CO-OP closing at year-end
On July 24, the Louisiana Health Cooperative, an ACA-created CO-OP, announced that it will not participate in the upcoming open enrollment period, and that current policies will terminate at the end of 2015. The CO-OP is reassuring its 16,000 members that they have enough capital on hand to fulfill obligations and pay claims incurred through the end of 2015.
The Louisiana Department of Insurance has posted an FAQ section regarding the CO-OP’s announcement, and is reminding current enrollees that they will need to select a new plan between November 1 and December 15 in order to have continuous coverage with a new plan effective January 1.
There were six carriers that offered individual coverage in the Louisiana exchange in 2015, but the CO-OP’s exit will reduce the number of participating carriers to five.
Looking to 2016
In the Louisiana exchange, two individual market carriers requested rate increases of ten percent or more for 2016: HMO Louisiana, and Louisiana Health Service & Indemnity (Blue Cross Blue Shield of Louisiana). For both carriers, the rates were finalized as-requested. But other carriers also proposed double digit rate hikes in the small group market and outside the exchange, and some were adjusted prior to final approval.
Louisiana Health Cooperative had requested rate increases of about 23 percent, but those will no longer apply, since the CO-OP will not be offering plans in 2016. Time Insurance Company’s requested 55 percent rate hike was eye-catching, but they only sold plans outside the exchange in 2015, and their parent company, Assurant, subsequently announced that they are exiting the individual market nationwide, and are not offering plans for 2016.
The Louisiana Department of Insurance has published proposed and final rate changes for all of the carriers in their individual and small group markets, including on and off-exchange carriers. The filings are separated based on whether the proposed rate change was greater than or less than ten percent, but individual and small group plans are not separated (you can tell whether a plan is individual or small group by viewing the rate filing on the far right side of the spreadsheet). Nearly all of the proposed rate hikes under ten percent were for small group plans (Healthcare.gov now also shows requested and approved rate changes for all plans, including those with proposed rate increases of less than 10 percent; those were not available prior to open enrollment)
Louisiana is one of the five states where the rate review process for plans sold in the exchange is conducted by HHS rather than state regulators. Most of the filings were approved as-proposed or with very minor changes, but there were some significant changes for plans sold outside the exchange. Humana’s proposed rate increase of 14.8 percent was chopped down to 6.4 percent, and Aetna’s proposed 21 percent rate hike was increased to 29 percent.
At ACAsignups, Charles Gaba estimated the weighted average rate increase to be about 15.4 percent for the individual market in 2016, but that was before the rates had been approved. For plans sold in the exchange however, it didn’t matter, as the final rates were virtually all the same as the requested rates:
- Blue Cross Blue Shield of Louisiana: average rate increases range from 14.57 percent to 19.68 percent.
- HMO Louisiana: average rates increase of just under 12 percent
- Humana: average rate increase of 4.26 percent (slightly lower than the 5.79 percent increase Humana requested).
- UnitedHealthcare: I’m estimating 9 percent based on quotes I got for identical UnitedHealthcare plans in 2015 and 2016 using Healthcare.gov.
- Vantage Health Plan: 6.81 percent rate increase
HHS released a report in October detailing benchmark plan premium changes for 2016. The benchmark plan is the second-lowest-cost-Silver plan, but it’s not necessarily offered by the same carrier from one year to the next. In Louisiana, the average benchmark premium increase is 8.6 percent for 2016. Since subsidies are tied to the benchmark plan premium, a more expensive benchmark plan will result in higher subsidies. But it’s vitally important that enrollees shop around during open enrollment, as rates will fluctuate significantly from one carrier to another.
King v. Burwell – subsidies are safe
The Supreme Court ruled in late June that subsidies are legal in every state, even if the federal government is running the exchange. The plaintiffs in King v. Burwell had argued that subsidies could only be provided by state-run exchanges, but the Court rejected that premise. As a result, subsidies are no longer in danger for 143,000 people in Louisiana, and they will continue to be available for new enrollees as well.
At ACAsignups, Charles Gaba estimated that if subsidies had been eliminated, unsubsidized average premiums in Louisiana would have climbed from $416/month in 2015 to $624/month in 2016. That’s for people who pay full price for their coverage. Most current enrollees in the Louisiana exchange have subsidies however, so the result for them would have been much more profound: Their rates would have jumped from an average current (after-subsidy) premium of $93/month to $624/month next year.
The Louisiana Department of Insurance confirmed that if the subsidies had been stuck down by the Supreme Court, carriers would have had two weeks to refile new (presumably much higher) rates for 2016. Fortunately for the residents, insurers, and medical providers of Louisiana, that didn’t come to pass.
More than 184,000 Louisiana residents selected qualified health plans (QHPs) through the marketplace during 2015 open enrollment. But not all of them paid their initial premiums, and some people cancelled their coverage in the early days of 2015. By the end of March, 149,954 people in Louisiana had in-force coverage through the exchange. Effectuated enrollments dropped again during the second quarter of 2015, to 141,740. Almost 91 percent are receiving premium subsidies, and 58 percent are receiving cost-sharing subsidies.
Initial 2015 enrollment was about 83,000 higher than 2014 enrollment. However, Louisiana residents signed up at a slower rate than individuals across the nation. About 35 percent of eligible Louisiana residents signed up for coverage through the marketplace compared to about 41 percent nationally.
Special options for enrolling
Open enrollment for 2016 will continue until January 31, 2016. After that, in most cases, you won’t be able to get coverage in the individual market – including outside the exchange – for the rest of the year. But there are some circumstances that will allow you to obtain coverage outside of open enrollment:
- You experience a qualifying event. You have 60 days from the date of the event to sign up for insurance.
- You are a Native American. You can sign up for health insurance at any time during the year.
- You qualify for Medicaid. Medicaid accepts applications throughout the year.
Rates and carriers for 2015
The number of insurance companies selling through the marketplace in Louisiana grew from five to six for 2015 coverage according to the U.S. Department of Health and Human Services. UnitedHealthcare, the nation’s largest health insurance company, joined the marketplace in Louisiana and about 20 other states. United took a very conservative approach in 2014, participating in just five states.
The Commonwealth Fund analyzed premiums and deductibles across all the metal tiers, differences in premiums between urban suburban and rural areas, and insurer participation in nearly all states. For Louisiana, the analysis showed premiums up 12 percent on average from 2014 to 2015. In contrast, the analysis showed a 0 percent change in premiums nationally. According to another study by the Commonwealth Fund, premiums in state individual insurance markets rose an average 10 percent or more each year from 2008 to 2010.
Small group plans
The SHOP exchange in Louisiana provides health insurance plans for businesses with up to 50 employees. Under the ACA, the definition of “small group” was scheduled to expand in 2016 to include businesses with up to 100 employees. But that changed in October when President Obama signed HR1624 (the PACE Act) into law, repealing the definition change for small groups. Under HR1624 States are free to independently define small groups as businesses with up to 100 employees, but most states will continue to define small groups as businesses with up to 50 employees in 2016.
In Louisiana, the state had already codified into law the definition change, mirroring what was in the ACA. But after HR 1624 was signed into law, the Louisiana Department of Insurance issued transitional relief, allowing carriers and businesses in the state to use the definitions in the PACE Act for 2016, rather than requiring businesses with 51 – 100 employees to become part of the small group market. It’s possible that the state could enact legislation to make that transitional relief permanent during the 2016 legislative session.
Paying more for NOT being covered
Penalties, like premiums, are rising. If you don’t qualify for exemption and don’t get health insurance in 2016, you’ll owe a penalty when you pay your 2016 taxes. 2016 penalties are the greater of:
- 2.5% of annual household income. The penalty can never exceed the national average cost for a bronze plan. The IRS announced in Revenue Procedure 2015-15 that the maximum 2015 penalty would be $2,484 for a single individual and $12,420 for a family of five or more. It will be a little higher in 2016, but the cap would only apply to very wealthy households.
- $695 per adult or $347.50 per child under 18. The maximum penalty under this method will be $2,085.
Although there were still 33 million uninsured people in the US in 2014, the IRS reported that just 7.5 million taxfilers were subject to the penalty in 2014 (out of more than 138 million returns). According to IRS data, 12 million filers qualified for an exemption (you can see a list of exemptions here).
2014 enrollment recap
During 2014 open enrollment, 101,778 Louisiana residents signed up for a qualified health plan (QHP). Eighty-eight percent of QHP enrollees received financial assistance, and their average monthly premium after subsidies was $83 according to a federal report.
More than 17 percent of Louisiana residents were without health insurance in 2014.
In early 2014, the Urban Institute estimated that Louisiana’s enrollment in the marketplace would reach 305,000 in 2016. That appears to be on the high side now that 2016 is upon us however. At ACAsignups, Charles Gaba is projecting an enrollment of 225,000 by the end of the 2016 open enrollment period.
ACA and exchange implementation in Louisiana
Louisiana is among the 26 states that left all responsibility for its health insurance marketplace to the federal government. Gov. Bobby Jindal repeatedly rejected a state-run exchange and even returned a $1 million federal planning grant.
Jindal also rejected Medicaid expansion in the state, a decision that leaves 34 percent of uninsured Louisiana adults in the coverage gap, so they can’t get help through Medicaid nor do they qualify for subsidies to purchase insurance through marketplace. According to the Kaiser Family Foundation, almost 192,000 Louisiana residents are shut out of both Medicaid and subsidies to purchase insurance through the marketplace.
The decision against Medicaid expansion affects not only uninsured individuals, but also Louisiana healthcare providers and its overall economy. The state provided $18 million in stopgap funding in late August 2014 when Baton Rouge General Mid City Hospital announced it would close its emergency room due to the expense of providing uncompensated care for the uninsured. Despite the infusion, the emergency room shut down in March 2015. An Urban Institute study says Louisiana is losing out on $15.8 billion in funding between 2013 and 2022 by not expanding Medicaid, while contributing $5.7 billion in taxes over the same period that will be used states that have expanded.
Louisiana health insurance exchange links
State Exchange Profile: Louisiana
The Henry J. Kaiser Family Foundation overview of Louisiana’s progress toward creating a state health insurance exchange.
Louisiana Department of Insurance, Office of Health Insurance
Assists consumers who have purchased insurance on the individual market or who have insurance through an employer who only does business in Louisiana.
(225) 219-4770 / Toll Free: (800) 259-5301