Highlights and updates
- Year-over-year enrollment up 10%, second highest increase in the country
- Anthem and CareSource offering plans for 2018
- Humana exited, but only offered plans in 1 county in 2017
- Revised (much higher) rates based on assumption that CSR funding would end
- Cost of CSR added to silver plan premiums; subsidies much larger in 2018
- Work requirement for Medicaid will take effect in July 2018
Kentucky exchange overview
For the first three years of ACA implementation, Kentucky operated its own exchange and enrollment website. Kynect, the state-run exchange, was widely considered one of the most successful state-run exchanges in the country.
But Governor Matt Bevin, who took office in late 2015, campaigned on an anti-Obamacare platform, and spent much of 2016 transitioning the Kentucky exchange to the Healthcare.gov platform.
The enrollment platform switch took effect in November 2016 (for enrollment in 2017 coverage), and got off to a rocky start, with brokers and enrollees finding the process more cumbersome and time-consuming than what they were accustomed to with Kynect. Enrollment, not surprisingly, was considerably lower in 2017.
But despite all of the upheaval, two of Kentucky’s three exchange carriers are continuing to offer coverage in the exchange for 2018, and enrollment for 2018 was more than 10 percent higher than it had been in 2017 — Rhode Island was the only state with a higher precentage increase in year-over-year enrollment. Although Humana exited the individual market at the end of 2017, their plans were only available in 2017 in a single county in Kentucky, so the impact of their exit was fairly minor.
2018 enrollment more than 10% higher than 2017 enrollment
89,569 people enrolled in private plans through Kentucky’s exchange during the open enrollment period for 2018 coverage. That was more than a 10 percent increase over the 81,155 people who had enrolled for 2017, but it was still lower than the 2016 and 2015 enrollment totals (93,687 and 106,330, respectively). Enrollment grew in 2018 for the first time in three years, despite the fact that open enrollment was half as long as it had been in previous years.
Kentucky’s former state-run exchange, Kynect, had been among the country’s most successful. But Kynect’s advertising got slashed in December 2015, and the transition to HealthCare.gov resulted in further declines for 2017, compounded by the Trump Administration’s decision to cut advertising and outreach for HealthCare.gov in the final week of 2017 open enrollment (Trump took office on January 20, 2017; open enrollment for 2017 coverage ended January 31).
There were additional funding cuts for navigators and exchange marketing in the weeks leading up to open enrollment for 2018 coverage, and yet enrollment was strong for 2018, with the second-highest year-over-year percentage increase in enrollment in the country. Rhode Island was the only state with a larger percentage increase in enrollment from 2017 to 2018.
Humana exited at end of 2017; Anthem and CareSource offering plans for 2018, but no overlap in coverage areas
For insurers planning to offer coverage in 2018, the deadline for filing forms in Kentucky was April 17, 2017 and the original deadline for filing 2018 premiums was May 17. But in mid-April, the state extended that deadline out to June 7. The extension gave insurers time to develop rates based on the market stabilization rules that were finalized in April 2017, and also to see what would happen with ongoing funding of the ACA’s cost-sharing reductions (CSR).
Nothing had been resolved in terms of the CSR funding question by the time rate filings were initially due in June. But Kentucky’s insurers ended up filing revised rates later in the summer/fall based on the assumption that CSR funding would not continue, and the funding was officially cut off in mid-October.
Kentucky’s exchange had three participating insurers in 2017: Anthem, CareSource Kentucky, and Humana. Humana announced in February 2017 that they would exit the individual market nationwide at the end of 2017. However, Humana plans were only available in the exchange in Jefferson County for 2017, so their exit did not impact most of the state.
Anthem offered exchange plans in every county in Kentucky in 2017, and CareSource was in roughly half the counties (61 out of 120, after increasing their coverage area from just 16 counties in 2015). CareSource is offering plans in the same 61 counties in 2018, but Anthem’s revised rate filing for 2018 reduced their coverage area to include only the 59 counties where CareSource does not offer coverage. So all counties in Kentucky have just a single insurer offering exchange plans for 2018. And residents who had Humana coverage, as well as those who had Anthem coverage in the 61 counties where CareSource also offered plans, needed to select new plans for 2018.
2018 rate filings revised based on assumption that CSR funding would not continue. Result is much larger premium subsidies for 2018, more affordable coverage for many
Anthem and CareSource both initially filed 2018 rates based on the assumption that cost-sharing reduction (CSR) funding would continue. But they both later filed revised rates with the cost of CSR added to silver plan premiums:
- Anthem: 41.2 percent. This filing assumes that CSR funding will not continue, and reduces Anthem’s coverage are to 59 counties. The cost of CSR has been added to all silver plans for 2018, both on and off-exchange. The initial average proposed rate increase (filed in June 2017, based on assumption that CSR funding would continue) was 34.1 percent.
- CareSource: 56 percent. CareSource’s initial proposed average rate increase was just 20.8 percent, but that was filed when Anthem was still planning to offer coverage statewide, and when CareSource was still assuming that CSR funding would continue. The much higher overall average increase — which was approved by state regulators — was based on the fact that Anthem subsequently opted to withdraw from all of the counties where CareSource offers plans, and on the new assumption that CSR funding would not continue. The 56 percent average rate increase included the cost of CSR added to all silver plans. As of January 2017, there were 22,811 members with CareSource plans in Kentucky, but they expected that to grow to 48,000 in 2018, likely due to the fact that Anthem exited all of the counties where CareSource offers coverage.
For both insurers, the initially proposed rate increases were based on the assumption that cost-sharing reductions would continue to be funded. In both cases, revised filings were later submitted with the assumption that CSR funding would not continue, and with the cost of CSR added to silver plan premiums instead.
Everyone eligible for CSR benefits is continuing to get them, as long as they selected silver plans; nothing has changed about eligibility for CSR benefits or the benefits themselves, but instead of federal funding to cover their cost, the cost was added to premiums. But adding the cost of CSR to silver plan premiums results in larger premium subsidies for all enrollees who are eligible for premium subsidies. That’s because premium subsidies are based on the cost of the second-lowest-cost silver plan, so the subsidies grow to keep pace with silver plan premiums.
A 45-year-old in Louisville who earns $25,000 in 2018 can get a bronze plan for just $27/month after premium subsidies. In comparison, a 45-year-old in Louisville who earned $25,000 in 2017 had to pay at least $110/month to get a bronze plan in 2017. The sharp increase in silver plan premiums means that the premium subsidies are much larger. When applied to silver plans, they keep the cost roughly comparable to what it was in 2017. But when applied to plans at other metal levels, they make the coverage substantially more affordable than it was in 2017.
Kentucky exchange and the Trump Administration
Trump campaigned on the promise of repealing and replacing the ACA, although the details in his replacement proposal were scant. His first executive order after taking office was aimed at “minimizing the economic burden” of the ACA while its repeal was pending. House Republicans passed the American Health Care Act (AHCA) in early May, and Senate Republicans began drafting their own version of the bill. Ultimately, Senate Republicans failed to pass three different iterations of the bill: the Better Care Reconciliation Act (BCRA), the Obamacare Repeal Reconciliation Act, and the Health Care Freedom Act (aka “skinny” repeal). All three failed in late July, and another attempt, the Graham-Cassidy Amendment, failed in September to garner enough support among Senate Republicans to pass.
But the ACA repeal battle isn’t necessarily over. Republican lawmakers did ultimately repeal the individual mandate as part of their tax reform bill, although that provision won’t take effect until 2019. And more extensive ACA repeal could still come up in a future legislative session, but likely only if Republicans retain their majorities in Congress after the 2018 election.
At ACA Signups, Charles Gaba estimates that as many as 487,000 people in Kentucky could lose coverage if the ACA were to be repealed and replaced with something less robust. The vast majority of those people currently have coverage as a result of Medicaid expansion in Kentucky (an Urban Institute Report had a nearly identical projection, indicating that 486,000 Kentucky residents would be in danger of losing coverage if the ACA is repealed). Medicaid expansion is still in effect in Kentucky, but the state received federal approval in 2018 to modify the program, and will implement changes — including a work requirement and premiums — as of mid-2018.
Senate Majority Leader, Mitch McConnell (R, Kentucky) believes that the ACA should be repealed and replaced. But Kentucky Governor Matt Bevin has indicated that he would prefer to simply repeal the ACA in full, and return to the pre-ACA era in which individual market insurance regulation was left almost entirely to the states (group health insurance plans have some long-standing federal regulations, including HIPAA and for self-insured plans, ERISA). This is not a politically tenable option, though, and a repeal bill that doesn’t include some sort of replacement is unlikely to pass either chamber of Congress (the Obamacare Repeal Reconciliation Bill was essentially just that, and it failed in the Senate by a wide margin, 45-55)
Kentucky residents began enrolling through Healthcare.gov for 2017 coverage
Kentucky residents are now enrolling in exchange coverage through Healthcare.gov. Everyone who already had a plan through Kynect prior to 2017 needed to re-enroll through Healthcare.gov for 2017. And anyone enrolling in coverage for the first time now does so through Healthcare.gov. As of March 2016, there were nearly 75,000 people enrolled in private plans through Kynect; all of them had to re-enroll through Healthcare.gov in order to remain insured as of January 2017.
Kentucky still has a state-run exchange for the time being, but uses the Healthcare.gov enrollment platform (Hawaii, Oregon, Nevada, and New Mexico are also state-based exchanges that use Healthcare.gov).
On October 4, 2016, HHS confirmed that Kentucky residents would be able to use Healthcare.gov as of November 1, and that the state would officially be a state-based exchange on the federal platform (SBE-FP) at that point, although HHS continued to express reservations about the transition, and concerns that the enrollment process might not be as seamless as it was when Kynect was operating its own enrollment platform. Consumer advocates expressed similar concerns, and ultimately, enrollment was significantly lower in 2017 than it had been the year before.
People who already had Kynect coverage in December 2016 had until March 1, 2017 to pick a plan for 2017, instead of the January 31 end of normal open enrollment. This is because people who had Kynect coverage in 2016 and who didn’t re-enroll through HealthCare.gov by December 31 lost their coverage and were uninsured as of January 1. Involuntary loss of coverage is a qualifying event, which triggers a 60-day special enrollment period.
2017 rates and carriers: 4 carriers exited, 3 remained
Four carriers that offered plans in the Kentucky exchange in 2016 — Aetna, WellCare, Baptist Health (Bluegrass Family Health), and UnitedHealthcare — did not offer plans in 2017.
The Kentucky Department of Insurance published the following average rate increases for the remaining carriers that are offering individual plans in the exchange in 2017:
- Anthem BCBS (in all 120 counties) = 22.9 percent (approved as filed)
- CareSource Kentucky (expanded into 15 new counties, for a total of 61 counties in 2017)= 29.3 percent (higher than the 20.55 percent rate increase CareSource had proposed)
- Humana (only in Jefferson County) = 31 percent (lower than the 33.7 percent Humana had proposed) Humana will not participate in the individual market after the end of 2017, so Jefferson County residents with Humana coverage in 2017 will need to select a new plan during the 2018 open enrollment period (November 1, 2017, through December 15, 2017).
Golden Rule and Aetna also offered plans in Kentucky in 2017, but only outside the exchange (the three on-exchange carriers also offer off-exchange coverage). So there were three on-exchange carriers and five off-exchange carriers from which enrollees could select.
Anthem reduced plan options; CareSource expanded coverage area
Anthem is continuing to offer coverage in all 120 counties in Kentucky (and is the only carrier doing so), but in 74 of those counties, they’re only offering HMO plans for 2017. So consumers may have a more difficult time finding a plan that will let them continue to see their doctor of choice, particularly in the counties where Anthem is the only option. Anthem is continuing to offer PPO plans in 46 counties in Kentucky.
CareSource offered coverage in the exchange in 46 counties in 2016. They have added 15 more counties to their coverage area for 2017, and are offering plans in just over half the state’s counties.
Baptist Health exited individual market
In early October, the Kentucky Department of Insurance confirmed that Baptist Health would exit the individual market at the end of 2016, although their off-exchange enrollees can keep their coverage through March 2017.
The carrier’s exit left about 7,000 people needing to find new coverage for 2017. Baptist Health indicated that they had enrolled more individual market members than anticipated in 2016, and that the ACA’s risk assessments were “unsustainable by a corporation the size of Baptist Health Plan.”
Baptist Health is continuing to offer coverage in Kentucky’s small group market, with an average rate increase of 12.57 percent for 2017.
UnitedHealthcare, Wellcare, and Aetna left Kentucky’s exchange at the end of 2016
At the end of 2016, UnitedHealthcare exited the Kentucky exchange, including both the individual and small business (SHOP) exchange. They also exited the individual market in Kentucky outside the exchange, although they are continuing to offer small group plans outside the exchange. 2016 was the first year that United had offered plans in the Kentucky exchange (more details below in the rates section).
United exited the individual markets in the vast majority of the states where they currently offer exchange plans. Their announcement did not come as a surprise, as United had already said publicly – in November 2015 – that they might not participate in the exchanges in 2017 due to unsustainable losses.
In late 2016, Wellcare’s website had a notice for marketplace plan members, letting them know that their coverage would end December 31, 2016, and that they would need to enroll in a new plan during open enrollment.
Aetna also exited the exchange in Kentucky, where they offered plans in 10 counties in 2016. But they are continuing to offer off-exchange plans in the state. Aetna’s exit from the exchange was confirmed in mid-August, after rate proposals for 2017 had been publicized. Aetna’s rate increase (5.6 percent, lower than the 7.6 percent the carrier had proposed) was far lower than the other three carriers that remained in the exchange, but ended up only applying outside the exchange.
DOI acts to protect broker commissions
Starting in late 2015, many of the nation’s health insurance carriers began reducing or eliminating broker commissions, mostly for plans sold outside of open enrollment (during special enrollment periods triggered by qualifying events) or for benefit-rich plans at the gold and/or platinum level.
The general consensus was that the commission cuts are an effort by insurance carriers to limit sales in general, and/or to limit sales of benefit-rich plans, which tend to attract enrollees with health conditions. In 2014 and 2015, eligibility for special enrollment periods was very loosely enforced by Healthcare.gov and some of the state-run exchanges, and carriers have noted that healthcare utilization among people who enroll outside of general open enrollment is significantly higher than utilization by people who enroll during open enrollment. The eligibility requirements have been tightened up in 2016, but carriers had already begun to roll out their new commission guidelines by early 2016.
Kentucky’s Department of Insurance responded with an “advisory opinion” (which isn’t legally binding on its own) stating that since broker commissions were included in the rates that carriers filed with the state for 2016, they could not be eliminated after they had already been approved. Their goal was to protect broker commissions, and therefore protect consumer access to the full range of plans available in Kentucky—both on and off-exchange—for anyone who had a qualifying event in 2016, and/or wanted to purchase a benefit-rich plan.
Enrollment lower in 2016
Open enrollment for 2016 ended on January 31. By February 4, Kynect’s enrollment in private plans stood at 93,687. That’s a drop of almost 12 percent from last year’s 106,330 total. At ACAsignups, Charles Gaba noted that Kynect was one of just a handful of states with lower enrollment in 2016 than in 2015, and most of the others had special circumstances, such as newly-expanded Medicaid or Basic Health Programs.
In Kentucky’s case, the drop-off in enrollment is almost certainly related to the fact that on December 18, Kynect’s successful 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. But it was not unexpected, as newly-elected Governor Matt Bevin had promised to shutter Kynect and switch to Healthcare.gov as one of his first priorities upon taking office.
During the first two open enrollment periods – for 2014 and 2015 – Kynect released regular enrollment updates. But for 2016, they released nothing until after open enrollment had ended. As with the termination of the advertising campaign, the lack of enrollment updates was attributed in large part to the fact that Bevin had 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.
Effectuated enrollment stood at 74,640 as of March 31, 2016. That’s a drop of 20 percent, and is higher than the national average, which was hovering around 13 percent at the end of the first quarter (the same as it was in 2015).
Of the people who had effectuated coverage as of the end of the first quarter, almost 76 percent were receiving premium subsidies that averaged $258 per month.
Kentucky’s 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 Healthcare.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, 2015, he notified then-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 was able to shut down Kynect via executive order, as the exchange was created with an executive order from former Governor Steve Beshear (as opposed to some state-run exchanges that were created via state legislation). Beshear’s executive order had to be renewed annually, and the last one expired on July 1, 2016. Bevin signed a new executive order the same day, recreating the state-run exchange and letting it remain in place until the transition to Healthcare.gov was complete.
HHS said they were committed to a “seamless transition” for Kentucky residents, who began using Healthcare.gov for the 2017 open enrollment period that started in the fall of 2016.
But Kentucky still has a state-run exchange
Although it initially sounded like Bevin’s plan was to entirely dismantle Kynect and switch to the federally-facilitated exchange, his position on that softened over time. By early March 2016, Kentucky was on a path towards having a federally-supported state-run exchange (Oregon, Hawaii, Nevada, and New Mexico currently have this model). Under the federally-supported model, the state still technically runs its own exchange, but it uses Healthcare.gov as the enrollment platform (this is the model that Kentucky is using in 2017).
For the time being, that will continue to be the case, as Bevin issued an executive order in July 2016, extending the state-run exchange to create a smooth transition to Healthcare.gov. But the long-term future of the exchange is very much up in the air under the Trump Administration.
In the 2017 Benefit and Payment Parameters, HHS clarified that state-based exchanges that use Healthcare.gov are required to – at a minimum – maintain a toll-free hotline to “respond to requests for assistance to consumers in their state” and maintain an “informational website” that will direct visitors to Healthcare.gov in order to enroll in coverage.
HHS also noted that for 2017, the fee for state-run exchanges to use Healthcare.gov is 1.5 percent of premiums. Through 2016, there was no fee for state-based exchanges to use Healthcare.gov. Initially, HHS had proposed a fee of 3 percent starting in 2017 (for perspective, the fee in the federally-run exchange is 3.5 percent of premiums). They agreed to reduce it to 1.5 percent of premiums in 2017. They proposed increasing it to 3 percent of premiums starting in 2018, but ultimately settled on 2 percent.
Financial impact of ditching Kynect
Governor Bevin and Kentucky Health Secretary Vickie Yates Brown Glisson said that the switch would result in considerable cost-savings for Kentucky, although that point was contested by Kynect advocates – including former Governor Steve Beshear, who started a lobbying campaign in February 2016 to fight back against Bevin’s efforts to dismantle Kynect and limit Medicaid expansion. Bevin also said that the cost of the technology shift will only be about $236,000 for the state.
A less-optimistic estimate was that it would cost at least $23 million to transition to Healthcare.gov, with Kentucky taxpayers footing the 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 was one of the country’s most successful exchanges since it opened in 2013.
In addition to the costs for the technology switch – which are apparently quite different depending on whom you ask – there’s the ongoing fee for operating the exchange and the enrollment platform. The state also plans to impose a 0.5 percent fee to cover the state’s portion of the exchange, including plan management, outreach, and the hotline and website. Once the fee to use Healthcare.gov is bumped up to 2 percent starting in 2018, the overall fee will be 2.5 percent. This is still lower than the 3.5 percent fee charged by HealthCare.gov in states that use the fully federally-run exchange, but assuming the exchanges are still in operation in 2019, the HealthCare.gov fee for state-run exchanges using the federal enrollment platform will almost certainly increase to 3 percent, as planned.
In 2016, Kynect charged a 1 percent assessment on premiums to fund the exchange, and it was applied to all individual and group plans sold in the state, on or off-exchange. Initially, the plan was that eliminating Kynect would do away with that one percent assessment. But Bevin planned to keep that assessment intact, at least for the time being, to fund “transition costs, fund the Kentucky Health Information Exchange and fund “legacy costs” of Kentucky Access, the high-risk insurance pool for which the fee was established.” The fee pre-dates Kynect (it used to fund the state’s high risk pool back when health insurance in the private market was medically underwritten), and lawmakers have indicated that they’ll continue to put the money to use elsewhere.
The fee charged to use Healthcare.gov is only assessed based on premiums for plans sold in the exchange. But due to the single risk pool rule in the ACA, the total cost of the fee must be spread across each exchange carrier’s entire book of business, including both on and off-exchange plans. Carriers that only sell off-exchange individual and small group plans avoid the fee entirely.
Lawmaker tried to block Bevin’s changes
On February 29, 2016, State Representative Darryl Owens (D, Louisville) introduced HB5 and HB6 in an effort to block Bevin’s plans to transition Kentucky to the Healthcare.gov enrollment platform and scale back Medicaid expansion.
HB5 would have required the state to continue to operate Kynect (or something “substantially similar), and HB6 would have required the state to keep Medicaid expansion as-is in Kentucky, without any of the modifications that Bevin has proposed.
Owens noted from the start that his bills stood a decent chance in the House, which is controlled by Democrats, but that they likely wouldn’t fare as well in the Senate, which is dominated by Republicans. Ultimately, both bills did pass the House in March 2016, but died in committee in the Senate, and did not advance to a vote on the Senate floor.
In March 2016, the Government Accountability Office released a report detailing compromised security incidents on Healthcare.gov between October 2013 and March 2015. The report also indicated that the GAO had studied three state-run exchanges, and found security flaws including “insufficient encryption and inadequately configured firewalls, among others.”
The GAO report didn’t name the three state-run exchanges that they analyzed, but the Associated Press obtained the details in a freedom of information request. The three state-run exchanges were Vermont, California, and Kentucky, but it’s important to note that those are the only three state-run exchanges that the GAO considered; they did not necessarily have more security flaws than other state-run exchanges. The GAO report notes that CMS should implement “procedures for overseeing the security of state-based marketplaces” as the existing protocol only called for testing every three years.
Former Governor Steve Beshear reassured Kynect enrollees that despite the security flaws, nobody’s data was compromised.
2016 open enrollment
Kynect made 2016 plans available for browsing starting on October 16, 2015, 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.
Kentucky was one of just four states that didn’t allow for an extension past December 15 to get coverage for January 1, 2016, 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.
Kynect focused 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 also focused extra outreach on 18 counties (mostly in the western and south-central parts of the state) where the uninsured rate was highest. Of the 285,000 people who were still uninsured in 2015 in Kentucky, 43 percent were 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
In October 2015, 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 had a 60 day special enrollment period triggered by loss of coverage, that extended until February 29.
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.
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 dropped to seven once the CO-OP dropped out. 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.
In addition to the carriers that were already offering individual plans through Kynect, the exchange added 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, it’s likely that there was considerable shifting in the market share of Kynect’s carriers for 2016. Premium subsidies have offset price hikes for most consumers, but it was 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 had Kentucky Health CO-OP, auto-renewal was not possible for 2016.
For the five carriers that provide Medicaid managed care plans in Kentucky, contracts 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.
Grandmothered plans allowed in Kentucky
Transitional, or grandmothered, health plans are allowed to renew in Kentucky until October 1, 2018, and remain in force as late as December 31, 2018. 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 has contributed to higher-than-expected claims costs for ACA-compliant plans across the country, 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.
According to the Kentucky Department of Insurance, there were still more than 38,000 people with individual market transitional (grandmothered) plans as of April 2016, and more than 86,000 with transitional small group coverage.
That’s in addition to grandfathered plans. As of March 2105, there were 25,491 people in Kentucky who still had coverage under grandfathered plans in the individual market, and 19,595 with grandfathered group coverage (this included 4,571 people on grandfathered small group plans, and the rest on large group plans).
Impressive coverage gains in 2014
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 was 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 was 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 was 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 (this also made it highly susceptible to being dismantled via executive order, which is what Governor Bevin did when he took office). Kynect was part of the state’s Cabinet for Health and Family Services, and it was 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.
Ultimately, however, a new governor with an anti-Obamacare approach was able to unravel Kynect and switch Kentucky to HealthCare.gov. Although they still technically have a state-run exchange, Kentucky’s exchange in 2017 is a far cry from what it was in 2014, both in terms of insurer participation and the outreach and community involvement that Kynect had.
Kentucky health insurance exchange links
Kynect – Kentucky’s Healthcare Connection
Consumer site for Kentucky’s marketplace
Kentucky Health Benefit Exchange
Administrative site for Kentucky’s marketplace
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