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Kentucky health insurance exchange / marketplace

Kentucky residents will use Healthcare.gov in 2017

  • By
  • healthinsurance.org contributor
  • January 11, 2016

How many have enrolled for 2016?

During the first two open enrollment periods – for 2014 and 2015 – Kynect released regular enrollment updates. But for 2016, they’ve released nothing so far. This is attributed in large part to the fact that the state’s newly-elected Governor, Matt Bevin, is opposed to the Affordable Care Act and has vowed to eliminate Kynect and modify the state’s Medicaid expansion – despite the fact that more than 70 percent of Kentucky residents would prefer that Bevin keep Kentucky’s Medicaid expansion without changes.

Kentucky to transition to Healthcare.gov for 2017

On November 3, 2015, Kentucky elected Matt Bevin to be their next governor, with 53 percent of the vote; Bevin took office on December 8. He campaigned on an anti-Obamacare platform, promising to dismantle Kynect and transition Kentucky to Heathcare.gov instead. He also initially said that he’d roll back Medicaid expansion in the state, which would eliminate coverage for 400,000 people and throw 160,000 of them into the coverage gap (making them ineligible for Medicaid and also ineligible for premium subsidies). In the final weeks of his campaign, Bevin softened his stance on Medicaid expansion, saying that he’d pursue a Section 1115 waiver instead of eliminating Medicaid expansion in the state.

But in the days immediately following the election, Bevin reiterated his intent to get rid of Kynect and have Kentucky residents use Healthcare.gov instead. And on December 30, he notified HHS Secretary Sylvia Burwell that the state would transition to Healthcare.gov by the end of 2016 (HHS requires a one-year notice for a state to shut down its exchange).

Bevin can shut down Kynect via executive order, as the exchange was created with an executive order from former Governor Steve Beshear. HHS has said they are committed to a “seamless transition” for Kentucky residents, who can expect to begin using Healthcare.gov for the 2017 open enrollment period that begins in the fall of 2016. For 2016 coverage, people in Kentucky will continue to use Kynect, regardless of the impending switch to Healthcare.gov.

Beshear has been an Obamacare proponent from the get-go, supporting both the establishment of Kynect and Medicaid expansion in Kentucky. But Beshear was term limited, so he was not in the race in 2015. The Democratic nominee, Kentucky Attorney General Jack Conway supported maintaining Kynect and Medicaid expansion.

Advertising campaign terminated

On December 18, Kynect’s succesful advertising campaign was shut down after a contract extension was rejected by the state Finance and Administration Cabinet and the prior contract expired November 30. The advertising campaign was funded with $5 million in federal funding, and any unused portion will be returned to the federal government. State outreach directors expressed dismay that the advertising campaign was shuttered mid-way through the 2016 open enrollment period.

Financial impact of ditching Kynect

Even after Kentucky transitions to Heathcare.gov, Kentucky residents will still have access to the same carriers, plans, and premium subsidies in 2017 that they would have had access to via Kynect – but they’ll be available through Healthcare.gov instead. From that perspective, it won’t make a significant difference whether Kentucky continues to operate its own exchange or not. But it’s estimated that it will cost at least $23 million to transition to Healthcare.gov, and Kentucky taxpayers will have to foot that bill. That added cost would be a necessary expense if Kynect weren’t functioning correctly (as was the case for Hawaii’s exchange before they made the difficult decision to begin using the Healthcare.gov enrollment platform). But Kynect has been one of the country’s most successful exchanges since it opened in 2013.

Kynect officials have pointed out that switching to Healthcare.gov would result in an increased assessment on health insurance premiums starting in 2017, although the new assessment wouldn’t apply to as many plans. The exchange currently charges a one percent assessment on premiums to fund the exchange (applied to all individual and group plans sold in the state, on or off-exchange). Eliminating Kynect will do away with that one percent assessment. But for plans sold through the exchange, Healthcare.gov will charge a 3.5 percent assessment.

Currently, the one percent assessment applies to large group plans (non-self-insured), and that will no longer be the case once Kentucky switches to Healthcare.gov. The 3.5 percent assessment will be calculated for individual and small group plans sold through Healthcare.gov in Kentucky, but the total cost of the assessment will be spread across each exchange carrier’s entire ACA-compliant individual and small group book of business. Carriers that only sell off-exchange individual and small group plans will avoid the fee entirely.

At ACAsignups, Charles Gaba has crunched the numbers. It appears that the total fee (assuming an enrollment of about 102,000 people in private plans in the exchange) in 2017 would be a little less than $18 million, as opposed to the $28 million budget that Kynect currently has. So there’s potentially a $10 million annual savings available, although the $23 million transitional costs will eat up the savings for the first two or three years. After that, it’s possible that using Healthcare.gov will save money for the people of Kentucky. But at the same time, they’ll miss out on the customer service and outreach that Kynect has been so successful at providing.

2016 open enrollment

Kynect made 2016 plans available for browsing starting on October 16, and opened up renewal for existing enrollees ahead of the November 1 start to open enrollment. Shoppers were able to compare their existing 2015 plan with the various options available in 2016 – including plans from three new carriers.

Open enrollment began November 1, and coverage will be effective February 1 for anyone who completed their enrollment by January 15. Kentucky was one of just four states that didn’t allow for an extension past December 15 to get coverage for January 1, although Kynect did announce that they would work to ensure a January 1 effective date for people who weren’t able to complete their enrollment by the deadline due to technical problems.

Open enrollment for 2016 will continue until January 31, 2016. Enrollments completed between January 16 and January 31 will have coverage effective March 1.

Kynect has been focusing their outreach on the 285,000 people who were uninsured in Kentucky in 2015, as well as the 51,000 CO-OP members who had to find new coverage for 2016 (more details below). Kynect is focusing extra outreach on 18 counties (mostly in the western and south-central parts of the state) where the uninsured rate is highest. Of the 285,000 people who were still uninsured in 2015 in Kentucky, 43 percent are eligible for Medicaid under Kentucky’s expanded eligibility guidelines.

Kynect also debuted a new plan selection tool for consumers to use during the 2016 open enrollment period. The tool helps shoppers compare medical costs across various plans, and determine which ones would be the best fit for each enrollee.

Kentucky Health CO-OP folds

On October 9, Kentucky Health Cooperative announced that they would cease operations by the end of 2015, and would not offer plans for sale during open enrollment for 2016 coverage. At that point, the CO-OP had about 51,000 members, all of whom had to secure coverage with another carrier for 2016. Former CO-OP members have a 60 day special enrollment period triggered by loss of coverage, that extends until February 29. Loss of coverage allows an applicant to enroll at any point in the month and still get coverage effective the first of the following month. So former CO-OP members can enroll in a plan at late as January 31 and still get a February 1 effective date, as long as they indicate that they’re enrolling using a special enrollment period, and not general open enrollment. They also have the option to enroll in a plan during February and get a March 1 effective date.

Kentucky Health CO-OP’s demise was cemented when the federal government announced on October 1 that risk corridor payments nationwide would be just 12.6 percent of the expected amount. Risk corridors are one of the ACA’s mechanisms for ensuring that carriers are on a somewhat level playing field in the first few years of ACA implementation. In 2014, 2015, and 2016, carriers that experience lower-than-expected claims pay into the risk corridors fund, while carriers that experience higher-than-expected claims receive payouts from the fund. If the latter exceeded the former, the idea was that the government would make up the shortfall. And in the opposite scenario, the government would get to keep the overage.

But in late 2014 – after a full year of ACA claims and after 2105 rates had already been set – lawmakers retroactively made the risk corridors program budget neutral, which means it can only pay out as much as it takes in. For 2014, the risk corridors program ended up about $2.5 billion in the red, which means that carriers got just a fraction of what they are owed. In the case of Kentucky Health CO-OP, that’s $9.7 million, out of $77 million they were supposed to get. Funds were to be paid in December 2015, but once it was determined that they would not be coming, the CO-OP had no choice but to close.

2016 rates

The Kentucky Department of Insurance finalized 2016 rates in July 2015, well ahead of many other states. Initially, rates were approved for eight individual market carriers, but that has dropped to seven now that the CO-OP is not participating in open enrollment. Despite the loss of Kentucky Health CO-OP, seven carriers in the individual market is more than Kentucky has had since the late 1990s, and it’s an increase from just three carriers offering plans through Kynect in 2014.

All five of the existing individual market Kynect carriers had their rate changes approved without modifications (all changes are averages, rate changes for a particular plan will vary):

  • Anthem BCBS = 12.2 percent increase
  • CareSource Kentucky = 11.83 percent increase (network is bigger and plans are available in additional counties in 2016).
  • Humana = 5.2 percent increase
  • Wellcare Health Plans = 10.98 percent decrease
  • Kentucky Health Cooperative (an ACA-created CO-OP) = 25.1 percent increase – this is no longer applicable, since all Kentucky Health CO-OP members had to transition to other carriers for 2016.
  • A full list of rates that have been filed and approved with the Kentucky Department of Insurance is available here, including small group plans and off-exchange carriers.

In addition to the carriers that were already offering individual plans through Kynect, the exchange is adding three more carriers for 2016:

  • UnitedHealthcare is offering plans statewide
  • Aetna has plans available in 10 counties
  • Bluegrass Family Health has plans available in 79 counties (out of 120 counties in Kentucky).

UnitedHealthcare and Bluegrass Family Health previously offered only small group plans through the exchange, and Aetna had not previously participated in Kynect.

Kentucky Health Cooperative garnered significant market share in 2014, enrolling 75 percent of Kynect’s private plan customers (the other 25 percent was split evenly between Humana and Anthem, which were the only other participating carriers in 2014).  But the CO-OP ended up raising premiums by 15 percent for 2015 because the initial low rates had not been sufficient to cover claims costs (ultimately, the low rates were part of what contributed to the CO-OP’s insolvency).

In 2015, the average Kentucky Health Cooperative premium per member was $310 per month, and that was projected to rise to $388 per month in 2016. Wellcare’s average per member premium was $318 per month in 2015, and Anthem’s average 2015 premiums was $313 per month.  CareSource had an average premium of $249 per month in 2015, and Humana’s was $321 per month.

Given the approved rate increases (or decrease, in the case of Wellcare), the demise of Kentucky Health CO-OP, and the introduction of three new carriers, there is likely to be considerable shifting in the market share of Kynect’s carriers in 2016.  Premium subsidies will offset price hikes for most consumers, but it is particularly important for enrollees to shop around during open enrollment, as opposed to relying on automatic renewal of their existing coverage. Obviously, for enrollees who currently have Kentucky Health CO-OP, auto-renewal was not be possible for 2016. But for everyone else, you can still return to the exchange and pick a different plan (as long as you do so by January 31) if you were auto-renewed into a plan and you’d rather pick a different option.

Five carriers currently provide Medicaid managed care plans in Kentucky, and their contracted were renewed in July 2015:  Anthem, Coventry Cares, Passport, Humana, and Wellcare.

2015 enrollment data

106,330 people had selected a private plan through Kynect by February 21.  That total did not include the people who enrolled during Kynect’s special enrollment period (SEP) for people who realized – after open enrollment ended – that they owed a tax penalty for not having insurance. Kentucky’s SEP ran from March 2 through April 30, and the exchange enrolled another 3,047 people in private plans during that time.  The individual mandate, which requires most people to have health insurance, went into effect Jan. 1, 2014. However, many people weren’t aware of the mandate and only learned of it when they filed their 2014 taxes. Consumers couldn’t do anything about the 2014 penalty at that point, but the special open enrollment period allowed them to minimize the 2015 penalty that will be assessed when tax returns are filed next spring.

Open enrollment ended on February 15, but the exchange granted an extension to February 28 to anyone who made a “good faith” effort to enroll by that date, but was unable to finish due to trouble with the website or getting through to the call center.

But not everyone who enrolled ended up paying the initial premium (which meant the coverage was never actually in-force).  And some people cancelled their coverage soon after it began.  By the end of June, 88,904 people in Kentucky had in-force private plan coverage through Kynect.  69.8 percent of them are receiving premium subsidies, and 38.1 percent have silver plans that include cost-sharing subsidies (only available to enrollees with incomes up to 250 percent of the poverty level).

An additional 152,529 people had enrolled in Medicaid through Kynect between November 15 and February 21.  Medicaid enrollment continues year-round.

In terms of retaining 2014 enrollees, Kynect re-enrolled 94.4 percent of their first-year insureds.  That’s far higher than the nationwide averages (69 percent retention among state-based exchanges, and 78 percent for Healthcare.gov exchanges)

Enhancement for 2015

Even though Kentucky’s state-run marketplace was already one of the nation’s most successful exchanges in 2014, officials worked hard to make improvements and updates for 2015 open enrollment.

Kynect met with brokers, insurance carriers, and Kynectors (navigators) to get feedback and learn what areas need improvement. Enhancements include:

  • The call center increased the number of customer service representatives from 185 at the start of the first open enrollment period to 400 for the start of the 2015 open enrollment period. The call center also expanded operating hours and underwent a systems upgrade to reduce wait times and enable more efficient operations.
  • More agents, brokers, and Kynectors are participating in the 2015 open enrollment.
  • Kynect debuted a mobile app to enhance outreach and customer service, especially for the under-35, “young invincible” population. The app allows users to check plan options and see rates, and then complete their application on the Kynect website. As of Feb. 19, more than 8,500 people had downloaded the app.
  • Kynect launched a full-service enrollment center at the Fayette Mall in Lexington. Through Feb. 19, nearly 7,600 people visited the center and nearly 6,000 people applied for new coverage.

Penalties will rise

Those who are uninsured more than two months of the year may have to pay a penalty, and the penalties are increasing again for 2016.

Those who don’t qualify for an exemption will have to pay the greater of:

  • 2.5% of annual household income above the tax filing threshold. The maximum penalty under this calculation method is the national average premium for a bronze plan, which the IRS announced would be $2,484 for 2016 ($12,420 for a family of five).
  • $695 per adult or $347.50 per child under 18. The maximum penalty per family using this method is $2,085.

Use the healthinsurance.org penalty calculator to see how much you may owe.

Grandmothered plans allowed in Kentucky

Transitional, or grandmothered, health plans are allowed to renew in Kentucky until October 1, 2016, which means they can remain in force as late as September 30, 2017.  Renewal is at carrier discretion however, and transitional plans are not required to renew – carriers can choose instead to replace them with ACA-compliant plans.  About 14,000 people in Kentucky were on plans – mostly from Humana – that were terminated at the end of 2014 because the carrier opted to switch to only ACA-compliant plans.

The extension of grandmothered plans contributed to higher-than-expected claims costs for ACA-compliant plans in 2014 and 2015, since the people who remained on grandmothered plans were healthy enough to get those plans – despite medical underwriting – between 2010 and 2013. Since those individuals have not transitioned to ACA-compliant plans yet, the overall risk pool for the ACA-compliant plans is sicker than expected.

Impressive coverage gains

Kentucky realized a particularly sharp decline in its uninsured rate following the launch of its health insurance marketplace and expansion of its Medicaid program. The percentage of people without health insurance dropped from 20.4 percent in 2013 to 9 percent in the first half of 2015, according to the Gallup-Healthways Well-Being Index. Only Arkansas had a larger percentage point drop.

According to official US census data however, Kentucky’s uninsured rate was only 14.3 percent in 2013, but had dropped to 8.5 percent in 2014.

Kynect officials said about 75 percent of those who signed up for coverage in 2014 did not previously have insurance. To help people who have little experience with the health care system or health insurance, the exchange has worked to create a consumer guide called “How to Kynect” and is providing it to new enrollees in order to help them learn how to select a primary care doctor, when to seek health care, when to visit the ER, how to use the pharmacy benefits on their plan, and understand insurance terminology.

History of Kentucky’s exchange

Kynect is considered one of the nation’s best marketplaces. More than 521,000 people obtained health insurance coverage through Kynect in 2014 — either private health insurance or Medicaid. During the 2015 open enrollment period, another 55,855 people enrolled in Medicaid through Kynect (Medicaid enrollment continues year-round), and 27,000 additional people signed up for private insurance through Kynect for the first time.

One sign of Kynect’s success is widespread awareness: a poll from late 2014 shows that nearly 80 percent of Kentucky residents had heard of the exchange and nearly 52 percent of Kentuckians between the ages of 30 and 64 said they knew “a lot” about it.

Another sign is the Beshear administration’s inclusion of Knyect in its list of top accomplishments of 2014. The state’s uninsured rate dropped nearly 8 points, and the newly insured were taking advantage of their coverage. The state reported that in 2014, 26,000 more people would have cholesterol screenings, 7,000 more women would have mammograms, 10,000 more women would have pap smears, and 14,000 more people with depression would be treated.

Kynect was one of the few marketplaces established through an executive order. Beshear’s order to establish the exchange in July 2012 followed months of seeming inaction on the exchange by the executive and legislative branches in the state. Kynect is part of the state’s Cabinet for Health and Family Services, and it is overseen by 19-member board appointed by Beshear.

Then-Governor Steve Beshear went against public sentiment in deciding the state would run its own marketplace. In an article in The New York Times, Beshear urged state residents to set aside politics and use the marketplace to get insured. “You don’t have to like the president; you don’t have to like me. Because this isn’t about him, and it’s not about me. It’s about you, your family and your children.”

Kentucky spent about $11 million on outreach and marketing for 2014 open enrollment, and it trained 5,000 people to support enrollment — including state employees, insurance agents, volunteers and representative of various community groups and social service organizations. These outreach efforts drove Kentucky’s enrollment totals.

While the federal marketplace, HealthCare.gov, and multiple state-run marketplaces had significant technical problems in 2014, Kynect ran well from the start. Experts say those in charge of implementing Kynect made good choices. They kept the design simple and worked with well-qualified and experienced vendors.

There is still room to improve however.  According to a report issued by the National Health Council in July 2015, Kentucky is an average-performing state in terms of how patient-centered the health insurance market is.  The report gave Kentucky a low score for how easy it is for consumers to compare and understand plans sold through Kynect, and on all other metrics, Kentucky received an average score.  Very few states received high scores.

Kentucky health insurance exchange links

Kynect –  Kentucky’s Healthcare Connection
855-4kynect (855-459-6328)
Consumer site for Kentucky’s marketplace

Kentucky Health Benefit Exchange
Administrative site for Kentucky’s marketplace

A Healthier Kentucky

Kentucky Health Insurance Advocate, Kentucky Department of Insurance
Assists people insured by private health plans, Medicaid, or other plans in resolving problems pertaining to their health coverage; assists uninsured residents with access to care.
(877) 587-7222 /DOI.CAPOmbudsman@ky.gov

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