three months in 2019 face a penalty in DC):
- The mandate penalty is the same amount as the federal mandate penalty was in 2018 ($695 per uninsured adult, or 2.5 percent of household income, whichever is greater), but the maximum penalty is tied to the average cost of a bronze plan in DC, as opposed to the average nationwide cost of a bronze plan. The ACA penalty was supposed to be inflation-adjusted annually starting in 2017 (the adjustment was $0 for 2017 and 2018), so DC will be responsible for setting the inflation adjustment each year.
- Most of the exemptions that apply to the federal penalty also apply in DC, but with some changes. People with DC Healthcare Alliance coverage are considered covered and not subject to a penalty (under the ACA’s individual mandate, DC Healthcare Alliance is not considered minimum essential coverage), as are those covered under the Immigrant Children’s Program. People with fairly high incomes (up to 222 percent of the poverty level for people age 21 and older, and up to 324 percent of the poverty level for people up to age 20) are not subject to the penalty (Medicaid eligibility extends to these levels in DC, so this exemption basically just means people who are eligible for Medicaid are not subject to the penalty if they’re uninsured).
- If the federal penalty is ever reinstated, people in DC would not be subject to two penalties. If that were to happen, the amount of the DC penalty would be reduced by the amount that the person owes under the federal penalty.
- Crucially, new association health plans (AHPs) created under relaxed federal rules do NOT qualify as coverage under the DC mandate. But AHPs that already met federal rules as of 2017 (and are considered minimum essential coverage) continue to be considered coverage under DC’s mandate in 2019.
- Money collected via the DC individual mandate penalty will be used for outreach to get uninsured people covered, and “activities that increase the availability of health insurance options or increase the affordability of insurance premiums in the individual health insurance market.“
The District’s individual mandate and associated penalty weren’t signed into law until September 2018, and there wasn’t a lot of publicity about the new mandate during open enrollment. So on February 15, 2019 — more than a week after open enrollment had ended in the District — DC Health Link announced that they would grant a 60-day special enrollment period to people who find out about the District’s new individual mandate penalty while filing their 2018 taxes. The first round of assessed individual mandate penalties in DC will show up on tax returns that are filed in early 2020, for the 2019 tax year.
Massachusetts has an individual mandate that predates the ACA, and that continues to be in effect in 2019. New Jersey also has a mandate in 2019. Vermont will have an individual mandate starting in 2020. So DC was the fourth jurisdiction to impose an individual mandate, and is one of three localities that has an effective mandate in 2019.
CSR funding fairly insignificant in DC
Throughout the country, the Trump Administration’s decision to cut off funding for cost-sharing reductions (CSR) had a significant impact on premiums for 2018. In many states, insurers had already filed rates based on the assumption that CSR funding would end, and in some of the other states, insurers scrambled to revise their filings to add the cost of CSR during an emergency refiling window that the federal government opened just before the start of open enrollment (CSR funding was eliminated on October 12; open enrollment began on November 1).
But in DC, the impact of CSR funding has been minimal. Both CareFirst and Kaiser based their proposed rates on the assumption that CSR funding would continue for 2018. The Trump Administration announced in October 2017 that CSR funding would end immediately, although Congress could allocate CSR funding in the future, restoring federal funding for the program.
But CSR funding has a very minimal impact in the District. DC Health Link’s executive director, Mila Kofman, explained that only 300 people in DC receive CSR benefits, and the total cost is about $150,000 per year (as opposed to CBO’s nationwide cost estimate of about $7 billion in fiscal year 2017 and $10 billion in fiscal year 2018).
The reason so few people in DC receive CSR is that DC Medicaid covers people with income up to 215% of the poverty level (as opposed to 138% in most states that have expanded Medicaid). Under the ACA, CSR benefits extend to 250% of the poverty level, although they’re most robust for people with income up to 200% of the poverty level. But in DC, people with income up to 215% of the poverty level are on Medicaid instead of private plans in the exchange, which means they’re not using CSR.
Although the rate filings for CareFirst and Kaiser note that rates were developed based on the assumption that CSR funding would continue in 2018, it appears that it didn’t make much of a difference one way or the other, since it’s such a small factor in the cost of coverage in DC.
However, the effect of CSR defunding is regional, rather than being limited to DC. Kofman noted that “in DC, we are concerned about our carriers. They are regional (in MD and in northern VA). Also, the issue for us is big picture – when you take out $7 billion from the health insurance industry it will have a rippling effect on the entire private market.”
(Ultimately, the lack of CSR funding has turned out to be a smaller issue than anticipated, because insurers in most states simply added the cost of CSR to their premiums for 2018, and have continued to do that ever since. In most cases, they added the cost only to silver plan premiums, which results in much larger premium subsidies, and lower after-subsidy premiums for people who buy bronze and gold plans. This has been an overall win for consumers, making coverage more affordable than it would otherwise have been.)
So while CSR funding is not a significant factor in DC itself, the overall issue of CSR funding had an impact on the insurers that offer coverage in the DC area: Filings in Virginia were based on the assumption that CSR funding would not continue; rate that were initially approved in Maryland were based on the assumption that CSR funding would continue, but those rates were revised in late October to add the cost of CSR to on-exchange silver plans instead.
DC Health Link’s robust small-business exchange
DC Health Link began allowing small businesses to enroll in small group plans via the exchange at any time during 2020, even if they couldn’t meet the employer contribution and/or employee participation requirements. And this provision has been extended through 2022. Normally, small groups that can’t meet the contribution or participation requirements are limited to signing up between November 15 and December 15 (this is an ACA rule, not specific to DC, but the extended window throughout 2022 is specific to DC).
As of mid-2015, members of Congress and their staffers accounted for 16,100 of the small business enrollees in DC. That had fallen to about 11,000 by early 2017, despite the fact that overall SHOP enrollment in DC Health Link had grown considerably, to about 67,000 people (by December 2017, enrollment in DC Health Link SHOP had grown to 75,633 people — far more than any other SHOP exchange in the country). The Grassley Amendment to the ACA dictates that Congress and Congressional staffers can only be offered coverage through the exchange—as opposed to the FEHBP that’s available to other federal government employees.
DC Health Link is the designated marketplace for members of Congress and their official office staff following a rule issued by the Office of Personnel Management, which oversees benefits for federal employees. Congress and their staffers are eligible to continue receiving the federal employer contribution toward their coverage so long as they select a plan through DC Health Link’s SHOP exchange (note that they do not enroll in individual market plans, as they would not be eligible for an employer contribution for those plans; instead, they enroll in SHOP plans, which are jointly funded by employers and employees).
Congress and staffers are allowed to instead purchase individual market coverage (on or off-exchange) in their home states, but they would not be able to receive premium subsidies if their income is over 400 percent of the poverty level (which would be the case for all members of Congress and many staffers, unless they have very large families to support on their income), and employer contributions aren’t applicable to individual market coverage. So the only way Congress and staffers can get employer contributions to their health insurance is to select coverage in the DC Health Link small business exchange.
The OPM rule that allowed members of Congress and their staffers to retain the employer contributions to their premiums has not been without controversy, and President Trump threatened to end the “bailouts” for members of Congress if Senate Republicans weren’t successful in their efforts to repeal the ACA. (That threat came shortly after Senate Republicans failed to pass three different versions of the repeal bill that the House had passed in May. Ultimately, Congressional Republicans failed in their 2017 efforts to repeal the ACA, but their tax bill did repeal the individual mandate penalty, albeit with a delay: the repeal took effect in 2019.)
Funding plan created controversy
The District of Columbia’s health insurance marketplace, DC Health Link, was identified as the nation’s second most expensive on a per enrollee basis in 2014, and its long-term funding plan triggered a lawsuit. The exchange’s 2015 fiscal year budget was about $28 million, but Kofman requested $32.5 million for the 2016 fiscal year, in order to cover the cost of adding 19 full-time positions to their staff (instead of relying on contract workers).
DC Health Link’s funding plan was formed to meet the requirement that all state-run exchanges be self-sufficient by 2015. A number of state-run exchanges have placed a tax on premiums sold through the exchange.
However, given the District’s small population, a premium tax would have to be very high to sustain DC Health Link — 17 percent according to a Washington Post article. Accordingly, the D.C. Council approved a one percent tax on premiums for all health-related insurance plans sold in the District — not just those sold on the exchange.
The tax is designed to apply to plans that can’t be sold on the exchange, including hospital indemnity plans, disability coverage, and long-term care plans. There is no off-exchange market for standard health insurance in DC, and grandmothered plans were not allowed to remain in force in the District. But “health-related” plans has a much wider scope, and includes many products that were never intended to be sold in the exchange.
Many insurers that sell health-related insurance products outside of the marketplace were vehemently opposed to the plan, but the exchange has defended the tax by pointing out that people who have access to health insurance are more likely to buy the supplemental products sold outside the exchange. They view the exchange as a sales booster for other health-related insurance products, and want those carriers to bear part of the revenue burden for the exchange. And the funding proposal had strong support from the exchange’s insurers, as well as local advocacy and business groups.
But the American Council of Life Insurers filed a lawsuit in July 2014, claiming the tax was unconstitutional and a violation of the ACA. A U.S. District Court judge dismissed the suit in November 2014, writing that the ACA gave state-run exchanges broad authority to establish funding mechanisms.
In December 2014, the American Council of Life Insurers appealed the November ruling to the U.S. Court of Appeals for the D.C. Circuit. In March 2016, the appeals court vacated the district court’s dismissal of the case, allowing the possibility that it could once again move forward.
Meanwhile, in January 2015, the DC Council passed a temporary version of the exchange’s proposed funding model, imposing the one percent tax on all health plans and health-related plans. Then in May 2015, the Council approved the assessment to take effect immediately in order to fund the exchange’s 2016 fiscal year; the collection of assessments to fund the exchange has continued since then.
The assessments are collected annually, starting in the summer of 2015. In July 2015, the board approved a measure that lays out exactly what products are exempt from the assessment, and also provides a means for assessed carriers to appeal their assessments.
History of the District’s exchange
The District of Columbia was an early adopter in moving to implement a health insurance exchange. The Health Reform Implementation Committee (HRIC), formed at the direction of Mayor Vincent Gray, issued its final recommendations in October 2011. The D.C. City Council adopted many of the committee’s recommendations and passed a bill to create the District of Columbia Health Benefit Exchange Authority, which Gray signed it into law in January 2012. The District of Columbia received federal approval to operate a state-based exchange in December 2012.
In June 2013, the exchange was rebranded as DC Health Link.
District of Columbia health insurance exchange links
DC Health Link
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.