Another shakeup of the carrier landscape
UnitedHealthcare will exit the individual health insurance market in Kansas at the end of 2016, both on and off-exchange. For 2016 coverage, UnitedHealthcare has competition from three other carriers in the Kansas exchange, but they all operate under the Blue Cross Blue Shield umbrella: Blue Cross Blue Shield of Kansas, Blue Cross Blue Shield of Kansas Solutions (offered in 103 of the 105 counties in Kansas), and Blue Cross Blue Shield of Kansas (only available in Johnson and Wyandotte Counties – ie, the Kansas City area).
With United’s exit, Kansas would have been left with only Blue Cross Blue Shield options in the exchange in 2017. But the Kansas Insurance Department announced in mid-May that two additional carriers – Medica Insurance Company and Coventry – have filed proposals to sell plans on and off the exchange in Kansas for 2017.
There has been considerable shifting in the exchange landscape in Kansas over the last few years. Coventry previously participated in the exchange in Kansas, but exited the exchange at the end of 2015. They continued to offer off-exchange plans in Kansas in 2016. In their return to the exchange for 2017, they have proposed only EPO plans (exclusive provider organizations, which are somewhat similar to HMOs – and in the case of Kansas, very similar to HMOs; more details below). EPOs and HMOs help carriers keep costs lower than they would be with PPO plans.
UnitedHealthcare did not participate in 2014 and 2015, but joined the exchange for 2016, and is exiting the entire individual market in the state at the end of 2016.
Kansas will allow network-only plans
Kansas passed legislation (HB2454 – signed into law in April 2016) that allows health insurance carriers to offer EPO plans, and to allow those plans to include a “gatekeeper” requirement similar to HMOs.
EPOs don’t cover any out-of-network care except for emergencies, and they typically don’t require a referral from a primary care doctor (ie, gatekeeper) to see a specialist, as long as the specialist is in the plan’s network. In Kansas, carriers can offer HMOs, but they have to pay an HMO privilege fee, which lawmakers increased in 2015.
Now that HB2454 has been signed into law, carriers can offer EPOs with narrow networks and gatekeeper requirements. The plans could be functionally very similar to HMOs, but wouldn’t be subject to the HMO privilege fee. The bill had support from Aetna, UnitedHealthcare, and Blue Cross Blue Shield of Kansas City, and passed unanimously in both the House and Senate.
Narrower networks are one of the ways that carriers can curtail costs and create plans with lower premiums. They also tend to be popular among healthy applicants – who are more concerned with premiums than with the scope of the plan’s network.
During the 2016 open enrollment period, 101,555 people enrolled in private health plans through the Kansas exchange, including new enrollees and renewals. For comparison, there were 84,872 who had in-force coverage through the Kansas exchange as of mid-2015.
The 2016 enrollment total is about 5 percent higher than the enrollment total at the end of the 2015 open enrollment period (96,197), but it’s a more significant number because HHS began accounting for attrition in real-time this year, during open enrollment. In past years, HHS tallied cumulative enrollment throughout the open enrollment period, and only began reporting unpaid and cancelled enrollments after open enrollment had ended.
That method led to a relatively sharp drop in effectuated enrollment by the end of the first quarter of 2015, when compared with the numbers at the end of open enrollment. For 2016, there will still be attrition – it’s a normal part of the individual health insurance market – but it’s not likely to be as sharp, since some of the attrition has already been accounted for in the enrollment report as of February 1.
Open enrollment for 2016 – both on and off-exchange – ended at the end of January, although applicants who experience a qualifying event can still enroll in a health plan for 2016. Native Americans or Alaska Natives can sign up for private coverage throughout the year, and enrollment for Medicaid and the Children’s Health Insurance Program (CHIP) is also open all year long.
The penalty for being uninsured is significantly higher in 2016 than it was in 2014 and 2015, so uninsured residents who experience a qualifying event should make sure they enroll in a plan during their special enrollment period. The next general open enrollment period will begin in the fall, for coverage effective January 2017.
2016 rate changes
Across the full individual and small group market in Kansas (including both on and off-exchange plans), proposed rate changes varied from a decrease of 0.4 percent, to an increase of nearly 38 percent. The Kansas Insurance Department warned that rate increases should be expected for 2016, but the rates that were approved were a little lower on average than the rates that carriers proposed. The average final rate changes across all five existing carriers range from a 9.4 percent increase to a 25.4 percent increase.
But those approved rate changes were finalized long before Coventry announced their exit from the exchange. The rate hikes for Coventry no longer apply, but more than half of the exchange enrollees in Kansas had to select a new plan for 2016.
The majority of exchange enrollees in Kansas receive premium subsidies, which offset a significant portion of the rate increases in 2016. This is contingent on consumers being willing to shop around during open enrollment however, as subsidies can change from one year to another if the price of the second-lowest-cost silver plan changes.
Statewide, the average price for the second-lowest-cost silver plan increased by 16.1 percent in 2016. That’s more than double the national average, and it means average subsidies have increased significantly in Kansas for 2016 – but not by enough to offset some of the higher rate hikes on Kansas plans, highlighting the importance of shopping around during open enrollment.
Subsidies safe for 66,000
The much-anticipated Supreme Court ruling on King v. Burwell was announced in June 2015, with the Court upholding the legality of premium subsidies for millions of Americans in states – like Kansas – where the federal government is running the exchange (Healthcare.gov). As of late June, there were 67,733 people receiving premium subsidies in Kansas; their coverage would have become unaffordable without subsidies.
Even those who pay full price for their health insurance would have seen dramatic rate increases if subsidies had been eliminated. The American Academy of Actuaries estimated that rates in the entire individual market in Healthcare.gov states would have increased by about 35 percent if the King plaintiffs had prevailed. And the Urban Institute put the figure even higher, predicting 55 percent rate increases market-wide if subsidies had been eliminated. And those are just the rate hikes that would have resulted from the elimination of subsidies… they would have been in addition to the normal annual rate increases based on medical cost growth.
Health and Human Services (HHS) reported 96,197 Kansans selected private health insurance through HealthCare.gov during 2015 open enrollment. According to estimates by Kaiser, about 39 percent of Kansans who were eligible to enroll via the marketplace in 2015 actually selected a health plan. The final 2015 open enrollment report shows that 52 percent of Kansas enrollees were new consumers. Twenty-six percent of Kansas enrollees were between the ages of 18 and 34; in all HealthCare.gov states, 28 percent of enrollees fell into the 18-to-34 bracket.
But by the end of March, the total number of people with in-force coverage through the Kansas exchange had dropped to 85,490, and it fell slightly lower by the end of June, to 84,872. Attrition is a normal part the individual health insurance market, as not all enrollees pay their initial premiums, and some insureds cancel their coverage for one reason or another (sometimes simply because they receive an offer of coverage from an employer instead).
Of the Kansas residents whose exchange coverage was in-force on March 31, just under 80 percent qualified for premium subsidies compared to 83.7 percent nationwide.
How much did insurance cost in 2015?
2015 premiums on the Kansas marketplace were up just 4 percent from 2014 rates, according to a comprehensive study completed by The Commonwealth Fund. Nationally, rates were flat. However, the zero percent average increase masked 10+ percent increases in 10 states and 10+ percent decreases in 14 states.
Below average enrollment in 2014
During the first open enrollment period, 57,013 Kansans enrolled in qualified health plans and nearly 14,000 people qualified for either Medicaid or the Children’s Health Insurance Program (CHIP) under existing eligibility criteria according to the Kaiser Family Foundation. In all, about one in five of those Kansans eligible signed up for private insurance — lower than the national average of 28 percent.
Among Kansas residents selecting a QHP, 85 percent qualified for financial assistance. Nineteen percent of Kansans selected a bronze plan (20 percent nationally), 60 percent selected a silver plan (65 percent nationally), 16 percent selected a gold plan (9 percent nationally), 2 percent selected a platinum plan (5 percent nationally) and 4 percent selected a catastrophic plan (2 percent nationally). Thirty-one percent of Kansas enrollees were between the ages of 18 and 34.
Kansas is the only state with a reported increase in the percentage of uninsured individuals between 2013 and 2014. The uninsured rate in Kansas rose from 12.5 percent to 14.4 percent according to a Gallup-Healthways poll. But both the full-year results and a mid-2014 poll that showed an even larger increase have been questioned by both Gallup and Kansas insurance experts. And by the first half of 2015, the Gallup data showed that the uninsured rate had ticked downward to 11.3 percent.
No Medicaid expansion
Kansas has not expanded its Medicaid program, which is called KanCare, despite a December 2013 poll that found 72 percent of registered Kansans voters favored expansion. While other Republican governors proceeded with Medicaid expansion, Gov. Sam Brownback remained opposed — as did the state’s Republican-controlled Legislature, which didn’t act on Medicaid expansion in 2014.
An Urban Institute report shows Kansas missing out on $5.3 billion in federal funding and hospitals losing $2.6 billion in Medicaid reimbursement.
The Kansas Hospital Association continues to advocate for expansion, touting a “Kansas solution” that includes cost-sharing provisions, high deductible plans, health savings accounts (HSAs) and other provisions that have been proposed or implemented in other conservative states.
Hospital officials have testified during state legislative committee meetings to explain the financial toll of the state’s decision against Medicaid expansion. Rural hospitals in particular are struggling because the Affordable Care Act is partly funded through a reduction in hospital payments from Medicare. In October 2015, Mercy Hospital in Independence, Kansas shut down, becoming the first Kansas hospital to close in nine years; the hospital’s demise has been linked to the state’s rejection of Medicaid expansion.
In states that expanded Medicaid, the Medicare reduction is offset by the increased number of people who are insured (either through private coverage sold on the marketplace or Medicaid). In states that don’t expand Medicaid, the uninsured rate remains higher and hospitals continue to struggle with higher levels of uncompensated (charity) care.
A Medicaid expansion bill, HB 2319, was introduced in the 2015 session and got a hearing before the House Health and Human Services Committee. The acting secretary for the Kansas Department of Health and Environment testified that expansion would cost the state $2.4 billion between 2016 and 2025, and the committee didn’t act on the bill.
Brownback seemingly reversed course on Medicaid expansion in 2015. During a speech to Missouri legislators, Brownback said he would most likely sign off on Medicaid expansion if it were budget neutral. Yet despite renewed calls to expand Medicaid with the news of Mercy Hospital’s closure, Brownback’s position was that the state can’t afford to expand Medicaid.
How Kansas approached marketplace implementation
Kansas opted to use HealthCare.gov rather than implement a state-run marketplace. The decision against a Kansas-run exchange came despite the efforts of Insurance Commissioner Sandy Praeger and some initial support from Brownback. Brownback, while critical of the Affordable Care Act, initially supported Praeger’s exchange planning efforts.
However, Brownback grew less and less supportive over time. In August 2011, Brownback returned a federal grant intended to help the state develop technical infrastructure for running the exchange. The return of the grant effectively quashed a state-run exchange, so Praeger began recommending state-federal partnership as a way for the state to retain some control.
In November 2012, Brownback announced that the state would default to a federally operated exchange, issuing a statement that said in part, “My administration will not partner with the federal government to create a state-federal partnership insurance exchange because we will not benefit from it and implementing it could costs Kansas taxpayers millions of dollars.”
During the 2014 legislative session, Kansas lawmakers debated a bill (SB 362) that would have subjected anyone who wanted to serve as a navigator to requirements above and beyond those at the federal level. Kansas navigators would have been subjected to criminal background checks, been fingerprinted, required to disclose their credit histories, and charged an annual $100 registration fee. The bill would have also prohibited navigators from recommending a specific insurance policy for a consumer. The bill passed the Senate, but failed to clear a House committee.
Kansas health insurance exchange links
State Exchange Profile: Kansas
The Henry J. Kaiser Family Foundation overview of Kansas’ progress toward creating a state health insurance exchange.
Kansas Insurance Department, Consumer Assistance Division
Assists consumers who have purchased insurance on the individual market or who have insurance through an employer who only does business in Kansas.
(800) 432-2484 / Local: (785) 296-7829