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Iowa health insurance exchange / marketplace

UnitedHealthcare exiting, Wellmark and Avera joining

  • By
  • healthinsurance.org contributor
  • August 13, 2016

Iowa operates a partnership exchange with the federal government. Iowa residents use the federal marketplace, HealthCare.gov, to compare and purchase coverage. The state is responsible for plan management, consumer assistance, and Medicaid eligibility determination.

Iowa’s plan management functions include selecting and monitoring the qualified health plans (QHP) that offer policies on the exchange. Iowa’s role in consumer assistance is education and outreach, coordinating the in-person consumer assisters, and overseeing the Navigator program. The federal government manages the exchange website and call center, and funds the Navigator program.

Wellmark and Avera joining exchange in 2017

Wellmark Blue Cross and Blue Shield, the largest carrier in Iowa’s individual market, did not participate in the exchange in Iowa in 2014, 2015, or 2016. But the carrier has committed to joining the Iowa exchange when the 2017 open enrollment begins in the fall, with “new and improved” health plans, which should give a tremendous boost to exchange enrollment in the state. Wellmark’s exchange plans will not be sold statewide however. They will be available in 47 of the state’s 99 counties, with the carrier’s Mercy Health Network HMO being the available exchange option in the majority of those counties.

Iowa is one of the states that is allowing grandmothered (transitional) health plans to remain in force per the Obama Administration’s most recent transitional relief, which permits states to allow grandmothered plans to continue to renew until October 1, 2017, and remain in force as late as December 31, 2017. Iowa had initially opted to make October 1, 2016 the latest date these plans could remain in force, but ultimately went along with the guidance that CMS issued in February 2016.

A significant number of Wellmark’s pre-2014 enrollees have opted to keep their non-ACA-compliant plans, but Wellmark’s expansion onto the exchange means that enrollees who qualify for premium subsidies and cost-sharing subsidies will be able to get them in 2017 and also keep the name-brand carrier they already know (Wellmark has been selling ACA-compliant health plans outside the exchange for the last two years, but subsidies are only available on plans obtained through the exchange).

Wellmark had 137,000 individual market members in Iowa in 2015, but the majority of them have non-ACA-compliant health plans. Healthcare.gov’s rate review tool indicates that about 33,000 Wellmark insureds (3,046 plus 29,975) had ACA-compliant plans in 2015, although the Iowa Insurance Division’s August notice regarding Wellmark’s rate increase stated that there were roughly 23,000 members on ACA-compliant plans.

According to Avera’s heavily redacted rate filing memo, the carrier does not currently offer on-exchange plans in Iowa, but will do so in 2017.

But UnitedHealthcare is exiting

In November 2015, UnitedHealthcare announced that they were experiencing significant financial losses in the exchanges, and that they weren’t certain whether they would continue to sell plans in the exchanges after the end of 2016. In April 2016, they confirmed that they would exit most of the 34 exchanges where they offer plans in 2016.

Iowa is one of the states where UnitedHealthcare will exit the exchange at the end of 2016. According to The Gazette, there are about 9,000 people who will need to secure new coverage during the open enrollment period that begins on November 1. That includes 8,700 Iowa residents who have coverage through UnitedHealthcare of the Midlands Inc. and 328 people who have coverage through UnitedHealthcare Life Insurance Co.

United currently offers plans in 76 of Iowa’s 99 counties, and in 71 of those counties, United offers at least one of the two lowest-cost silver plans in the exchange. In 66 counties, the benchmark plan for a 40 year-old would have been between $25 and $100/month more expensive in 2016 if United hadn’t participated. However, the impact of United’s exit is likely to be buffered by the fact that Wellmark is joining the exchange in 2017.

United will exit the SHOP exchange in Iowa, but will continue to offer small group plans outside the exchange. The company will not offer plans in the Iowa individual market at all in 2017, including outside the exchange.

2017 rates and carriers

Five carriers have filed on-exchange rates and plans to be available in Iowa in 2017. According to the Iowa Insurance Division and Healthcare.gov’s rate review tool, the following average rate increases have been proposed:

  • Aetna (formerly Coventry): 22.6 percent for POS, and 37.4 percent for HMO
  • Avera (new to the exchange): 5 percent
  • Gunderson (merging with Unity Health Insurance): 19.8 percent
  • Medica: 19 percent
  • Wellmark (new to the exchange): 35 to 45 percent, depending on plan; average is 37.8 percent

The Iowa Division of Insurance held public hearings about the proposed rates in late July, and consumers expressed their frustration with the size of the proposed rate hikes. But Insurance Commissioner Nick Gerhart noted that there is little the state can do to reign in rate increases if they’re justified by medical spending.

For people enrolled in plans through the exchange and willing to shop around during open enrollment, premium subsidies will mitigate much of the rate increase for the 87 percent of Iowa exchange enrollees who receive subsidies. Premium subsidies will be available in 2017 for the first time for Wellmark enrollees, as long as they switch to a Wellmark plan offered through the exchange.

2016 enrollment

55,089 people in Iowa enrolled in private plans through the exchange during the 2016 open enrollment period, including renewals and new enrollees. For perspective, dring the 2015 open enrollment period, 45,162 people enrolled in private plans through the exchange in Iowa.

By the end of March 2016, effectuated enrollment in the Iowa exchange stood at 48,949. That’s 25 percent higher than the 39,090 effectuated enrollment total at the end of March 2015.

Average premiums

Kaiser Family Foundation data indicates that there were still 188,000 uninsured residents in Iowa in 2015, and 47 percent of them were eligible for the state’s expanded Medicaid coverage. Another 16 percent were eligible for subsidies to help purchase private health insurance coverage, as long as they buy a plan through the Iowa exchange.

Of the people who enrolled in plans through the Iowa exchange for 2016, 85 percent were eligible for premium subsidies. Their pre-subsidy premium averaged $425/month (a little higher than the $396/month average across all Healthcare.gov states), but their average after-subsidy premium was just $122/month (also a little higher than the $106/month average across all Healthcare.gov states).

For comparison, 85 percent of enrollees also qualified for subsidies in 2015 in the Iowa exchange, but their average pre-subsidy premiums were $371/month, and their average after-subsidy premiums were $111/month.

By March 2016, 87 percent of Iowa exchange enrollees were receiving subsidies that averaged $307 per month.

Consumers have choices for 2016

The Iowa Insurance Division announced in May 2015 that five carriers had submitted proposals to sell individual coverage in the exchange for 2016 – up from one that offered plans in 2015. Ultimately, four carriers offered exchange plans in Iowa in 2016.

Early in the 2015 open enrollment period, Coventry and CoOpportunity Health both offered plans in the Iowa exchange. But CoOportunity stopped offering policies in late December 2014. CoOportunity was a CO-OP health insurer formed with funding through the Affordable Care Act. CoOpportunity got into financial difficulty after higher than expected enrollment and claim costs in 2014, and was subsequently liquidated, leaving Coventry as the only marketplace insurer available in Iowa.

But for 2016, Coventry and Medica are offering plans state-wide, while two other carriers are offering plans in select areas. United Healthcare of the Midlands, and Gunderson are offering plans in various areas of the state (although that chart indicates that Avera is also offering plans in the Iowa exchange in 2016, Avera’s 2017 rate filing memo notes that they do not participate in the exchange in 2016, and Avera’s website also confirms that Avera plans are not available in the Iowa exchange in 2016).

Two additional carriers are offering small group plans through the exchange.

For the three carriers that offered individual health insurance in 2015 (two of which were off-exchange only), the approved average rate changes for 2016 were:

  • Wellmark = 17.6 to 28.7 percent increases, across ACA-compliant, transitional, and grandfathered plans. (137,000 members, OFF-EXCHANGE ONLY; rate hike for ACA-compliant off-exchange plans is 24.5 percent)
  • Coventry = 19.8 percent increase (47,000 members)
  • Gunderson = 9.4 percent (60 members, all off-exchange in 2015, but on-exchange plans are available in 2016)

At ACAsignups, Charles Gaba put the weighted average rate increase market-wide at a little over 22 percent. But for people who already had a plan through the exchange, it was 19.8 percent, since those plans were all from Coventry.

However, the average benchmark premium increased by 12.8 percent in Iowa, which was less than the overall average rate increase for on-exchange plans (in Cedar Rapids, the average benchmark premium is 15.4 percent more expensive in 2016). The benchmark plan is just the second-lowest-cost Silver plan in each area – it’s not necessarily the same plan from one year to the next, or even from the same carrier. Iowa is a good example of a new carrier taking over the benchmark position in at least some areas of the state.

With the addition of new carriers and plans in the Iowa exchange, it was extremely important for 2015 enrollees to shop around during open enrollment for 2016 plans. Subsidies are higher in 2016 than they were in 2015, but the increase in subsidies isn’t enough to fully offset the average rate increases on Coventry plans for 2015 enrollees who let their coverage auto-renew.

2015 enrollment

More than 45,000 Iowans singed up for qualified health plans during the second open enrollment period. While an improvement over 2014, the 2015 total was just 20 percent of the estimated 225,000 Iowans who were eligible to sign up on HealthCare.gov. Nationally, about 40 percent of those eligible actually enrolled during the 2015 open enrollment period.

And as expected, not everyone who enrolled ended up keeping their coverage.  Some people never paid their initial premium, and others cancelled their coverage early in the year for one reason or another.  By the end of June+, there were 39,347 people with in-force coverage through the Iowa exchange.

Medicaid expansion

Iowa expanded Medicaid under the ACA, but with a waiver that called for using Medicaid funds to purchase private health plans for eligible residents. But in June 2015, the state announced that they were abandoning their alternative “private option” for Medicaid expansion, and switching Medicaid enrollees to regular Medicaid managed care plans instead. The switch to managed care was initially scheduled for January 2016, but was pushed back to March 2016.

Iowa’s uninsured rate decreased 1.4 points, from 9.7 percent in 2013 to 8.3 percent in 2014 according to the Gallup-Healthways Well-being Index. By the first half of 2015, the same survey put the uninsured rate in Iowa at just 5 percent. Iowa’s Medicaid/CHIP enrollment grew by 24 percent – about 116,000 people – from 2013 to November 2015, which is no doubt a significant factor in the reduction in the uninsured rate.

2015 premiums up 11 percent on average

A study by The Commonwealth Fund found that 2015 marketplace premiums in Iowa increased by 11 percent on average compared to 2014. The Commonwealth Fund’s study was weighted for differences in premiums between urban/suburban/ rural areas and insurer participation.

2014 enrollment metrics

In total, 29,163 people enrolled in qualified health plans (QHPs) during the 2014 open enrollment, and an additional 36,891 people qualified for Medicaid or the Children’s Health Insurance Program (CHIP).

Just 11.1 percent of Iowa residents eligible to enroll through the marketplace did so in 2014. Iowa tied with neighboring South Dakota for the lowest percentage of eligible enrollees signing up. A Kaiser Health News article attributed the low enrollment in both states to Wellmark Blue Cross & Blue Shield’s decision against participating in the states’ marketplaces rather than a boycott of the Affordable Care Act. In addition, the fact that transitional (pre-2014) plans were allowed to renew meant that overall enrollment in ACA-compliant plans was lower than expected.

A U.S. Department of Health and Human Services report showed the 2014 average, post-subsidy premium for Iowa consumers was $108 per month. The national average in states using HealthCare.gov $82 per month after subsidies. In 2015, the average after-subsidy premium in Iowa increased to $117 per month, and the national average increased to $105 per month (in the 37 states that used Healthcare.gov in 2015). It’s worth noting, however, that variations in after-subsidy premium are a function of income and plan selections – in an area where people have higher average household incomes, average after-subsidy premiums will be higher. That will also be the case in an area where people gravitate to more comprehensive plans. The ACA’s subsidies ensure that for people with equal income, the second-lowest-cost silver plan will be the same price in every area of the country (the exception is areas where the second-lowest-cost silver plan is actually priced so low that subsidies aren’t necessary in order to ensure that the plan isn’t more than the percentage of income cap imposed by the ACA).

Twenty-six percent of Iowa residents selected a bronze plan (20 percent nationally), 57 percent selected a silver plan (65 percent nationally), 12 percent selected a gold plan (9 percent nationally), 4 percent selected a platinum plan (5 percent nationally) and 2 percent selected a catastrophic plan (2 percent nationally). Twenty-six percent of Iowa enrollees were between the ages of 18 and 34.

Iowa’s approach to the marketplace

Iowa operates a partnership exchange with the federal government. The state has occasionally mentioned as a state that may transition to a different model for its exchange. In February 2014, Gov. Branstad floated the idea of a regional exchange in conjunction with South Dakota, Nebraska and Kansas. Bills to convert to a state-run exchange were introduced in Senate committees in both 2013 and 2014, but neither advanced. And as time goes by, it becomes less likely that the state will branch out into its own exchange, or create a regional exchange, due to the start-up costs.

Iowa health insurance exchange links

HealthCare.gov
800-318-2596

Iowa Insurance Division: State Partnership Exchange Plan Management

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

Consumer Advocate Bureau
Provides consumers with assistance in navigating the health care system, assistance programs, and other issues related to health insurance benefits.
1-877-955-1212 / consumer.advocate@iid.iowa.gov

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