Highlights and updates
- 1332 waiver proposal would radically change Iowa’s insurance market
- Wellmark, Aetna, and Gunderson leaving the exchange at year-end
- Medica will be the only insurer in the exchange in 2018
- Medica’s proposed average rate hike has been revised to 56.7 percent
- Wellmark only on-exchange for one year; 1 enrollee with very high claims
Iowa exchange overview
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.
But federal Navigator funding is being cut significantly for the upcoming open enrollment period, as is funding for outreach and advertising for HealthCare.gov. Open enrollment will begin November 1, 2017, and will end on December 15, 2017. This is half as long as previous open enrollment periods.
2018: Only Medica remaining in the exchange; 56.7% average rate hike will be offset by subsidies for most exchange enrollees
In the spring of 2017, Iowa was one of just a few states facing the most uncertain market conditions for 2018. Insurers in Iowa had to file rates and plans by June 19, 2017 if they wished to offer plans in the individual market in 2018, and for a while, it wasn’t clear that there would be any filers.
But ultimately, Medica did file plans for statewide coverage in Iowa in 2018, albeit with an average rate increase of 43.5 percent, which they later revised (in August) to 56.7 percent (proposed rate increases vary from 44.4 percent to 61.2 percent, depending on the plan).
Medica’s proposed rates are based on the assumption that cost-sharing reductions (CSRs) will not be funded by the federal government in 2018; higher rates for silver plans to account for the lack of funding have been incorporated in the proposed rates.
According to their rate filing, Medica has about 14,000 enrollees who will be impacted by their proposed rate increase. But the rest of Iowa’s individual market enrollees will have to transition to Medica plans if they want to remain covered in 2018 (this could change if the state’s proposed 1332 waiver — details below — is implemented in time for 2018 coverage).
A 56.7 percent rate increase is eye-popping, but of the approximately 72,000 Iowa residents who have ACA-compliant individual health insurance (including on and off-exchange), more than 44,000 were receiving premium subsidies (premium tax credits) as of early 2017. Premium subsidies are only available in the exchange, and the majority of the people who aren’t receiving premium subsidies have purchased coverage outside the exchange.
The ACA’s premium subsidies will still be in effect in 2018, regardless of whether Congress passes an ACA repeal bill in 2017 (a propsect that is looking less and less likely as the Graham-Cassidy bill struggles in the Senate). The subsidies grow to keep pace with average premiums in each area, and are based on keeping the cost of the second-lowest-cost silver plan at an affordable level. Since Medica will be the only insurer offering plans throughout the state, there won’t be as much variation from the average premium as there would be if multiple insurers were offering coverage. So subsidies in Iowa will grow significantly in 2018, offsetting much of the rate hikes that people would otherwise experience.
HHS estimated in 2016 that there were 41,000 people with individual market coverage in Iowa who would be eligible for premium subsidies if they switched to coverage in the exchange — at that point, those individuals had coverage outside the exchange. Some of them have ACA-compliant coverage purchased off-exchange, while others had grandmothered and grandfathered plans that were purchased prior to 2014 (for perspective, Wellmark has about 70,000 people on grandmothered and grandfathered indivual market plans in Iowa, and they will be able to keep those plans in 2018 if they choose to do so).
Wellmark, Aetna, and Gunderson exiting the individual market
Iowa has four insurers offering coverage in the exchange in 2017: Wellmark, Aetna, Medica, and Gunderson. The Iowa Division of Insurance confirmed that there are no additional insurers offering new individual market plans only outside the exchange.
On April 3, 2017, Wellmark announced that they would exit the ACA-compliant individual market (both on and off-exchange) at the end of 2017. Roughly 21,400 people who currently have Wellmark coverage will need to sign up with Medica for 2018.
On April 6, just days after Wellmark’s announcement, Aetna also said that they would stop offering individual market plans in Iowa at the end of 2017. Aetna had 42,000 enrollees in individual market plans as of 2016. People who currently have Aetna coverage will need to switch to a plan offered by Medica instead.
Medica, which is the only insurer that offers coverage statewide in 2017, had previously said that they would not be able to remain in the exchange “without swift action by the state or Congress to provide stability to Iowa’s individual market.”
The most direct action the Trump Administration or Congress could take would be to commit to funding cost-sharing subsidies through at least the end of 2018, which the Administration had not done as of mid-September; funding for cost-sharing subsidies would have been appropriated by the bipartisan market stabilization bill that Senators Lamar Alexander (R, TN) and Patty Murray (D, WA) were proposing, but that effort was scuttled by Republican leadership in the Senate in September, in favor of the Graham-Cassidy measure to repeal the ACA, which does not include funding for CSRs).
Medica filed rates for plans in neighboring Nebraska for 2018, and CNBC reported on June 16 that Medica was planning to file rates for Iowa. But there was still some uncertainty around their impending filing, with Medica’s CEO noting that “our intent is to be in Iowa. … We want to help the individuals, the farmers, the small business owners in Iowa. But until we have clarity on rules, we will not make a final call until we have that.” The suspense ended on June 19, when Medica filed rates for statewide coverage in Iowa in 2018 — although insurers can still retract their filings during the summer, as contracts with HealthCare.gov don’t have to be finalized until September 27.
Gunderson only offers plans in five counties (Allamakee, Clayton, Fayette, Howard, and Winneshiek) in the northeastern part of the state. They did not file plans for 2018 coverage, and Des Moines Register health care reporter, Tony Leys, confirmed on July 6 that Gunderson was officially notifying residents in those five counties that their plans would no longer be available after the end of 2017. Thus, Medica will be the only insurer offering coverage in the state’s individual market in 2018.
Iowa’s ambitious 1332 “Stopgap Measure” waiver awaits federal approval; would radically change the individual market in the state
Medica filed plans for 2018 coverage in Iowa, but there was a period of time in mid-2017 when there was considerable uncertainty in terms of whether Iowa would have any insurers offering coverage in the exchange for 2018. There is currently no federal backup system in place if an area were to end up with no participating exchange insurers (or no individual market insurers at all). All areas of the country ultimately ended up with insurers slated to offer coverage for 2018, but there were initially quite a few “bare” spots.
On June 12, Iowa submitted a 1332 waiver proposal to CMS, asking for expedited approval and leniency in terms of the rules that normally apply to the 1332 waiver process. The Iowa Insurance Division established a page where people could submit and read public comments about the proposal, and the state moved forward with their proposal, dubbed “the Iowa Stopgap Measure,” despite the fact that Medica filed plans for 2018.
The state wants a one-year waiver from ACA rules (with the option to renew if necessary) in order to implement their Proposed Stopgap Measure (PSM). CMS declared their waiver proposal to be complete on September 19, opening up a comment period that will run through October 19.
At that point, there will be very little time for CMS to approve the measure and for Iowa to implement it in time for 2018 coverage. But Iowa had asked that their waiver proposal become effective immediately upon approval (which would be sometime after October 19), and Iowa Insurance Commissioner Doug Ommen noted on September 20 that “We [Iowa regulators] look forward to moving through that [federal public comment period] process and getting that approval. We’re not going to wait [to begin setting up the program] until we get the final approval from the United States because this is really important for Iowa. I’ve compared those rates that were submitted under the ACA and I’ve looked at what it is that is available to Iowans under the stopgap — and frankly, the right answer for Iowa in 2018 will be the stopgap measure.”
However, it’s worth noting that the 56.7 percent average rate increase that Medica has proposed (without the 1332 waiver) is based on the assumption that the federal government won’t continue to fund CSRs. If Congress had allocated the money, or if the Trump Administration had committed to ongoing funding, the rate hikes would be smaller. The state could have also improved the risk pool by cutting off grandmothered plans, but they’ve opted instead to allow those plans to continue until the end of 2018.
Ommen’s comments indicate that his office is working with Medica (and possibly Wellmark) to create the infrastructure for the Stopgap Measure ahead of time, so that it could be implemented immediately if and when CMS approves the state’s 1332 waiver. Ommen noted on September 20 that over the past week, he’s had “some really good communication with the federal government and the Trump Administration. So, we are very, very optimistic we will receive approval” for the 1332 waiver.
In early October, however, there were widespread reports that President Trump had instructed CMS to reject Iowa’s waiver proposal, and there were ensuing questions as to his motivations. Some noted that his overarching focus when it comes to Obamacare is trying to make it fail, which could conceivably include rejecting a waiver — allowed under Obamacare — that lets a state make major changes to Obamacare. But others have pointed out how odd it is for a Republican President to call for the rejection of a waiver proposal that would make a state’s insurance regulations much more conservative. Iowa’s waiver proposal includes market reforms that are similar to some that were proposed earlier this year by Republican lawmakers intent on repealing the ACA.
As of October 10, Iowa’s waiver proposal is still under review, and it was unclear whethere Trump’s opinion on the issue would have any impact on the outcome.
In a nutshell, here’s what Iowa is proposing:
- Iowa would develop a “PSM Plan” which would be a single standardized plan that all participating insurers would offer (Wellmark has said that they would offer the PSM Plan statewide if it’s approved, and Medica was also involved in the state’s discussions leading up to the 1332 waiver proposal, so presumably they would also offer the PSM Plan; Tony Leys of the Des Moines Register reports that Aetna has said they are definitely leaving Iowa’s individual market, regardless of whether the PSM Plan is implemented).
- The PSM Plan would be equivalent to an ACA silver-level plan, with an actuarial value range of 68-72 percent. It would include coverage for the ACA’s essential health benefits and all Iowa-mandated benefits, but it would have a deductible of $7,350 for a single person and $14,700 for a family (cost-sharing reductions would reduce this for low-income enrollees).
- Under the initial waiver proposal, there would have been no cost-sharing reductions for lower-income enrollees, which means out-of-pocket costs would have been considerably higher for that population. 52 percent of Iowa exchange enrollees in 2017 are receiving cost-sharing reductions. However, Iowa filed a supplement to the 1332 waiver proposal in August, adding cost-sharing reductions for people with income between 133 and 150 percent of the federal poverty level. The state later filed another supplement to the waiver proposal in early October, which calls for continued cost-sharing reductions for people with income up to 200 percent of the poverty level. Cost-sharing reductions under the ACA extend to 250 percent of the poverty level (although they’re substantially less generous for people with income above 200 percent of the poverty level), so Iowa’s proposal would cut them off at a lower level. However, Iowa’s cost-sharing reductions would be actuarially equivalent the ACA’s for people with income between 133 percent and 150 percent of the poverty level (people with income under 133 percent of the poverty level would continue to be eligible for Medicaid), with plans having 94 percent actuarial value and a $600 individual maximum out-of-pocket. For those with income between 150 and 200 percent of the poverty level, the ACA provides plans with actuarial value of 87 percent, while Iowa would provide plans with an actuarial value of 83 percent (out-of-pocket exposure for a single person would be capped at $2,450).
- People with income above 200 percent of the poverty level would be ineligible for cost-sharing subsidies. Those enrollees are eligible for only minimal cost-sharing subsidies under the ACA (silver plans with an actuarial value of 73 percent, instead of the regular 70 percent that applies to silver plans), but they would lose even that little bit of cost-sharing assistance under Iowa’s proposal. A single person with income a little over $24,000 would be faced with a deductible of $7,350, with no alternative plans available (under the ACA, that person can use his or her premium subsidy to purchase a plan at a higher metal level, with more robust coverage).
- To fund premium subsidies for the PSM Plan and a reinsurance program to protect insurers from very high-cost claims, Iowa would use money that the federal government would have spent on premium subsidies and cost-sharing reductions (assuming there would have been insurers offering plans in the market, which is a big assumption, given the nature of the emergency 1332 waiver being proposed). They anticipate using $220 million for premium subsidies, and $80 million for a reinsurance program. A few other states have also proposed reinsurance programs (Oregon’s is awaiting CMS approval, Oklahoma withdrew theirs amid delays in the approval process; Minnesota’s and Alaska’s have already been approved), but Iowa is the only one that’s seeking full federal funding for it, rather than a combination of state and federal funding.
- Iowa’s proposed reinsurance program would cover 85 percent of the cost of claims between $100,000 and $3 million, and 100 percent of claims above $3 million.
- Premium subsidies for the PSM Plan would be based on age and 2017 income (it’s unclear if there would be any mechanism for adjustments if a household’s 2018 income ends up being dramatically different from their 2017 income). They would be in the form of flat monthly credits that would be paid directly to the insurance company, varying from $24/month for a child with household income over 400 percent of the poverty level, to $828/month for a person age 55 or older with household income between 133 percent and 150 percent of the poverty level (below 133 percent of the poverty level, Medicaid is available). It’s noteworthy that people with income too high for ACA premium subsidies would receive premium subsidies under the Iowa plan, which would be significant for the 28,000 current enrollees who don’t receive any financial assistance with their premiums.
- Coverage would be guaranteed-issue (ie, medical history would not be a factor) and would not have lifetime or annual benefit limits. As with ACA-compliant coverage, people would only be able to sign up during open enrollment or a special enrollment period. But in a deviation from ACA rules, people signing up during special enrollment periods (except for birth or adoption of a child) would have to provide proof of continuous coverage over the past 12 months. This is an attempt to keep people from waiting until they’re sick to potentially seek out a qualifying event and “game the system” by enrolling at that point.
- PSP Plan policies would be purchased directly from insurers (or with the help of brokers), rather than via HealthCare.gov. Premium subsidies would be sent directly to insurers to offset the cost of coverage. It’s notable that this would create a very tight timeframe for the state to implement a framework for all of this in just a few months before 2018 open enrollment begins in November (the urgency of the situation is the reason Iowa has requested a 14-day approval process for their waiver proposal).
There have been various counties in a number of states — including Washington, Tennessee, Indiana, Kansas, Missouri, Wisconsin, Ohio, and Virginia — where no insurers had filed plans for 2018 (or the only participating insurer had withdrawn its filed plans), but all of them have been filled over the summer by other insurers or reversed withdrawal decisions. For the time being, as of mid-September, there are no areas of the country facing “bare” spots in 2018. But Iowa’s waiver proposal is seen by some as a “just in case” template.
Due to technology glitches, Massachusetts had to use a workaround in 2014 that involved temporarily putting 325,000 people on MassHealth (Medicaid), but a solution like that would require a waiver from HHS in order to use federal Medicaid funding.
At the federal level, Senator Lamar Alexander (R, Tennessee) introduced S.761 in March, which would allow people to use ACA premium tax credits towards the purchase of off-exchange plans in areas where no exchange insurers offer coverage. The bill has not advanced out of committee yet. Even if it were to be enacted, it would not be of use to people in an area — like most of Iowa if Medica doesn’t offer ACA-compliant plans — facing the possibility of no individual market insurers offering coverage on or off the exchange.
Another bill, S.1201, introduced in May by Senator Claire McCaskill (D, Missouri), would allow people in areas without an exchange option to purchase the same coverage that members of Congress and their staffers buy, from DC’s small business exchange. McCaskill’s bill has also not advanced out of committee.
Wellmark joined exhange for 2017, but exiting Iowa’s ACA-compliant individual market at the end of 2017
Wellmark joined the exchange in Iowa for 2017, after offering only off-exchange plans for the first three years of ACA implementation. But on April 3, 2017, the insurer announced that they would exit the ACA-compliant individual market (both on and off-exchange) at the end of 2017. Wellmark said that the planned exit will mean that roughly 21,400 people will need to secure new coverage for 2018.
The insurer noted that they have lost $90 million in the ACA-compliant individual market over the last three years. They explained that younger, healthy people have been slow to enroll, leaving an older, sicker pool of insureds — a situation that is not sustainable over the long term. Wellmark in Iowa also has a uniquely expensive enrollee, whose claims total $1 million per month (a teenager with severe hemophilia) and who accounted for a quarter of their total rate increase (across all members’ plans) in 2017.
Wellmark reported that 1.64 million members in the state will not be impacted by the exit. This includes people who have grandfathered and grandmothered individual market Wellmark plans (ie, people whose plans took effect prior to 2014). People with employer-sponsored plans (including ACA-compliant small business plans) and Medicare supplement plans will also not be impacted.
Wellmark’s exchange plans are narrow-network HMOs, and are not available statewide in 2017. They are available in 40 of the state’s 99 counties, with the carrier’s Mercy Health Network HMO (Wellmark Value Health Plan) the available exchange option in 36 of those counties.
And Wellmark announced in late September 2016 that they would no longer offer Gold plans in the individual market, nor would they “promote” individual market PPOs. But they noted that people with existing off-exchange Bronze and Silver PPOs in Iowa would be able to keep those plans in 2017. The switch away from PPOs and towards HMOs and EPOs has been a nationwide trend over the last few years.
Iowa is one of the states that is allowing grandmothered (transitional) health plans to remain in force per the Obama Administration’s transitional relief, which now permits states to allow grandmothered plans to continue to renew until October 1, 2018, and remain in force as late as December 31, 2018. 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. An additional extension was issued by the Trump Administration HHS in February 2017, allowing grandmothered plans to remain in force throughout 2018. Iowa has agreed to that extension as well.
A significant number of Wellmark’s pre-2014 enrollees have opted to keep their non-ACA-compliant plans. The Des Moines Register reported that roughly 55,000 people still had 2016 Wellmark plans in Iowa that had been in effect since before the ACA was enacted, and that’s in addition to people with grandmothered plans.
Wellmark had 137,000 individual market members in Iowa in 2015, but the majority of them had 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 at that point. Despite expanding onto the exchange for 2017, total enrollment in the insurer’s ACA-compliant plans is slightly lower in 2017 than it was in 2015.
Medica considered a market exit, but indicated they prefer to remain
Medica is the only insurer that offers exchange plans state-wide in Iowa in 2017, and there are 13 counties where they are the only insurer participating in the exchange. For 2018, they are the only insurer that will offer coverage anywhere in the state.
But on May 3, Medica released the following statement: “Without swift action by the state or Congress to provide stability to Iowa’s individual insurance market, Medica will not be able to serve the citizens of Iowa in the manner and breadth that we do today. We are examining the potential of limited offerings, but our ability to stay in the Iowa insurance market in any capacity is in question at this point.”
There is no doubt that the most pressing concern for insurers in terms of market stability is the ongoing funding of cost-sharing subsidies, which Congress and the Trump Administration had not yet clarified as of mid-September. The revised rate filing that Medica submitted in mid-August is based on the assumption that cost-sharing subsidies will not be funded, and the additional cost to over them has been loaded onto the cost of silver plans in the exchange.
In Iowa, however, some of Medica’s concern could also be related to the single very high-cost insured described in Wellmark’s 2017 rate filing. With Wellmark, Aetna, and Gunderson exiting, Medica would become the insurer of last resort, and there isn’t currently an adequate risk-sharing mechanism for addressing claims like that, particularly in a market as small as Iowa’s. The state’s proposed 1332 waiver would address the situation, but it’s on a very tight time frame for 2018 implementation, as it’s being reviewed by CMS as of September 2017.
On June 16, three days before rate filings were due in Iowa, Medica told CNBC that their “intent is to be in Iowa” for 2018. But they also noted that “until we have clarity on rules, we will not make a final call until we have that.”
Democratic lawmakers want to allow people to purchase Medicaid as an alternative to individual market coverage
Two Democratic lawmakers in Iowa have informally proposed a public option that would allow people to purchase Iowa Medicaid, using ACA premium subsidies to offset some of the cost. The proposal has not yet been introduced as legislation, but state Rep. John Forbes and Sen. Matt McCoy held a public meeting to discuss the possibility in June 2017. The 2017 legislative session in Iowa ended on April 22, and the legislature won’t reconvene until January 2018, so this measure couldn’t be introduced before then.
A Medicaid buy-in program would face an uphill challenge in Iowa’s Republican-controlled legislature. But if legislation were to be formally introduced and passed by the legislature, the proposal would also require approval from the Trump Administration.
Although no states currently allow residents who aren’t eligible for Medicaid to buy into the program, it’s an idea that’s gained at least a little traction in 2017. Lawmakers in Wisconsin are planning to introduce a similar measure. And Nevada lawmakers passed a measure during the 2017 legislative session that would have allowed state residents to buy into Nevada’s Medicaid program, but Governor Sandoval vetoed it.
The Iowa exchange and the Trump Administration
Although the future of the Affordable Care Act has been uncertain under the Trump Administration, nothing has changed for now. House Republicans passed the American Health Care Act on May 4, but it has not yet passed the Senate as of September, and the chances of a Senate bill passing looked especially unlikely once John McCain officially opposed the Graham-Cassidy bill on September 22.
The Iowa Division of Insurance issued a statement after the House passed the AHCA, noting that the ACA has not worked well in Iowa, and expressing optimism about a new federal solution. It’s worth noting, however, that Iowa’s market would likely be in better shape if the state had stopped allowing grandmothered plans to continue (in Iowa, Wellmark’s decision to stay out of the exchange through 2016 meant that large numbers of the insurer’s healthy enrollees kept their grandmothered plans, leading to a less healthy risk pool for ACA-compliant plans).
The Senate has crafted their own version of ACA repeal (initially the Better Care Reconciliation Act (BCRA), which failed in July, and later, the Graham-Cassidy bill, which appeared doomed as of late September).
But even if the Senate doesn’t pass ACA repeal, the future of the ACA is still uncertain. The Trump Administration has taken some actions aimed at stabilizing the individual markets, but other actions have essentially served to destabilize the market. And the House v. Price (formerly House v. Burwell) lawsuit to determine the legality of the ACA’s cost-sharing subsidies has created a great deal of uncertainty among insurers. The lawsuit has been pended until October, but the Trump Administration has, on more than one occasion, indicated that they might not continue the payments, in an effort to get Democrats to negotiate on health care reform. The Administration’s use of cost-sharing reduction funding as a bargaining chip has made insurers understandably nervous, and insurers across the country (including Medica in Iowa) are adding the cost of cost-sharing subsidies to the premiums they’re planning to charge in 2018, as they’re assuming that federal funding will be eliminated.
This uncertainty, combined with significant losses, led to Wellmark, Aetna, and Gunderson opting to exit the ACA-compliant individual market at the end of 2017.
HHS reported that from 2010 to 2015, the number of Iowa residents with health insurance grew by 132,000 as a result of the ACA — a number that has continued to climb since 2015, largely due to Medicaid expansion. Total net Medicaid enrollment in Iowa grew by 128,556 people from 2013 through December 2016.
51,573 people enrolled in private plans through the Iowa exchange during the 2017 open enrollment period (November 1, 2016 through January 31, 2017). That’s a little more than a 6 percent decline from the 2016 open enrollment period, when 55,089 Iowa residents enrolled.
Across all the states that use HealthCare.gov, enrollment dropped by about 5 percent in 2017. This is due in part to the uncertainty surrounding the future of the ACA, and the Trump Administration’s move to cut back advertising and outreach in the final week of 2017 enrollment.
By February 2017, effectuated enrollment in Iowa’s exchange stood at 46,519. Of those, 87 percent were receiving premium subsidies, and 53 percent were receiving cost-sharing subsidies.
HHS estimated that there were 41,000 people in Iowa with off-exchange coverage in 2016 who would be eligible for subsidies if they switched to the exchange. And Kaiser Family Foundation data indicated that just 20 percent of eligible Iowa residents had enrolled in coverage through the exchange by 2016, the lowest percentage in the country. That may be due in part to the lack of marketing for the exchange in the state, or the fact that Wellmark sat out the first three years of exchange operation (they’re offering exchange plans in 2017; details below).
UnitedHealthcare exited at the end of 2016
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 offered plans in 2016.
Iowa is one of the states where UnitedHealthcare exited the individual market (on and off-exchange) at the end of 2016. According to The Gazette, there were about 9,000 people who needed to secure new coverage during the 2017 open enrollment period. That included 8,700 Iowa residents who had coverage through UnitedHealthcare of the Midlands Inc. and 328 people who had coverage through UnitedHealthcare Life Insurance Co.
In 2016, United offered plans in 76 of Iowa’s 99 counties, and in 71 of those counties, United offered 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 has joined the exchange in 2017.
United exited the SHOP (small business) exchange in Iowa, but is continuing to offer small group plans outside the exchange. The company is not offering plans in the Iowa individual market at all in 2017, including outside the exchange.
2017 rates and carriers
Four carriers are offering on-exchange plans in Iowa for 2017. But Medica is the only carrier offering exchange plans in all 99 counties in Iowa. In 13 of the state’s counties, Medica is the only carrier offering plans in the exchange.
According to the Iowa Insurance Division, the following average rate increases were approved for carriers that are offering exchange plans in 2017:
- Aetna (formerly Coventry): 22.58 percent; Aetna had roughly 42,000 policyholders in Iowa in 2016.
- Gunderson (merging with Unity Health Insurance): 19.8 percent; Gunderson had 88 policyholders in 2016. Their 2017 Iowa plans are available only in four counties in the northeast corner of the state (Allamankee, Clayton, Fayette, and Howard).
- Medica: 19 percent; Medica had 1,367 policyholders in 2016.
- Wellmark (new to the exchange for 2017, but exiting the ACA-compliant individual market at the end of 2017): Average rate increase for 2017 was 42.6 percent for existing Bronze and Silver PPOs, and 37.8 percent for HMOs. There were about 7,800 policyholders with Wellmark’s HMOs in 2016, and about 22,000 policyholders who had plans for which the average 42.6 percent rate increase applied. All of them had off-exchange plans in 2016, but were able to transition to Wellmark’s on-exchange plans in 2017 if they so chose.
Aetna is not offering exchange coverage in 2017 in most of the states where they participated in 2016. But they’re continuing to offer coverage in the exchanges in four states, including Iowa (the others are Delaware, Nebraska, and Virginia). At the end of 2017, they are exiting Iowa’s individual market, although they have not said what they plan to do in the other three states.
Avera did not offer health insurance in the Iowa exchange in 2016 (their plans were all off-exchange), but they had initially filed rates for on-exchange plans to be available in 2017. That’s no longer the case however, and their individual market plans are now only available in South Dakota (they are continuing to offer small group plans in Iowa).
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 was little the state can do to reign in rate increases if they’re justified by medical spending. Iowa regulators do not have the authority to reject rate increases outright, but can negotiate with carriers. Ultimately, the rates were approved as-filed for 2017.
For people enrolled in plans through the exchange and willing to shop around during open enrollment, premium subsidies mitigate much of the rate increase for the majority of Iowa exchange enrollees who receive subsidies (in 2016, 87 percent of Iowa exchange enrollees were receiving subsidies). Premium subsidies are available in 2017 for the first time for Wellmark enrollees, as long as they switched to a Wellmark plan offered through the exchange. And subsidies are significantly larger in 2017 than they were in 2016, since the average benchmark plan (second-lowest-cost silver plan, upon which subsidy calculations are based) is 25 percent more expensive in 2017.
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.
2016 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 initially 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 had more choices in 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 offered plans state-wide, while two other carriers offered plans in select areas. United Healthcare of the Midlands, and Gunderson offered plans in various areas of the state (although that chart indicates that Avera was also offering plans in the Iowa exchange in 2016, Avera’s 2017 rate filing memo (which has since been deleted, since they’re not offering individual market coverage in Iowa in 2017) noted that they did not participate in the exchange in 2016, and Avera’s website also confirmed that Avera plans were not available in the Iowa exchange in 2016).
Two additional carriers offered small group plans through the exchange in 2016.
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.
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.
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 3.1 percentage points, from 8.1 percent in 2013 to 5 percent in 2014 according to U.S. Census Bureau data. Iowa’s Medicaid/CHIP enrollment grew by 25 percent – about 125,500 people – from 2013 to August 2016, 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
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 / firstname.lastname@example.org