Aetna cancels 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 already offers coverage in the exchanges in 15 states, 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.
Proposed rates for 2017: More than 20% weighted average increase
There are five carriers in the individual market in Maine, including both the HMO and PPO arms of Harvard Pilgrim. Three of them—all except Aetna and Harvard Pilgrim PPO—will offer on-exchange plans in 2017. Proposed rate changes are:
- Anthem: 14.1 percent increase (15,650 current members)
- Community Health Options: 22.8 percent increase (58,750 members)
- Harvard Pilgrim HMOs: 18.7 percent increase (7,100 current members)
Off the exchange, Harvard Pilgrim has proposed a 24.4 percent increase for its PPO plans (200 members, off-exchange only). Aetna has proposed a 14.2 percent average rate increase, and have scrapped their plans to expand into the exchange for 2017.
All told, that’s a weighted average rate increase of about 20.67 percent, although it remains to be seen whether the rates will be approved as proposed. For 2015 and 2016, rate changes in Maine were very small, so the proposed rate changes for 2017 could cause some sticker shock. Two of the ACA’s rate-stabilizing mechanisms (risk corridors and reinsurance) are temporary, and will end at the end of 2016. This is one of the driving factors that could result in higher premiums in 2017.
Community Health Options is also proposing to eliminate their “Preferred” individual market plan, and map current members to their “Community Choice” product instead. Both plans are PPOs.
For enrollees who receive premium subsidies, the subsidies will offset a significant portion of the rate increases for 2017. But people who don’t receive subsidies – including everyone who shops off-exchange – will likely see significantly higher premiums in Maine next year.
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 leads market share, despite early enrollment freeze
Maine is one of 23 states where a CO-OP health plan was established under the ACA. 16 have not survived, although the CO-OP in Maine (Community Health Options, or CHO) is one of seven that are still operational. But for the time being, enrollment in CHO’s individual plans is frozen, and the CO-OP has requested an average rate increase of 22.8 percent for 2017.
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 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 has experienced has 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 have been reduced, and claims have been lower than expected. The CO-OP has not had to draw down as much from reserves as anticipated, and their 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 does not owe money to the federal government for the 2015 risk adjustment program. Instead, Community Health Options will receive about $710,000 from the federal government under the risk adjustment program (funds for the 2015 year are paid in 2016).
Maine regulators address CO-OP losses
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 are continuing 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 are 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 are in Maine, although some are 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). The CO-OP still has 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 is that Community Health Options will start selling new plans again “at some point in the not-so-distant future” – which could include 2016 plans later in the year, or could indicate that the CO-OP won’t have plans available again until 2017.
The CO-OP has been in the news frequently since the extent of their 2015 losses became apparent – particularly since they were the only CO-OP to make a profit in 2014. But Lewis says that the reports of the CO-OP’s struggles have been exaggerated, and that CHO’s administrative and claims expenses were lower than projected in the first two months of 2016. In their March report on CHO, the BOI confirmed that was true for January, and CHO had a better-than-expected first quarter of 2016. It’s too soon to say that the CO-OP is out of the woods, but they’re certainly doing better than they were in late 2015.
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 (link includes chart detailing the plans available from each carrier), 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’re uninsured in 2016
The penalty for not having insurance goes up again in 2016. If you don’t qualify for an exemption, you’ll have to pay the higher 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 per household.
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).
This penalty calculator can help you figure out how much you may have to pay if you aren’t covered during 2016.
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.