Highlights and updates
- Looking ahead to 2019: Anthem to rejoin exchange; average rate changes very modest
- 1% average rate increase for 2019 (would be lower without federal actions that destabilize the market)
- Approved 1332 waiver will implement reinsurance, reactivate MGARA
- 75,809 enrolled for 2018, down about 4.5% from 2017
- Anthem left exchange at end of 2017, as they said they would without CSR funding
- Initially approved 2018 rates (avg. 20% increase) based on continued CSR funding
- Higher silver rates were implemented for 2018 to cover the cost of CSR
- Higher silver rates resulted in much larger premium subsidies
Maine exchange overview
Maine uses the federally-run exchange, but under the marketplace plan management model, which allows the state to have oversight of the plans that are sold in the exchange.
Maine has one of the few remaining ACA-created CO-OPs (Community Health Options, or CHO); despite challenges in 2015 and 2016, the CO-OP was able to enroll more than 3,000 new members for 2017, and is one of only four CO-OPs (nationwide) continuing to offer coverage for 2018. Amid higher-than-anticipated losses for CHO in the final months of 2017, the Maine Bureau of Insurance and CHO actuaries considered the possibility of establishing a premium deficiency reserve for 2018. But by March 2018, the Maine Bureau of Insurance was confident that CHO would be able to continue to operate without the need for a premium deficiency reserve.
The cost of cost-sharing reductions (CSR) was added to on-exchange silver plans for 2018, which means premium subsidies are much larger than they were in 2017. Two insurers — Harvard Pilgrim and Community Health Options — are offering coverage in the exchange for 2018. Anthem also offered coverage in Maine’s exchange in 2017, but opted to leave the exchange because ongoing CSR funding wasn’t committed by the federal government (and was ultimately eliminated altogether in October). Anthem enrollees had to pick a plan from Harvard Pilgrim or CHO if they wished to continue to have coverage in the exchange for 2018, keeping in mind that the exchange is the only place premium subsidies and CSR benefits are available.
But for 2019, Anthem will rejoin the exchange—despite the fact that the federal government will continue to not reimburse insurers for the cost of CSR in 2019. Anthem announced earlier in 2018 that they would rejoin the exchange if Maine’s proposed reinsurance program was approved and implemented for 2019. Federal approval was granted in late July, 2018.
Maine is the only state in the northeastern U.S. that has refused to accept federal funding to expand Medicaid, but voters in the state passed a legally binding ballot initiative in the 2017 election, which called for Medicaid expansion in Maine by July 2018. However, Governor LePage has been vehemently opposed to Medicaid expansion for years, and has thus far refused to implement the ballot initiative. Although LePage cannot block expansion forever (and will be replaced by a new governor as of 2019), he can delay implementation of the expansion. That’s what has happened so far, and Maine’s Medicaid expansion has been tied up in the court system all year. The state’s Supreme Judicial Court ruled in late August that LePage’s Administration had to move forward with expansion of Medicaid, but nothing had happened as of mid-September.
Instead of Medicaid expansion, LePage’s Administration has been pushing for a reduction in the number of people covered under Maine Medicaid. The state submitted a waiver proposal to HHS in August 2017 that proposes a Medicaid work requirement, asset test, premiums for households with income of 51 percent of the poverty level or above, and the elimination of retroactive eligibility. The waiver proposal was still pending HHS approval as of September 2018.
Maine was one of only six states that already had guaranteed-issue coverage in the individual market pre-ACA (meaning that applications couldn’t be declined based on applicants’ medical history). But the ACA makes coverage much more affordable for people with income up to 400 percent of the poverty level (that’s the upper income limit for subsidy eligibility). The fact that Maine hasn’t expanded Medicaid under the ACA, however, means that coverage is essentially out of reach for people living in poverty.
Approved 1332 waiver will implement reinsurance and reactivate MGARA
In 2011, Maine implemented the Maine Guaranteed Access Reinsurance Association (MGARA) to provide reinsurance coverage for the individual market. The program was funded by reinsurance premiums paid by insurers, as well as a $4 per member per month assessment on all health insurance plans in the state (except state and federal employee benefits plans).
MGARA helped to stabilize Maine’s individual market starting in 2012, and kept premiums lower than they would otherwise have been. The program was suspended at the end of 2013, to make way for the ACA’s reinsurance program that took effect in 2014. But the ACA’s reinsurance was temporary, and only lasted for three years, through the end of 2016.
Now that the federal reinsurance program has ended, several states have implemented—or will soon implement—their own reinsurance programs, using 1332 waivers to receive federal funding. The idea is that reinsurance results in lower premiums across the board, which means premium subsidies are also lower. That reduces the amount that the federal government has to spend on premium subsidies in the state, and the 1332 waiver allows the federal savings to be passed on to the state, in order to fund the reinsurance program. The result is lower premiums and more people insured, since coverage becomes more affordable for people who aren’t eligible for premium subsidies and have to pay full price. Alaska implemented their reinsurance program (mostly funded with federal money via a 1332 waiver) in 2016, resulting in a very modest premium increase for 2017, and a significant premium decrease for 2018.
In 2017, Maine enacted LD659, which reauthorizes MGARA, but on the condition that the state had to submit and receive federal approval for a 1332 waiver that provides federal pass-through funding for the state’s reinsurance program.
In March 2018, the state published an actuarial analysis of the proposed 1332 waiver, and accepted public comments on the proposal until May 2, with two public informational meetings in April. Following the public comment period, Maine submitted a 1332 waiver proposal to CMS on May 9. CMS determined on June 8 that the application was complete, and opened a public comment period from June 8 to July 8. Federal approval was granted on July 30.
The state will re-activate MGARA as of January 2019, providing reinsurance in the individual market (on and off-exchange), using federal pass-through funding in addition to re-activating the $4 per member per month assessment on all health insurance plans in the state. The reinsurance program is projected to result in individual market premiums that are 9 percent lower in 2019 than they would be without the reinsurance program (insurers filed two sets of rates for 2018; with reinsurance, the average proposed rate increase is 6.17 percent, and without reinsurance, it would have been 9.58 percent). The actuarial analysis of the waiver proposal notes, however, that despite the lower premiums that will result with MGARA in effect, the rate of premium increases in Maine’s individual market over the next decade is still expected to outpace inflation.
According to the actuarial analysis of Maine’s proposed 1332 waiver, the number of people insured in Maine’s individual market is projected to decrease by about 19 percent in 2019, due to the expansion of Medicaid that voters approved in the 2017 election. Governor LePage has thus far not moved forward with implementing Medicaid expansion, but once Medicaid is expanded, people with income between 100 percent and 138 percent of the poverty level will switch from the exchange to Medicaid, resulting in fewer people in the individual market.
The elimination of the individual mandate at the end of 2018 will also result in a reduction of the population with individual health insurance, likely on the more affluent end of the spectrum. Healthy people with income above 400 percent of the poverty level, who don’t get any premium assistance, are the most likely to leave the market once the individual mandate is eliminated. But these are also the people who are likely to be retained in the market by the re-activation of MGARA and the fact that premiums for 2019 will be lower with the reinsurance program in effect than they would otherwise be.
Under Maine’s new reinsurance program, which has received approval for federal pass-through funding through 2023, MGARA will cover 90 percent of claims that are between $47,000 and $77,000, and it will pay 100 percent of claims that range from $77,000 up to $1 million (this is considerably more generous than the reinsurance programs in some other states; Wisconsin, for example, will have a reinsurance program that pays 50 percent of claims that are between $50,000 and $250,000). Maine’s program will also be set up so that when an enrollee has claims associated with one of eight high-cost medical conditions (uterine cancer; metastatic cancer; prostate cancer; chronic obstructive pulmonary disease (COPD); congestive heart failure; HIV infection; renal failure; and
Rheumatoid Arthritis), their claims are ceded to MGARA (the insurer gives 90 percent of the enrollee’s premiums to MGARA, and MGARA then pays a portion of the claims for that enrollee).
Approved rate increases for 2019; Anthem will rejoin the exchange, average rate changes very modest
As described above, the approval of federal funding for Maine’s reinsurance program (MGARA) did not come until late July, which was well after insurers had to file their proposed rates for 2019. So the Maine Bureau of Insurance had insurers file two sets of rates for 2019: One based on the assumption that the reinsurance program woul dbe implemented, and the other based on the assumption that it wouldn’t.
The rate filings are available via SERFF, and the Bureau of Insurance has included the SERFF filing number for each insurer. As was the case in 2018, the cost of cost-sharing reductions (CSR) is being added to on-exchange silver plan premiums for 2019.
And in a significant development, Anthem’s filings stated that the insurer would rejoin the exchange in Maine if the reinsurance program is implemented (federal approval was granted in July, and the reinsurance program will take effect in January 2019). Anthem left the exchange at the end of 2017 due to the Trump Administration’s decision to end federal funding for CSR. Anthem still offers coverage in the Maine individual insurance market in 2018, but only off-exchange.
The Maine Bureau of Insurance has posted a summary page showing the following approved average rate changes for 2019, based on the anticipated implementation of MGARA:
- Anthem: a 4.3 percent DECREASE
- Community Health Options: 0.9 percent increase
- Harvard Pilgrim: 2.1 percent increase
At ACA Signups, Charles Gaba has calculated a weighted average rate increase of 1 percent in Maine’s individual market for 2019.
It’s noteworthy that Community Health Options’ rate filing indicated that 5 percentage points of their rate increase is due to the repeal of the individual mandate penalty after the end of 2018, and another 5 percentage points is due to the Trump Administration’s proposal to expand access to short-term plans and association health plans. So without those changes, CHO would be implementing a significant rate decrease instead of a slight rate increase.
Nearly 76k enrolled for 2018, down from more than 79k in 2017
The enrollment window for 2018 coverage was the first time that open enrollment ended before the start of the new year, with all plans effective January 1. Open enrollment began on November 1, and ended December 15, 2017, although Maine residents actually had until December 31 to enroll, due to the windstorms that hit the state in October.
75,809 people signed up for coverage via Maine’s exchange during open enrollment, down about 4.5 percent from the 79,407 people who enrolled in plans for 2017, That, in turn, was a decrease of about 5.5 percent from the 84,059 who enrolled the year before. The decreased enrollment is likely a result of the ongoing uncertainty about the future of the ACA under the Trump Administration (more details below), the fact that the Trump Administration sharply reduced funding for exchange marketing and enrollment assistance. And for 2018 coverage, the shorter enrollment period likely played a role in reducing total enrollment.
Nationwide, states that use HealthCare.gov saw overall enrollment declines of roughly 5 percent in 2017 and again in 2018, after growing from 2014 through 2016.
Of the people who were enrolled in 2017 coverage in Maine’s exchange 87 percent were receiving premium subsidies. HHS estimated in 2016 that another 10,000 people could qualify for subsidies in the Maine exchange, but they had off-exchange individual market coverage instead, where subsidies aren’t available.
Anthem exited Maine exchange at the end of 2017
Maine’s exchange had three insurers offering coverage in 2017 — all statewide. But on September 27, 2017, Anthem announced that they would exit the exchange in Maine at the end of 2017. Residents of Maine who had exchange plans from Anthem had to select coverage from another insurer during open enrollment if they wanted to continue to have coverage in the exchange — which is the only place subsidies are available.
Open enrollment ended on December 15. But people in Maine who lost Anthem coverage at the end of December were also eligible for a special enrollment period, triggered by involuntary loss of coverage, that ran concurrently with open enrollment, and also continued for 60 days after the end of 2017. Anthem exchange enrollees who did not pick their own new plan by December 15 were automatically enrolled into a similar plan from another exchange insurer, but they also had until March 1, 2018 to select their own replacement plan.
Anthem allowed existing members to switch to off-exchange plans (without subsidies) if they wanted to renew with Anthem instead of switching to a plan from another insurer. But for new 2018 enrollees, Anthem only offers one gold plan (off-exchange) in Aroostook, Hancock and Washington Counties. Anthem had about 28,000 individual market enrollees in 2017, but according to their rate filing, they expected that to decrease to about 5,600 in 2018, all of whom would have off-exchange coverage.
Anthem’s announcement was not surprising to anyone who had read their recent filings, as the insurer clearly stated that their plan was to exit the exchange if cost-sharing reduction (CSR) funding did not continue. The filing described exactly what Anthem ultimately did, including the switch to a gold-level off-exchange plan in Rating Area 4 (Aroostook, Hancock and Washington Counties).
The Maine Bureau of Insurance had asked the three insurers to provide backup filings to be used if CSR funding wasn’t committed for 2018. Harvard Pilgrim and Community Health Options proposed higher rates (details below), but Anthem said that their backup plan was to exit the exchange.
If lawmakers had allocated funding for CSRs at any point during 2017, or if the Trump Administration had committed to continuing the payments, Anthem planned to stay in the exchange for 2018. They made it clear that they couldn’t stay if the CSR funding wasn’t committed, and they waited until the last day to make their decision. Insurers had to sign contracts with HealthCare.gov by September 27, so the CSR situation could have been remediated at the federal level anytime until then.
There was a bipartisan market stabilization bill in the works that would have allocated funding for CSRs, but Senate Majority Leader Mitch McConnell tabled it in favor of focusing on the Graham-Cassidy amendment to repeal the ACA (which fell apart on September 26)
The ACA has faced ongoing sabotage attempts ever since it was enacted, and the uncertainty at the federal level throughout 2017 has exacerbated the problem. Anthem’s departure from Maine’s exchange was forewarned and clearly stated, but the CSR funding issue remained unresolved as of the deadline for insurers to commit to the exchange. This was a situation that could have been avoided, but lawmakers in the majority party opted instead to continue to push for ACA repeal with a bill that was hastily drafted and a process that ignored regular Senate order.
Anthem joined quite a few other insurers that exited the exchanges at the end of 2017 across the country. Most cited federal uncertainty as a significant factor in their decisions to exit the market.
Ultimately, most of the insurers that remained in the exchanges nationwide (including in Maine) were able to add the cost of CSR to premiums — mostly on silver plans. That meant that premium subsidies were larger than they would otherwise have been, making coverage more affordable for people who get premium subsidies. As long as insurers can continue to add the cost of CSR to silver plan premiums in future years, the lack of direct federal funding for CSR isn’t likely to be a problem, as it’s essentially more than offset by federal funding for larger premium subsidies.
Initially approved 2018 rates increases were based on assumption that CSR funding would continue
Regulators in Maine published 2018 rate proposals for the three Maine exchange insurers in June 2017, and finalized the rates in early September. Insurers proposed two sets of rates: one that assumed cost-sharing reduction (CSR) funding would continue, and another that assumed the federal government would not fund CSRs in 2018 (ultimately, CSR funding was eliminated in October 2017, so the second set of rates were applicable).
The Maine Bureau of Insurance initially rejected all three insurers’ rate proposals on August 10, and asked them to submit new rates. The revised rate filings were then approved on September 1. These average approved rate increases were all based on the assumption that CSR funding would continue in 2018, so they ended up being insufficient:
- Anthem: 18 percent (Anthem initially proposed a 21.2 percent average increase, which the Maine Bureau of Insurance deemed excessive. Anthem refiled with an 18 percent average rate increase, which was approved). The increase would have applied to 28,707 members if CSR funding had continued and Anthem had thus remained in the exchange.
- Community Health Options: 17.5 percent (CHO initially proposed a 19.6 percent average increase. The Maine Bureau of Insurance rejected that proposal, but noted that they would approve an average rate increase of 17.5 percent. The increase would have applied to about 33,104 members (CHO expects their membership to increase to roughly 39,054 members in 2018) if CSR funding had continued.
- Harvard Pilgrim HMOs: 27.1 percent (Harvard Pilgrim initially proposed an average rate increase of 39.7 percent, which was rejected as excessive by the Maine Bureau of Insurance. They filed the new average rate increase of 27.1 percent, which was approved). The increase would have impacted about 20,773 members if CSR funding had continued.
So if CSR funding had continued, the weighted average approved rate increase would have been about 20.1 percent.
Alternate rate proposals were implemented when CSR funding did not continue
Maine’s insurers noted that if CSR funding were to be eliminated (which ended up being the case), the rate increases would need to be significantly higher for silver plans, and Anthem’s alternate rate proposal noted that they would not offer plans in the exchange if CSR funding were to be eliminated:
- Anthem: 25.2 percent, but Anthem plans would no longer be available on the exchange if CSR funding is eliminated (this backup plan was implemented on September 27 — the deadline for insurers to commit to the exchange — because CSR funding had still not been committed by that point; ultimately, the funding was cut off altogether in mid-October). Anthem noted that they have about 28,000 individual market members in 2017, but expected that to fall to just 5,600 if Anthem plan were to no longer be available on the exchange. In addition to moving to an off-exchange-only model, Anthem will only market one gold off-exchange plan for new enrollees, in rating area 4. The higher average rate increase (25.2 percent versus 18 percent if CSR funding had continued) reflects the overall higher morbidity Anthem expects in their membership if their plans are no longer available on-exchange and no longer actively marketing to new enrollees in most parts of the state.
- Community Health Options: 15.8 percent, but silver plan rates would increase by an average of 50 percent, while other metal levels would increase by an average of 6-19 percent (note that despite the much higher silver plan rate increases, the overall average increase for CHO is actually lower in this scenario than it would be if CSR funding were committed. The insurer’s actuaries confirmed that this is correct, and is based on the expected distribution of plan selections and how the rates would change for each plan; people with silver plans and no premium subsidies would be expected to switch to gold or bronze plans instead, which would have smaller average rate increases).
- Harvard Pilgrim HMOs: 38.3 percent, with silver plans having an average increase of 41.7 to 45.9 percent.
Regardless of the rate increases, premium subsidies will protect most enrollees from the brunt of the increase. 87 percent of Maine exchange enrollees are receiving premium subsidies, which will grow to keep pace with the new rates. Premium subsidies are based on keeping the cost of the second-lowest-cost silver plan at an affordable level, and the percentage of income that’s considered affordable will be slightly smaller in 2018 than it was in 2017, meaning that after-subsidy premiums will decline slightly for some enrollees.
Adding the cost of CSR to silver plans means premium subsidies are much larger in 2018
Because CHO and Harvard Pilgrim added the cost of CSR to their silver plan premiums for 2018, premium subsidies are much larger than they would otherwise have been. This keeps the after-subsidy cost of the benchmark silver plan roughly consistent with 2017, but it makes bronze and gold plans more affordable than they were in 2017 for people who are eligible for premium subsidies.
As an example, a 50-year-old in Portland who earns $35,000 in 2018 can get a 2018 bronze plan for as little as $26/month after premium subsidies (and the subsidy is $445/month for this individual; note that subsidies vary based on income and the cost of the benchmark plan for each applicant).
In 2017, a 50-year-old in Portland earning $35,000 would have had to pay $214/month for the lowest-cost bronze plan after premium subsidies, because the subsidy would have been just $119/month. And while the cheapest gold plan would have cost this individual $461/month after subsidies in 2017, the cheapest gold plan for 2018 is $351/month.
The spike in silver plan premiums means that the subsidies have to be much larger to keep silver plans at an affordable level, but those much larger subsidies can also be applied to plans at other metal levels, which don’t have the cost of CSR added to their premiums.
Average rate changes for 2017
There were five carriers in the individual market in Maine in 2016, including both the HMO and PPO arms of Harvard Pilgrim. Three of them—all except Aetna and Harvard Pilgrim PPO—are continuing to offer on-exchange plans in 2017. Average rate changes (before any subsidies are taken into account) were:
- Anthem: 18 percent (carrier initially proposed a 14.1 percent average increase, and later increased it to 19.4 percent. But state regulators didn’t approve of the increased profit margin in the second increase. Anthem then filed another average increase of 18 percent, which was approved). The increase impacted approximately 15,650 members.
- Community Health Options: 25.5 percent (carrier initially proposed a 22.8 percent increase, but later revised the average rate hike to 25.5 percent, which was approved). The increase applied to about 58,750 members.
- Harvard Pilgrim HMOs: 21.1 percent (the carrier initially proposed an 18.7 percent average increase, but later revised the filing to a 21.1 percent average increase, which was approved). The increase impacted about 7,100 members.
For 2015 and 2016, rate changes in Maine were very small, so the rate changes for 2017 likely caused some sticker shock — although the larger subsidies are offsetting some of the rate increases for subsidy-eligible enrollees, which includes the large majority of Maine exchange enrollees. Two of the ACA’s rate-stabilizing mechanisms (risk corridors and reinsurance) were temporary, and ended at the end of 2016. This was one of the driving factors for higher premiums in 2017.
Community Health Options also proposed eliminating their “Preferred” individual market plan, and mapping existing members to their “Community Choice” product instead. Both plans are PPOs.
For enrollees who receive premium subsidies, the subsidies are offsetting a significant portion of the rate increases for 2017. But people who don’t receive subsidies — including everyone who shops off-exchange — likely saw significantly higher premiums in Maine in 2017.
Aetna canceled plans to join exchange for 2017
Aetna had planned to enter the exchange in Maine for 2017, with plans available in nine of the state’s 16 counties. Aetna offered coverage in the exchanges in 15 states in 2016, and Maine was among five states where the carrier had planned to add exchange coverage for 2017. But in early August—three months prior to the start of open enrollment for 2017 coverage—Aetna announced that they were abandoning their plans to expand into those five states. And they subsequently announced that they would exit the exchanges in 11 states, continuing to offer exchange plans in 2017 in just four states.
Aetna already offered individual market plans in Maine, but only outside the exchange. According to their rate filing for 2017, they have 700 enrollees in their ACA-compliant Whole Health plan in 2016.
During the 2016 open enrollment period, enrollment in private plans through the Maine health insurance exchange reached 84,059 people. By March 31, effectuated enrollment stood at 75,240. Of the people with effectuated coverage at the end of the first quarter, nearly 85 percent were receiving premium subsidies.
For 2015, 74,805 people enrolled in private plans through the Maine exchange during open enrollment, and effectuated enrollments had fallen to 66,828 by the end of March 2015. So the 2016 enrollment represents a 12 percent increase over 2015, and the effectuated enrollment total at the end of March was 12.5 percent higher than it had been the previous year.
Now that open enrollment has ended for 2016, plan changes and new enrollments aren’t available (on or off exchange) unless the applicant has a qualifying event (Native Americans can enroll year-round, as can anyone who is eligible for Medicaid or CHIP).
CO-OP still operational; 48,000 enrolled
Maine is one of 23 states where a CO-OP health plan was established under the ACA. 18 have not survived, although the CO-OP in Maine (Community Health Options, or CHO) is one of five that are still operational.
Community Health Options stopped enrolling individual market members for 2016 in December 2015, and enrollment was frozen until 2017 enrollment began in November 2016. The CO-OP’s average rate increase for 2017 was 25.5 percent, and some plan modifications were made to reduce costs (adult vision and elective abortion coverage were removed, and out-of-network deductibles were increased).
As of February 1, 2017, the Maine Bureau of Insurance reported that CHO’s membership was about 48,000 people. That’s a significant drop from the 84,000 members who were enrolled in February 2016, but the drop was expected, given the enrollment freeze throughout 2016, and the rate increase for 2017. By mid-January, CHO had enrolled between 3,000 and 4,000 new members for 2017, compared with about 12,000 new members who enrolled for 2016. The CO-OP’s higher rates for 2017 meant that they were no longer as price competitive as they had been in prior years, but the lowered enrollment is part of their plan to get back on financially solid ground, since their earlier struggles were tied in part to rapid enrollment growth and higher-than-expected claims.
In February 2017, the Maine Bureau of Insurance reported that CHO’s 2016 incurred claims were slightly lower than anticipated, and noted that “the Company remains optimistic that this favorable trend will continue and the BOI is monitoring results on a weekly basis.”
The Maine Bureau of Insurance has been publishing monthly reports on CHO’s status since March 2016. You can see them all here.
Maine regulators address CO-OP losses in 2015/2016
An HHS report published in July 2015 analyzed the financial and enrollment status of the CO-OPs, and CHO stood out as the only one with a positive net income in 2014. Community Health Options also exceed enrollment expectations in 2014, enrolling 257 percent of their projected 2014 target.
In 2014, one other carrier – Anthem – competed with the CO-OP for individual enrollments on the Maine exchange, and the CO-OP garnered about 83 percent of the enrollments. In 2015, Harvard Pilgrim joined the exchange, but even with two competitors, Community Health Options still got about 80 percent of the 2015 enrollments.
But the tremendous growth the CO-OP experienced also resulted in higher-than-anticipated claims, and significant losses 2015. According to news reports, Community Health Options lost more than $17 million in the first three quarters of 2015, after making almost $11 million in the first three quarters of 2014. And the losses spiked in the final quarter of 2015; total losses for the year reached $74 million, although only $31 million of that was real losses from 2015; the other $43 million was money that the CO-OP set aside as a “premium deficiency reserve” to cover anticipated losses in 2016.
By the end of the first quarter of 2016, it was evident that CHO was doing better than it had in 2015. Administrative costs had been reduced, and claims were coming in lower than expected. The CO-OP’s cash investments stood at $83.9 million at the end of March 2016, up from $76.4 million at the end of 2015.
Community Health Options is also the only one of the remaining CO-OPs that did not owe money to the federal government for the 2015 risk adjustment program. Instead, Community Health Options received about $710,000 from the federal government under the risk adjustment program (funds for the 2015 year were paid in 2016).
The Maine Bureau of Insurance stepped in as soon as the losses through the third quarter of 2015 were known. By then it was clear that the CO-OP’s 2015 premiums had been set too low, as were the 2016 premiums (which were only an average of 0.5 percent higher than 2015’s rates). But there was nothing that could be done to raise them at that point, since the rates were already locked in until the end of 2016.
The BOI asked the CO-OP to stop selling the underpriced plans for 2016 as soon as possible, but December 26th was the soonest CMS could remove Community Health Options’ products from Healthcare.gov (the CO-OP only accepted new individual enrollments through their own website until December 15). After December 26, Community Health Options ceased all new individual enrollments for 2016. They continued to enroll groups for 2016 though.
By the end of February 2016, CHO’s total enrollment stood at 84,269 (individual and group combined), which was a 12.4 percent increase over their total enrollment at the end of 2015. The total enrollment was higher than CHO had planned when they decided to cease enrollment for 2016, due to the amount of time it took for Healthcare.gov to remove the CO-OP from the enrollment platform.
In February 2016, the BOI proposed a plan to put CHO into receivership and terminate roughly 15 to 20 percent of the carrier’s individual plan enrollments in order to stem the losses that were expected for 2016. The BOI was going to work with Anthem and Harvard Pilgrim to transition the terminated members to other plans, while ensuring that they wouldn’t have to meet their out-of-pocket costs again on the new plan if they had already done so early in the year with their CHO coverage. However, the federal government rejected the BOI’s proposal, citing the fact that ACA-compliant policies must be guaranteed renewable (they can be terminated, but only if all the plans are terminated – individual enrollees cannot have their plans terminated while the same plans remain in force for other members)
Most of the CO-OP’s enrollees were in Maine in 2016, although some were in New Hampshire (Community Health Options expanded to New Hampshire in 2015, and the CO-OP ceased new individual plan enrollments in New Hampshire on the same schedule they used in Maine; for 2017, they pulled out of New Hampshire altogether). The CO-OP still had the majority of the 2016 individual market share in Maine, despite ceasing enrollment mid-way through open enrollment for 2016.
CEO Kevin Lewis noted that they “need to be responsible and work within the reserves that we have available.” The CO-OP renewed all existing members from 2015 — unless they opted to switch to a different carrier during open enrollment — and Lewis has said that the CO-OP is “not in the slightest” danger of closing. His projection was that Community Health Options will start selling new plans again “at some point in the not-so-distant future” — which ended up being November 2016, for plans effective in January 2017.
Average benchmark plans less expensive in 2016
84.9 percent of the people who had effectuated coverage as of March 2016 through the Maine exchange were receiving premium subsidies. Their average subsidy is $342 per month. At the end of open enrollment, the average pre-subsidy premium for subsidy-eligible enrollees was $428/month, while their average after-subsidy premium is $103/month. So the average subsidy amount climbed from $325 per month to $342 per month by the end of March, indicated that the people who didn’t keep their coverage (or pay for it in the first place) were those who were receiving smaller subsidy amounts.
In 2015, 89 percent of Maine enrollees qualified for premium subsidies. Their average pre-subsidy premium was $425/month, and their average after-subsidy premiums was only $93/month.
Without accounting for subsidies, the three carriers in the Maine exchange all had very modest overall rate changes for 2016:
- Community Health Options (a CO-OP, originally called Maine Community Health Options), which has about 80 percent of the market share in the exchange, proposed a 0.5 percent increase. Rate changes were approved as filed, and range from an average 1.73 percent decrease to a 0.54 percent increase (note that Community Health Options plans for 2016 are no longer for sale in the individual market after December 26, 2015, and in hindsight, the rates that were approved fro 2016 were too low).
- Anthem BCBS had “most” of the remaining market share, and proposed a 5.7 percent average increase. Average approved rate changes ranged from a 1.1 percent decrease to a 5.49 percent increase.
- Harvard Pilgrim Health Care proposed a 4.8 percent decrease, and Healthcare.gov’s quoting tool confirms that Harvard Pilgrim’s rates are indeed lower in 2016 than they were in 2015.
Kaiser Family Foundation compiled data on benchmark plan (second-lowest-cost Silver) premium changes in major cities across the country. In 2015, the average pre-subsidy benchmark premium for a 40-year-old non-smoker in Portland was $282/month. In 2016, it’s only 1.1 percent higher, at $285/month. But state-wide, the average benchmark premium in Maine is 1.2 percent less expensive than the average benchmark premium in the state in 2015. Keep in mind that the benchmark plan can be offered by a different carrier from one year to the next – the designation just means it’s the second-lowest-cost Silver plan for a given area in a given year.
The very small overall rate change is particularly significant in Maine given the fact that it’s the second year in a row that their overall rates have been almost unchanged.
The individual market in Maine includes five carriers, but two of them (HPHC and Aetna) only offer plans outside the exchange in Maine in 2016. Starting in 2017, Aetna’s plans will be available on-exchange in nine of the state’s 16 counties.
Universal health care study vetoed
In June 2015, Maine lawmakers passed LD384, a bill to study options for universal health care in Maine that would be compliant with the ACA. The bill called for consultants to develop at least three ACA-compliant universal health care designs and submit them to the legislature by December 2016. It also made available $100,000 in federal grant money for the study, to be dispersed by the end of June 2016. The final proposal was to include at least one of each of the following models:
1. A government-funded single payer system that only allows private health insurance to cover supplemental benefits, with no private coverage available for benefits covered by the single-payer system.
2. A government administered that incorporates integrated health care delivery and payment.
3. A “public health benefit option” run by the state, but with the option for people to select either the public option or private health insurance.
A much larger percentage of eligible Maine residents opted to enroll in medical insurance through HealthCare.gov in 2015 compared to 2014. Nearly 60 percent of eligible Maine residents (about 74,805 of 124,000) purchased coverage in 2015 versus just 36 percent in 2014. About 80 percent of them selected Community Health Options, an ACA-created CO-OP.
By the end of June, effectuated enrollment had declined to 66,828 (attrition is a normal part of the individual market; nationwide, effectuated enrollment declined during the second quarter of 2015, as the marketplaces stepped up their enforcement of documentation requirements for enrollees’ immigration and financial status). Nearly 89 percent were receiving premium subsidies, and 58 percent were receiving cost-sharing subsidies (available to reduce out-of-pocket exposure on silver plans for enrollees with incomes up to 250 percent of the poverty level).
Higher tax penalty if you were uninsured in 2016 and/or remain uninsured in 2017
The penalty for not having insurance went up again in 2016 (penalty payments are assessed when you file your tax return, so for 2016, they’ll be assessed in the spring of 2017). If you don’t qualify for an exemption, you’ll have to pay the higher of:
- 2.5 percent of annual household income. The penalty can never exceed the national average cost for a bronze plan. For 2016, Revenue Procedure 2016-43 set the maximum penalty to $2,676 for a single individual, and $13,380 for a family of five or more, if they were uninsured in 2016. Note that the cap would only apply to very wealthy households, since 2.5 percent of most households’ income is far less than these amounts.
- $695 per adult or $347.50 per child under 18. The maximum penalty under this method is $2,085 per household. This amount is subject to inflation each year after 2016, but the IRS confirmed that there would be no inflation adjustment for 2017, so $695 per uninsured adult continues to be the flat-rate penalty in 2017.
Although there were still 33 million uninsured people in the US in 2014, the IRS reported that just 7.5 million tax filers 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). For 2015, even fewer people were subject to the penalty. The IRS reported in January 2017 that 6.5 million tax filers paid an average of $470 in penalties for being uninsured in 2015.
This penalty calculator can help you figure out how much you may have to pay if you weren’t covered during 2016 or remain uninsured in 2017
2015 rates and insurers
According to the Maine Bureau of Insurance, Maine Community Health Options (MCHO), Anthem Health Plan of Maine, and Harvard Pilgrim Health Care offered about 40 individual polices through the exchange in 2015. These three insurers also offered policies to small businesses through the SHOP exchange. Harvard Pilgrim was new to the Maine marketplace in 2015.
Aetna only offered plans outside the exchange in 2015 (that’s also the case in 2016). Mega, a Texas-based insurer, withdrew from the Maine market at the end of 2014.
Average premiums for 2015 were the same or slightly lower than 2014 rates. MCHO, which won a large percentage of 2014 enrollees, kept its rates flat for 2015. Anthem’s rates dropped an average of 1.1 percent.
Uninsured rate dropped after 2014 open enrollment
According to a Gallup-HealthWays survey, Maine’s uninsured rate was 16.1 percent in 2013, and had dropped to 9.4 percent by the first half of 2015.
Although enrollment in private plans through the exchange stood at nearly 67,000 people in mid-2015, the state’s refusal to accept federal funding to expand Medicaid means that the uninsured rate is still considerably higher than it would be if Medicaid expansion were in place.
History of the Maine marketplace
Maine’s health insurance marketplace is operated by the federal government. Gov. Paul LePage announced the state’s decision against a state-run model in November 2012. In a letter to then HHS Secretary Kathleen Sebelius, LePage said the Affordable Care Act has “severe legal problems” and state-run exchanges will be “actually controlled” by the federal government.
LePage’s administration did explore creating a state-run exchange. The governor appointed an advisory committee, and in September 2011 that committee recommended that Maine implement a state-run exchange. The committee also issued recommendations as to how the exchange should be structured and governed. However, Maine ultimately joined the Supreme Court case that attempted to overturn the Affordable Care Act, and the state legislature failed to pass exchange legislation in both 2011 and 2012.
No Medicaid expansion
Maine is the only state in the north-eastern US that has not expanded Medicaid. It’s also got the highest uninsured rate in the north-east, and Washington County still has 14 percent of its residents without health insurance coverage.
Democrats in the Maine Legislature have pushed for Medicaid expansion, but could not overcome Gov. LePage’s ongoing opposition on the issue. LePage has vetoed five Medicaid expansion bills. The November 2014 election offered hope for a turnaround on Medicaid expansion, with two challengers supporting expansion and LePage was considered vulnerable. However, LePage was returned to office.
Maine has provided Medicaid coverage to low-income young adults age 18 – 20 since 1991, but LePage had proposed eliminating coverage for 19 and 20 year old non-disabled adults as a way to save the state $3.7 million in Medicaid costs. A federal appeals court prevented that change in late 2014, and in June 2015, the Supreme Court declined to hear Maine’s case. As a result, 6,500 young adults in Maine will be able to keep their Medicaid coverage.
But there are 24,000 adults in the coverage gap in Maine; they don’t qualify for Medicaid because the state has not expanded the eligibility guidelines, but they also don’t qualify for premium subsidies in the exchange because their income is under the poverty level. Until the state expands Medicaid, those people have no realistic access to health insurance coverage.
Maine health insurance exchange links
State Exchange Profile: Maine
The Henry J. Kaiser Family Foundation overview of Maine’s progress toward creating a state health insurance exchange.
Louise Norris is an individual health insurance broker who has been writing about health insurance and health reform since 2006. She has written dozens of opinions and educational pieces about the Affordable Care Act for healthinsurance.org. Her state health exchange updates are regularly cited by media who cover health reform and by other health insurance experts.