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Kentucky health insurance marketplace: history and news of the state’s exchange

CareSource expanding coverage area for 2020; Residents in 56 counties can select from both Anthem and CareSource.

Latest Kentucky exchange updates

Kentucky exchange overview

State legislative efforts to preserve or strengthen provisions of the Affordable Care Act

How hard is Kentucky fighting to preserve the Affordable Care Act’s provisions? Compare to other states’ efforts.

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 insurers are continuing to offer coverage in the exchange, and although enrollment dropped for 2019, it’s still higher than it was in 2017, thanks to significant enrollment growth in 2018. 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.

And CareSource is expanding its coverage area for 2020, so residents in 56 counties will be able to choose from both Anthem and CareSource. Residents in the other 64 counties will only have one insurer offering plans, although there will still be multiple plan options available, since insurers offer a variety of plans.

Kentucky also has a gubernatorial election in November 2019 — just days after the start of open enrollment for 2020 health plans — in which Bevin is running for re-election and Democratic Attorney General, Andy Beshear (who supports the ACA) is running to unseat him. Beshear is the son of Steve Beshear, who was governor just before Bevin and highly instrumental in Kentucky’s implementation of Medicaid expansion and a state-run exchange.

Kentucky’s uninsured rate has dropped substantially under the ACA, thanks in large part to the state’s expansion of Medicaid. According to official US census data, Kentucky’s uninsured rate was 14.3 percent in 2013. As of 2018, it stood at 5.6 percent, up slightly from a low of 5.4 percent in 2017 (nationwide, the uninsured rate has been inching upward under the Trump administration).

2020 rates and plans

The Kentucky Department of Insurance announced approved rate changes for the individual market in early September, and noted that CareSource is increasing its coverage area for 2020. In 56 counties (up from 34 in 2019 and zero in 2018), exchange enrollees will be able to select from both CareSource and Anthem plans; in the other 64 counties, only one of the two insurers will offer plans in the exchange (56 counties have both Anthem and CareSource; 37 counties have only Anthem, and 27 counties have only CareSource).

The following average rate changes apply for 2020:

  • Anthem: 9.7 percent increase (Anthem had originally proposed an 11.95 percent increase) – plans available in 93 counties in 2020, as was the case in 2019.
  • CareSource: 4.5 percent decrease – plans available in 83 counties in 2020, up from 61 counties in 2019.

At ACA Signups, Charles Gaba calculated a weighted average rate increase of 3.7 percent for Kentucky’s individual market in 2020.

[When we talk about rate changes, we’re referring to pre-subsidy premiums. Premium subsidies fluctuate from one year to the next based on changes in the benchmark plan premium. People who receive premium subsidies can still see changes in their after-subsidy premiums from one year to the next (especially if a new plan takes over the benchmark spot and the enrollee keeps their existing coverage for the coming year), but the changes won’t necessarily mirror the percentage by which the full-price premiums change.]

Although there are a variety of factors that go into pricing — including the scope of the provider network and the drug formulary designs — a check of 2019 prices in Lexington indicates that CareSource plans are more expensive than Anthem plans at the same metal level. But an average rate decrease for CareSource coupled with an increase for Anthem could reduce or eliminate that difference in 2020.

And for perspective, CareSource had a substantial rate increase (nearly 20 percent) for 2019, while Anthem’s was much more modest, at about 4.5 percent.

2019 enrollment: Down about 4%, but still higher than 2017 enrollment

84,620 people signed up for individual market health insurance coverage through Kentucky’s exchange during the open enrollment period for 2019 plans. That’s about 5.5 percent lower than enrollment the year before, when 89,569 people enrolled through Kentucky’s exchange during the open enrollment period for 2018 coverage.

2018’s enrollment 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). 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 was almost certainly related to the fact that on December 18, 2015, 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 was to be returned to the federal government. State outreach directors expressed dismay that the advertising campaign was shuttered mid-way through the 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.

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).

Enrollment grew in 2018 for the first time in three years (Kentucky had the second-highest year-over-year percentage increase in enrollment in the country), despite the fact that open enrollment was half as long as it had been in previous years and there were additional funding cuts for navigators and exchange marketing in the weeks leading up to open enrollment for 2018 coverage.

And although enrollment dropped off a bit for 2019, it’s still higher than it was in 2017, despite the fact that the individual mandate no longer applies in 2019 and the Trump Administration has expanded access to short-term plans and association health plans as alternatives to individual market coverage.

Average 2019 rate increases: 4.3% for Anthem and 19.4% for CareSource

Kentucky regulators spent the summer of 2018 reviewing the 2019 filings. In August, the Kentucky Department of Insurance published a summary of the approved average rate changes (detailed rate filings are available here):

  • CareSource: 19.4 percent average rate increase, plans continued to be available in 61 counties for 2019. CareSource had 52,707 members as of 2018.
  • Anthem: 4.3 percent average rate increase. Anthem offered plans in 59 counties in 2018, but expanded to offer plans in a total of 93 counties in 2019, re-entering 34 counties where they had stopped offering coverage at the end of 2017. Anthem had more than 88,600 members in 2017, which was the experience period they used to set rates for 2019. But their projected membership for 2019 was just over 47,600 members (for 2020 plans, Anthem’s filing projects just over 29,000 members).

In 2018, there was no overlap in the coverage for CareSource and Anthem. But for 2019 coverage, consumers in 34 counties were able to choose from plans offered by both insurers (see the 2019 coverage area maps for CareSource and Anthem). In 16 of those counties, however (the ones shaded purple on this map), the only available Anthem plans had a narrow provider network.

At ACA Signups, Charles Gaba calculated a weighted average proposed rate increase of just over 12 percent for Kentucky’s individual market, based on the initial filings (Anthem’s initial proposed rate increase was slightly larger than their revised filing). But he also noted that most or all of that rate increase was likely due to the elimination of the individual mandate penalty after the end of 2018, and the Trump administration’s efforts to expand access to short-term plans and association health plans.

CareSource’s filing mentioned that the individual mandate penalty repeal was a factor in the 2019 rate increase, they didn’t clarify how much of a role it played.

According to CareSource’s filing, the Kentucky Department of Insurance instructed the carriers to add the cost of cost-sharing reductions (CSR) only to on-exchange silver plans for 2019. This is the most beneficial approach for consumers, as it allows non-subsidized buyers to purchase on-exchange bronze or gold plans, or plans at any metal level off-exchange, and avoid paying the added premiums that cover the cost of CSR. For subsidized buyers, the subsidies will offset the cost of CSR if silver plans are purchased, and will result in particularly good deals on bronze and gold plans. That’s because the larger premium subsidies offset more of the cost of those plans, since the cost of CSR isn’t added to the price of non-silver plans (but it is added to the cost of silver plans, and subsidies grow to keep pace with the cost of the benchmark plan, which is a silver plan).

For perspective, here’s a look back at how rates changed over the last few years in Kentucky’s exchange:

2016: 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 was more than Kentucky had had since the late 1990s, and it was 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), although Kentucky Health Cooperative ended up closing at the end of 2015, so their plans were not available for 2016. The following average rate changes applied to the existing plans:

  • Anthem BCBS = 12.2 percent increase
  • CareSource = 11.83 percent increase (network is bigger and plans are available in additional counties in 2016).
  • Humana = 5.2 percent increase
  • Wellcare = 10.98 percent decrease

In addition to the carriers that were already offering individual plans through Kynect, the exchange added three more carriers for 2016: UnitedHealthcare offered plans statewide, Aetna offered plans in 10 counties, and Baptist Health (Bluegrass Family Health) offered plans in 79 counties.

2017: 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 exited the individual market after the end of 2017, leaving only Anthem and CareSource in the exchange.

2018: 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 (the Trump administration terminated CSR funding in October 2017, just before enrollment in 2018 plans began):

  • Anthem: The average rate increase was 41.2 percent. Anthem had previously filed an average rate increase of 34.1 percent, but revised it higher to account for the loss of CSR funding.
  • CareSource: The average rate increase was 56 percent, up from just under 21 percent that the insurer had initially filed. But the earlier filing had been made 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 offered plans, and on the new assumption that CSR funding would not continue.

Everyone eligible for CSR benefits continued to receive them (and that is still the case) as long as they selected silver plans; nothing changed about eligibility for CSR benefits or the benefits themselves. But instead of federal funding to cover their cost, the cost is now 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 earned $25,000 in 2018 could get a bronze plan for just $27/month after premium subsidies. And for 2019, a 45-year-old in Louisville who earned $25,000 could get a bronze plan for about $32/month. In comparison, in 2017, a 45-year-old in Louisville who earned $25,000 had to pay at least $110/month to get a bronze plan. The sharp increase in silver plan premiums in 2018 resulted in much larger premium subsidies, and that continues to be the case. 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.

Individual market insurer participation in Kentucky’s exchange: 2014-2020

2014: Plans were available in Kentucky’s exchange from Anthem, Humana, and Kentucky Health Cooperative (an ACA-created CO-OP). 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.

2015: CareSource and Wellcare joined the exchange for 2015, bringing the total number of participating insurers to five, although Anthem and the CO-OP were the only insurers offering plans statewide; the other three insurers each had much more limited coverage areas.

In October 2015, Kentucky Health Cooperative announced that they would cease operations by the end of 2015. At that point, the CO-OP had about 51,000 members, all of whom had to secure coverage with another carrier for 2016.

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 were one of the ACA’s mechanisms for ensuring that carriers were on a somewhat level playing field in the first few years of ACA implementation. In 2014, 2015, and 2016, carriers that experienced lower-than-expected claims paid into the risk corridors fund, while carriers that experienced higher-than-expected claims were supposed to 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 meant it could only pay out as much as it took in. For 2014, the risk corridors program ended up about $2.5 billion in the red, which meant that carriers got just a fraction of what they are owed. In the case of Kentucky Health CO-OP, that was $9.7 million, out of $77 million they were supposed to receive. 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: Anthem offered exchange plans statewide, while CareSource offered plans in 46 counties. Plans were also available from Humana, Baptist Health, UnitedHealthcare, Wellcare, and Aetna, but four of those insurers exited the exchange at the end of 2016.

2017: Anthem continued to offer coverage in all 120 counties in Kentucky in 2017 (and was the only carrier doing so), but in 74 of those counties, they only offered HMO plans for 2017. Anthem continued to offer PPO plans in 46 counties in Kentucky. CareSource added 15 more counties to their coverage area for 2017, offering plans in just over half the state’s counties. Humana also continued to offer coverage in Kentucky’s exchange, but reduced their coverage area to only Jefferson County. And Humana announced in February 2017 that they would exit the individual market nationwide at the end of 2017.

2018: CareSource continued to offer plans in 61 counties in 2018, but Anthem’s revised rate filing for 2018 reduced their coverage area to include only the 59 counties where CareSource did not offer coverage. So all counties in Kentucky had just a single insurer offering exchange plans for 2018. Residents who had Humana coverage in Jefferson County, as well as those who had Anthem coverage in the 61 counties where CareSource also offered plans, needed to select new plans for 2018.

2019: Anthem expanded its coverage area to include 93 counties, giving residents in 34 counties the opportunity to select a plan from either insurer (in the other 86 counties, just one insurer offers plans for 2019).

2020: CareSource is expanding its coverage area to a total of 83 counties, overlapping with Anthem in 56 of those counties. So for 2020, there are 56 counties where Anthem and CareSource plans are available, 27 counties where only CareSource is available, and 37 counties where only Anthem is available.

Kentucky residents began enrolling through Healthcare.gov for 2017 coverage

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 have eliminated coverage for 400,000 people and thrown 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 (Bevin ultimately secured federal approval for a Medicaid work requirement, but it was overturned by a federal judge before it could take effect and the case was being appealed as of the fall of 2019).

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). Bevin opted to keep Kentucky’s state-run exchange, but switch to the federal enrollment platform.

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. Everyone who already had a plan through Kynect prior to 2017 needed to re-enroll through Healthcare.gov for 2017.

Under the federally-supported model, Kentucky still technically runs its own exchange, but it uses Healthcare.gov as the enrollment platform (Hawaii, Oregon, and New Mexico are also state-based exchanges that use Healthcare.gov; Nevada also used HealthCare.gov through 2019, but switched back to a fully state-run exchange as of the fall of 2019; New Mexico plans to do the same thing in the fall of 2020 and Oregon is considering a similar move).

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 was 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. The increase to a 3 percent fee was implemented as of 2019, but it will drop back down to 2.5 percent as of 2020.

Grandmothered plans allowed in Kentucky

Transitional, or grandmothered, health plans are allowed to renew in Kentucky until October 1, 2020, and remain in force as late as December 31, 2020 (this could be extended again, as the deadline has been pushed out several times already, with annual extensions). 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).

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 open enrollment period for 2015 coverage, another 152,529 people enrolled in Medicaid through Kynect (Medicaid enrollment continues year-round), and 106,330 people enrolled in private plans through Kynect, 26 percent of whom were new to the exchange for 2015.

One sign of Kynect’s success was widespread awareness: a poll from late 2014 showed 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 representatives 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 since 2017 has been a far cry from what it was in its first few years, 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
855-4kynect (855-459-6328)
Consumer site for Kentucky’s marketplace

Kentucky Health Benefit Exchange
Administrative site for Kentucky’s marketplace

Foundation for 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