Looking ahead to 2017
Maryland is one of many states where UnitedHealthcare is exiting the individual market at the end of 2016. The rest of the carriers that participate in the state-run exchange—Maryland Health Connection—in 2016 will continue to do so in 2017, and have proposed the following average rate increases:
- CareFirst Blue Choice (HMO): 12 percent
- CareFirst Blue Cross Blue Shield: 16 percent
- Cigna: 30 percent
- Evergreen: 8 percent
- Kaiser Permanente: 25 percent
CareFirst Blue Choice still has the bulk of the market share. At ACA Signups, Charles Gaba has calculated a weighted average requested rate increase of about 15 percent. This is lower than the 20 percent average rate increase in Maryland in 2016, although the proposed rates are still under review, and Maryland regulators ended up increasing some of the proposed rate hikes last year (details below).
As of March 2016, there were 135,208 people with in-force coverage through the exchange. In May 2016, Maryland Health Connection announced that there were still about 240,000 people in the state who were eligible to purchase coverage through the exchange (not including those eligible for Medicaid). Three years before, that number stood at 405,000.
2016 open enrollment
Maryland Health Connection enabled online browsing for 2016 plans a month ahead of the start of open enrollment. In the first nine days of open enrollment for 2016, Maryland Health Connection reported that 89 percent of their enrollees who had already returned to the exchange to actively renew their coverage for 2016 had switched to a different plan rather than keeping their existing coverage for 2016.
This was not unexpected, given CareFirst’s market share (78 percent of the exchange market as of August) and rate increase (more than 21 percent), combined with the fact that two other exchange carriers in Maryland have lower prices in 2016 than they had in 2015. However, when 2017 rate requests were filed in the spring of 2016, CareFirst Blue Choice still had the bulk of the individual market—roughly 55 percent of the full individual market, including on and off-exchange coverage.
Nationwide, open enrollment for 2016 ended on January 31. But Maryland Health Connection allowed people who began the enrollment process by January 31 to finish by February 5 if they were unable to finish on time due to the snowstorm that struck the area.
By February 5, 162,177 people enrolled in health plans (QHPs) through the exchange, including 51,195 enrollees who were new to the exchange for 2016. But there are always some enrollees who don’t pay their initial premiums, or who cancel their coverage for one reason or another (this has always been the case in the individual market, and is not new with the ACA). By March 31, effectuated enrollment stood at 135,208.
For perspective, 120,617 people had in-force coverage through the exchange as of October 2015, and compared with enrollment at the end of the 2015 open enrollment period, 2016’s enrollment (as of February 5) represented a 35 percent increase – the third highest percentage increase in the country, and a sign that Maryland Health Connection has moved well beyond their initial rocky start in 2013/2014.
Including Medicaid coverage, more than 500,000 people enrolled in health coverage through Maryland Health Connection between November 1, 2015 and February 5, 2016. Medicaid enrollment continues year-round, and the Medicaid enrollment total during open enrollment (362,415) includes people who renewed their existing Medicaid coverage, as well as new enrollees.
A total of 30,313 people had enrolled in dental plans through Maryland Health Connection by February 5, including people who bought stand-alone dental on its own, as well as people who purchased dental coverage in addition to health coverage. 2016 is the first year that dental plans have been available through the exchange in Maryland.
According to Kaiser Family Foundation data, there were still 336,000 uninsured residents in Maryland in 2015. About 40 percent of them were eligible for Medicaid, and 13 percent were eligible for premium tax credits in the exchange. Of the people who enrolled in private plans through Maryland Health Connection for 2016, 90 percent were eligible for premium subsidies.
Until open enrollment begins again on November 1 – for coverage effective in 2017 – enrollment will only be possible for people who have a qualifying event (this is true both on and off-exchange). However, Native Americans can enroll year-round, as can anyone eligible for Medicaid or CHIP.
Legislation introduced to make pregnancy a qualifying event
In February 2016, SB662 was introduced in the Maryland Senate, with eight Democratic sponsors. The legislation would have deemed pregnancy to be a qualifying event. Both on and off the exchange, a pregnant woman would be eligible to enroll in a health plan “at any time after the commencement of pregnancy, as certified by a healthcare practitioner” and the special enrollment period would remain open throughout the pregnancy.
SB662 did not pass out of committee during the 2016 legislative session, which ended on April 11. Thus far, New York has opted to make pregnancy a qualifying event, but CMS has declined to make pregnancy a qualifying event at the federal level.
2016 rates and carriers
On September 4, 2015, the Maryland Insurance Administration announced approved rates for 2016. As expected, the overall average rate increase was significant, although that’s primarily because of CareFirst’s approved rate changes, which ranged from 19.8 percent to 26 percent, and their significant market share (in 2015, about 79 percent of exchange enrollees had a plan from CareFirst Blue Choice, CareFirst of Maryland, or Group Hospitalization and Medical Services, Inc., which is also a CareFirst carrier).
United (including All-Savers) and Cigna both ended up with price decreases for 2016, as they had proposed. Kaiser had proposed a rate increase of just 4.8 percent, but regulators increased the final rate change to ten percent for Kaiser plans. Using the market share numbers as of mid-August, and a CareFirst weighted average increase of 21.1 percent (some sources say 24 percent, but that appears to be an unweighted average, since the CareFirst HMO has the majority of the carrier’s enrollees and will be increasing in price by 19.8 percent), I calculated a weighted average rate increase of 18.3 percent for plans sold through Maryland Health Connection, the state-run exchange.
At ACAsignups, Charles Gaba calculated the weighted average rate increase in Maryland including off-exchange plans, and came up with about 20 percent. Carriers had proposed a weighted average rate hike of 25 percent, so the Maryland Insurance Administration did trim the rates before approving them.
Not surprisingly, CareFirst’s rate proposals were met with criticism and skepticism. Despite the fact that regulators approved final rates lower than CareFirst had proposed, consumer groups were not pleased that the rates ended up as high as they did. This was the second year in a row that CareFirst requested rate hikes as high as 30 percent, although regulators reduced the final rates for 2015 plans much more significantly than they did for 2016 plans.
For most enrollees, subsidies mitigate the impact of the rate hikes… if they shopped around during open enrollment, which ended January 31. If the benchmark plan (second-lowest-cost silver plan) has a higher premium in 2016 than it did in 2015, subsidies in that area have increased for everyone receiving them. But it was essential for enrollees to shop around to see which plan offered the best value in 2016, since there was significant disparity among the plans in terms of price changes for 2016.
In the early days of the 2016 open enrollment period, it did appear that people were indeed shopping around, as 89 percent of private plan renewals in the first nine days of open enrollment included a plan change.
Exchange transferring calls to brokers
Maryland Health Connection ran a pilot program during the 2016 open enrollment period, transferring calls to brokers who could assist consumers with the enrollment process once the exchange had determined their eligibility for financial assistance.
The program aimed to reduce Maryland Health Connection’s call-center hold times and allow consumers to receive plan selection advice, which only licensed agents/brokers can provide (navigators and enrollment assisters are not licensed insurance producers, so they cannot provide plan recommendations). The pilot program included 25 brokers during the 2016 open enrollment period, but if is ultimately deemed a success, the exchange is planning to expand the program in 2016 and include additional brokers for the 2017 open enrollment period that will begin in the fall of 2016.
Small business exchange fully functional, rates decreasing
Maryland launched its Small Business Health Options (SHOP) exchange in April 2014, but the employee choice option only became available in August 2015. Six carriers offered plans through Maryland Health Connection’s small business exchange in 2015, and in good news for small employers, the small group market experienced an average rate decrease of 1.8 percent in 2016.
Employers can select from two “choice” options (prior to the summer of 2015, employee choice was not available):
- In the Employer Choice Option, the employer picks one insurance company on the SHOP, and employees can choose any plan offered by that insurer.
- In the Employee Choice Option, the employer picks the metal level that will be open to employees. Employees can then choose a plan at that metal level from any insurer on the exchange.
Eligible small employers (up to 25 employees) can qualify for a two-year tax credit to help offset the cost of purchasing coverage in the SHOP exchange, depending on their employees’ average salaries.
Enrollment deadline the 15th of the month (with one exception)
In 2014 and 2015, Maryland Health Connection allowed people to enroll until the 18th of the month and still get a first of the following month effective date. But that’s no longer the case; the exchange now follows the same schedule as almost all the other states: Enrollments must be completed by the 15th of the month in order to get a first of the following month effective date.
But for January 1, 2016 coverage, the exchange made an exception. Enrollments completed by December 18 had effective January 1. The deadline reverted to the 15th going forward though; enrollments completed between January 16 and January 31 will have coverage effective March 1.
Exchange recouping $45 million from Noridian
When Maryland Health Connection opened its doors in October 2013, things didn’t go well… to put it mildly. The initial rollout of the exchange was a disaster, and Maryland Health Connection ended up scrapping their initial platform and starting over for round two with technology purchased from Connecticut’s exchange. But they had paid Noridian Healthcare Solutions about $73 million to build the website the first time around (other contractors were also paid – the total cost was around $118 million).
The state ended its contract with Noridian in early 2014, and in July 2015, a settlement was announced that calls for Noridian to refund $45 million back to Maryland. The repayment includes $20 million initially, and then $5 million annual payments over the next five years. The settlement avoids costly and lengthy litigation – similar to what Oregon and Oracle have been embroiled in for months.
A Maryland Office of Legislative Audits report published in October 2015 was also critical of Maryland Health Connection. The audit alleged that Maryland Health Connection didn’t adequately verify work done by “vendors, contractors and grass-roots organizations” that worked with the exchange. Of particular concern is the audit’s finding that the exchange provided subsidies that were higher than they should have been (if enrollees receive too much in subsidies, they may have to pay back some or all of it when they file their taxes the following year). The audit also alleged that Maryland Health Connection didn’t do enough to secure enrollees’ personal information.
In November 2015, Maryland Attorney General Brian E. Frosh indicated that other vendors in addition to Noridian may bear some of the blame for Maryland Health Connection’s failed launch in 2013. Frosh’s investigation “has revealed that the vendors’ misstatements about their software and the vendors’ poor performance under the contract were the actual and proximate cause of the system’s failed launch” and he urged the legislative investigation to focus on the vendors in addition to the exchange itself.
OIG audit alleges misallocation of costs
In addition to the state audit, the US Office of the Inspector General (OIG) audited Maryland Health Connection’s allocation of costs for 2013 and 2014. The OIG audit concluded that Maryland Health Connection misallocated millions of dollars in federal funding. Since the exchange enrolls people in private health plans as well as Medicaid, they received initial funding from the Center for Consumer Information and Insurance Oversight (CCIIO), as well as from Medicaid.
Because the exchanges were starting something that had never been done before, they had to rely solely on enrollment projections heading into 2014. Maryland Health Connection used an enrollment projection of 58 percent private plans and 42 percent Medicaid. Ultimately, that ended up being slightly off, and was compounded by the fact that the projections were based the calendar year rather than the fiscal year.
The OIG audit determined that the Maryland exchange should give back $28 million to CCIIO, and seek reimbursement from Medicaid. Although the exchange notes that the accounting reconciliation would result in the exchange owing the federal government about $5 million, Maryland Health Connection has maintained that no errors were made, and that they worked closely with CMS throughout the exchange implementation process, receiving approval from CMS for their financial allocations in advance of the OIG audit.
It’s unclear whether Maryland Health Connection will have to comply with the recommendation of the OIG audit. Although the exchange does not believe that any errors were made on their part, they’ve expressed their commitment to “…continuing work with CMS so that funds are appropriately allocated, allowable and reasonable.”
By early October 2015, Maryland Health Connection announced that their private plan enrollment stood at 120,617. That was lower than the July (126,346) and August (123,673) enrollment counts, but higher than March (114,559). Attrition is normal part of the individual market, and a gradual decline in enrollment should be expected outside of open enrollment.
The effectuated enrollment total as of March 31 was 114,559, so the exchange enrolled nearly 12,000 people during the second quarter – after open enrollment had ended (qualifying events are necessary to enroll outside of open enrollment). Enrollment got a boost in the spring thanks to the 5,436 people who signed up during the special enrollment period (March 15 to April 30) for people who were uninsured for all or part of 2014 and who found out about the ACA’s individual mandate penalty when they filed their 2014 taxes.
Almost 71 percent of the exchange enrollees (as of June 30) qualified for premium subsidies, and 50 percent were receiving cost-sharing subsidies (only available on silver plans, for enrollees with household income up to 250 percent of the poverty level).
As during the 2014 open enrollment period, CareFirst dominated the market in 2015. As of August 13, 2015, nearly 96,000 consumers had enrolled with CareFirst, and more than 20,000 had enrolled with Kaiser. The balance of enrollees was shared by three additional carriers: 3,440 had enrolled with Evergreen, 3,383 with United Healthcare (including subsidiary All-Savers), and 698 with Cigna.
Enrollment for Medicaid is open year-round. The exchange announced that as of the end of February, 166,353 people had enrolled in Medicaid coverage through the exchange for 2015. Total Medicaid enrollment in Maryland increased by 36 percent (306,512 people) between the end of 2013 and August 2015, largely due to the fact that Maryland accepted federal funds to expand Medicaid under the ACA.
In 2013, the uninsured rate in Maryland was 12.9 percent, according to Gallup data. By mid-2015, the uninsured rate had dropped to 7 percent.
2015 plans and premiums
For 2015, eight carriers offered individual policies through Maryland Health Connection, with a total of 61 plans available (an increase from 45 in 2014). 2015 plans were available from United Healthcare, All-Savers, Evergreen, Kaiser, three CareFirst companies, and Cigna.
A study issued by the Commonwealth Fund shows that, on average, premiums in Maryland were unchanged from 2014 to 2015. The analysis was weighted to take into account the differences in rates in urban/suburban/rural areas and insurer participation. But for individual carriers, there were significant premium changes for 2015. Three carriers (All-Savers, Evergreen, and Kaiser) had rate reductions, while the three CareFirst plans had rate increases (this includes CareFirst Blue Choice, CareFirst of Maryland, and Group Hospitalization & Medical Services). Cigna and United Healthcare were new to the exchange in 2015.
Difficulties in 2014
Severe technical problems plagued the Maryland Health Connection website in 2014. Some consumers who were unable to sign up for private insurance were temporarily enrolled in the state’s high-risk insurance program, at the state’s expense. Problems with determining who qualifies for Medicaid means the state may make about $20 million in unnecessary payments over two years. Maryland fired its prime contractor, Noridian Healthcare Solutions, and hired Deloitte Consulting to adapt Connecticut’s successful technology for use by Maryland. Consultants put the cost of rebuilding the Maryland Health Connection website at up to $60 million. Officials are still evaluating legal action to recover some of the money paid to Noridian.
Maryland Health Connection was criticized for its lack of transparency. News outlets informally complained about inadequate disclosure of website problems, and the Kent County News filed a formal complaint with the state’s Open Meetings Compliance Board. Industry experts, state and federal legislators, and the state comptroller all questioned the mostly closed-door meetings during which exchange officials decided to rebuild the state’s website rather than transition to the federal site.
In addition, the Maryland Health Benefit exchange, which oversees the marketplace, repeatedly delayed the launch of the Small Business Health Options Program (SHOP). Work on the SHOP website was put on hold in February 2014, and the launch date pushed back.
Overhaul leads to dramatic improvement
After 2014 open enrollment ended, Maryland Health Connection underwent an extensive overhaul. The exchange abandoned its old website technology and replaced it with Connecticut’s proven system, fired contractors, implemented new call center technology, and implemented a staggered launch to the second open enrollment period. The overhaul cost about $40 million according to the Washington Post.
On top of the technological improvements, Maryland Health Connection used a staggered start to limit traffic in the first several days of 2015 open enrollment. Consumers were able to browse plans anonymously starting on Nov. 9, six days ahead of the start of open enrollment. This was a major improvement over 2014, when consumers were unable to browse plans until after they had created an account with the exchange. Consumers could sign up for coverage at enrollment fairs beginning on Nov. 15 and through the call center on Nov. 16. Several more days of increasing access were planned. However, with the site running smoothly, the exchange was opened to all users two days earlier than planned.
In 2014, Maryland Health Connection had fewer than 100 call center staff, but they increased that to more than 350 during the second open enrollment period. The website also operated smoothly throughout the 2015 open enrollment period.
In late 2015, the Maryland Health Connection board of directors was considering new regulations (to be implemented in 2017) requiring carriers to do a better job of keeping their online provider directories updated, as the current directories have an unacceptable number of errors and don’t accurately indicate whether or not providers are accepting new patients. Healthcare.gov instituted similar regulations – effective in 2016 – for carriers that sell plans through the federally-run exchange in 38 states (Maryland has its own exchange and does not use Healthcare.gov).
2014 enrollment recap
Despite all of the problems in 2014, Maryland exceeded its enrollment goal of 260,000. During the six-month open enrollment period, 63,002 people enrolled in private insurance and 232,075 people enrolled in Medicaid. Through September 2014, enrollment grew to more than 458,000 people: 81,553 in private health plans and another 376,850 in Medicaid.
Six insurers offered 45 individual plans through Maryland Health Connection for the 2014 plan year. The vast majority of those who enrolled in QHPs selected plans offered by one of the three CareFirst BlueCross BlueShield companies that participated in the marketplace. The CareFirst options captured nearly 94 percent of 2014 enrollees, followed distantly by Kasier with about 5 percent, Evergreen Health Cooperative with 0.7 percent, and All Savers (part of UnitedHealthcare) with 0.4 percent.
According to a Gallup-Healthways poll, Maryland’s uninsured rate dropped from 12.9 percent in 2013 to 7.8 percent in 2014.
Maryland Health Connection History
Maryland was an early adopter of the health insurance marketplace envisioned by the Affordable Care Act (ACA). While many other states waited to see the outcome of the Supreme Court challenge to the ACA, Maryland moved ahead. The Maryland Health Benefit Exchange (MHBE) was signed into law in April 2011, with additional legislation passed in May 2012. The MHBE was later rebranded as the Maryland Health Connection. In December 2012, the Maryland Health Connection was among the first six state-based exchanges to be approved by the federal government.
Maryland Health Connection is overseen by a nine-member board. In June 2014, Carolyn Quattrocki was named to a one-year term as executive director of the board. She began serving in that role on an interim basis in December 2013 following the resignation of Rebecca Pearce.
For 2014 and 2015, Maryland Health Connection functioned as a clearinghouse, meaning any carrier that offered QHPs in the state could sell policies on the exchange. In addition, any health plan with significant market share in the state is required to participate in the marketplace, and health plans are limited to selling four benefit packages per metal level (platinum, gold, silver, and bronze).
But starting with the 2016 plan year, the exchange switched to an active purchaser model, which means that the exchange can negotiate with carriers to determine which plans will be offered on the exchange.
Maryland health insurance exchange links
Maryland Health Connection
Maryland Health Benefit Exchange (MHBE)
Information about exchange planning and development
State Exchange Profile: Maryland
The Henry J. Kaiser Family Foundation overview of Maryland’s progress toward creating a state health insurance exchange.
Health Education and Advocacy Unit, Office of the Attorney General
Serves residents and other consumers who receive health care from a Maryland health care provider or health insurance provider.