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

CMS allowing Montana Health CO-OP and PacificSource to refile rates with CSR load on Silver plans, all insurers plan to remain in the exchange for 2018

Highlights and updates

Montana exchange overview

Montana uses the federally-run exchange at Healthcare.gov, with three participating carriers. The state has struggled with large double-digit rate increases two years in a row, and although subsidies offset the rate hikes for most enrollees, those who aren’t eligible for subsidies are paying considerably more for their health insurance in 2017.

But the rate hikes for 2016 and 2017 appear to have had a stabilizing impact, and the insurance companies that offer coverage in the state have said that — contrary to the popular GOP talking point — the Montana market is not in a death spiral. They note, however, that if some of the provisions in the GOP reform proposal — including cuts to Medicaid and the elimination of the individual mandate — are implemented, it would significantly destabilize the market.

Montana’s Commissioner of Securities and Insurance, Matt Rosendale, was elected in November 2016. Rosendale opposes the ACA, and his views are diametrically opposed to those of his predecessor, Commissioner Monica Lindeen (Lindeen was term-limited, and couldn’t run in 2016). Despite the fact that the insurance companies selling plans in Montana say that the markets are on a stable trajectory (unless GOP lawmakers sabotage them), Rosendale saysObamacare is in a death spiral. Premiums have increased drastically, insurers are abandoning the marketplace, and the system is collapsing under its own weight.” (Montana’s exchange has remained steady at three insurers, and that will continue to be the case in 2018; they have not experienced insurers abandoning the marketplace).

2018 proposed rate filings

Insurers in Montana had to submit proposed rates and plans for 2018 by June 8, 2017. On July 11, Commissioner Rosendale’s office published the average rate increases that each of the three insurers have proposed for 2018:

  • Blue Cross Blue Shield of Montana: 23.1 percent (already included higher rates to account for the potential loss of CSR funding).
  • Montana Health CO-OP: 4 percent (will be raised in October to account for the loss of CSR funding; an extra 24 percent will be added to Silver plan premiums)
  • PacificSource: 7.4 percent (will be revised in October to account for the loss of CSR funding; an extra 11 percent will be added to Silver plan premiums)

BCBSMT has the largest chunk of the market share, so the weighted average proposed rate increase was 14.14 percent (that will be higher now that the cost of CSR is being added to Silver plans for Montana Health CO-OP and PacifiSource). There were two public hearings regarding the rate filings: one in Billings, on July 24 and the other in Helena, on July 26.

CSR funding and Montana’s 2018 health insurance rates

Blue Cross Blue Shield of Montana’s proposed rate increase is significantly larger than the other two insurers. But part of that has to do with how the insurers handled the uncertainty surrounding federal funding for cost-sharing reductions (CSR). Throughout 2017, President Trump has threatened to cut off funding for CSR. Montana’s Insurance Commissioner didn’t tell insurers to take a specific approach to CSR funding, so it was left to the insurers to price their rates as they saw fit.

Montana Health CO-OP and PacificSource both filed rates that were based on the assumption that CSR funding would continue in 2018. Blue Cross Blue Shield of Montana took the opposite approach, and based their rate proposal on the assumption that CSR funding would not continue. Insurers are legally obligated to provide CSR to eligible enrollees (Montana residents who select a Silver plan and whose income is between 139 percent and 250 percent of the poverty level), and the federal government is supposed to reimburse insurers for the cost of doing so. But the ACA didn’t specifically allocate funding for this, which triggered a lawsuit by House Republicans (House v. Burwell, which then became House v. Price). House Republicans won the lawsuit in 2016, but the Obama Administration appealed and the money has continued to flow to insurers ever since.

But on October 12, the Trump Administration announced that federal funding for CSR would end immediately, leaving Montana Health CO-OP and PacificSource in a tough spot — one that the CO-OP described as “untenable” and “not survivable” unless they were allowed to refile new rates with the cost of CSR included. The CO-OP indicated that they would have to exit the exchange if they weren’t allowed to file new rates, and at first it appeared that might be the case.

CMS had opened up a short window after the CSR defunding announcement, to allow insurers to refile new rates if they were in states where regulators had not allowed them to file initial rates based on the assumption that CSR funding would end. But since Montana regulators had not told the insurers how to file (keep in mind that BCBSMT had already filed rates with the assumption that CSR funding would end), CMS initially told the Montana Department of Insurance that Montana insurers would not be eligible to refile rates.

But on October 16, CMS reversed that decision and notified the Montana Department of Insurance that Montana Health CO-OP and PacifiSource would be allowed to refile their rates for 2018. Montana Health CO-OP is adding 24 percent to their Silver plan rates, and PacificSource is adding 11 percent to their Silver plan rates. At other metal levels, the previously filed rates will remain unchanged for both insurers.

Adding the cost of CSR to Silver plan rates is the strategy that protects most consumers, since premium subsidies will be larger as a result of the spike in Silver plan rates. Those subsidies can be applied to bronze or gold plans, making them a relatively better value. And for people who don’t qualify for subsidies, bronze and gold plans will continue to be available without the added cost of CSR.

The bipartisan Murray-Alexander legislation is being considered in the Senate, and if enacted, would allocate CSR funding for two years. However, it’s highly unlikely that it could have an impact on 2018 premiums, as open enrollment begins on November 1, and rates are already being tested in HealthCare.gov’s sytem. If CSR funding is eventually allocated for 2018 and the premiums also include the cost of CSR, the premium overcharges will be refunded to consumers via MLR rebate checks, starting in 2019.

In Montana, 85 percent of exchange enrollees qualify for premium subsidies, and will see significantly larger premium subsidies in 2018 as a result of the higher Silver plan premiums. 42 percent of Montana exchange enrollees are receiving CSR, and that benefit will continue to be available to eligible enrollees in 2018.

CO-OP closed 2017 enrollment early, but began allowing enrollment again in of July, 2017

Montana has three carriers offering plans in the exchange for 2017, one of which is Mountain Health CO-OP, an ACA-created CO-OP that operates in Montana and Idaho. The CO-OP’s average rate increase for 2017 was 31 percent. But Mountain Health CO-OP limited their enrollment for 2017 (some carriers in other states are doing this too), and the following message began appearing in December 2016 when visitors arrived at their website:

“Montana Health CO-OP will accept no new enrollments for 2017 after the evening of December 22. We are halting new enrollments because of the large number of new members for 2017. Thank you to all our 10,000+ new members!”

From December 23 through the end of January (the remainder of open enrollment), enrollees in Montana were able to select from Blue Cross Blue Shield of Montana, and PacificSource.

But the enrollment freeze was lifted in July 2017 — ahead of schedule. Montana Health CO-OP had originally planned to start offering coverage as of November 2017 (ie, during open enrollment, for coverage effective January 2018). But as of mid-July, the CO-OP website said “MHC is now accepting special enrollments off exchange. On-exchange special enrollments to begin soon! (off exchange means plans purchased directly through the CO-OP, as opposed to via HealthCare.gov) A representative confirmed by phone that the CO-OP had recently received regulatory approval to begin selling plans again, and indicated that on-exchange plans would be available by late July, for effective dates starting in September. As is the case nationwide, enrollments outside of open enrollment are contingent upon having a qualifying event, but people with qualifying events could select Montana Health CO-OP plans with effective dates of September – December. And as of November 1, CO-OP plans will be available during the the regular open enrollment period (November 1, 2017, through December 15, 2017, for coverage effective January 1, 2018).

The enrollment freeze did not apply to small group plans, which are available year-round and can still be purchased via Montana Health CO-OP.

The fact that the CO-OP has resumed enrollments ahead of schedule, combined with the fact that their average proposed rate increase for 2018 was only 4 percent, indicates that the CO-OP is back on fairly stable footing (note that premiums for Silver plans will now increase by an additional 24 percent in 2018, due to the fact that the Trump Administration has cut off funding for cost-sharing reductions; this is not indicative of instability in the CO-OP or the individual market, however, as the CSR funding has to come from somewhere).

Montana’s exchange and the Trump Administration

Commissioner Rosendale opposes the ACA and is pushing for a more conservative, “free-market,” Montana-based approach to health care reform. Rosendale was elected in November 2016, when the previous Commissioner, Monica Lindeen (who supported the ACA) was ineligible to run again due to term limits. In a letter to U.S. Senator Lamar Alexander (R, Tennessee) in March 2017, Rosendale outlined his proposals, and noted that his letter supersedes the letter that Lindeen had sent in late 2016.

Rosendale wants more flexibility to allow plans that aren’t ACA-compliant to be sold (this is one of the basic tenants of the ACA repeal provisions that Congressional Republicans have pushed throughout 2017; it’s essential to understand that allowing the sale of non-compliant plans would have a significant destabilizing effect on the insurance market and would drive up premiums for people with pre-existing conditions). He also wants equalized tax treatment for individual and employer-sponsored plans, and access to health savings accounts (HSAs) for everyone, rather than just those with high deductible health plans.

Montana expanded Medicaid under the ACA, as of 2016 (two years after it became available). By early 2017, there were 71,000 enrollees in Montana’s expanded Medicaid program. The various ACA repeal bills that Congressional Republicans considered in 2017 would have ended Medicaid expansion at some point in the fairly near future, but none of those measures was enacted.

2017 enrollment

52,473 people enrolled in coverage for 2017 through the Montana exchange during open enrollment. That was nearly 10 percent lower than the 2016 enrollment total.

The average pre-subsidy premium in Montana’s exchange is $581/month, which is considerably higher than the $476/month average across all states that use the federally-run exchange. But 84 percent of the 2017 enrollees are receiving premium subsidies, and their average after-subsidy premium is $176/month.

2017 rates: BCBSMT rates determined not justified, but implemented anyway

The same three carriers that offer individual market plans in the exchange in 2016 filed rates for 2017. Only a small fraction of the states did not lose any carriers in their exchanges in 2017, and Montana was among them (although there are three participating insurers, plans have only been available for purchase from two of them since December 22, 2016; people who had already purchased Montana Health CO-OP coverage by that date are being covered by their plans throughout 2017)

The state published the proposed rate increases in July 2016, and on July 26, the three insurers participated in a public hearing about the proposed rates. They had additional rate proposal hearings in early August. All three carriers explained that their claims costs in 2015 far exceeded the premiums they collected, and that while there’s pressure on carriers to lower their rates, they cannot do so unless healthcare providers agree to reduced rates as well.

Although the state reviewed the rates to determine whether they were justified, state regulators do not have the authority to prevent unjustified rate increases from being implemented; if a carrier chooses to implement a rate increase that the state has deemed unjustified, the state will issue a public notice stating that the rate increase is not justified (for a state to have an effective rate review program, that’s the bare minimum requirement).

  • Blue Cross Blue Shield of Montana initially proposed rate increases averaging 62.1 percent for their individual plans (range is from 40 percent to 108 percent). But in mid-August, they submitted a new rate filing, with an average rate increase of 58.4 percent. They ultimately settled on an average rate increase of 55.3 percent, but the rate review system notes that “The Montana CSI has found the rates submitted in this filing to be unreasonable.” BCBSMT has about 55,000 enrollees, including on and off-exchange plans.
  • PacificSource had proposed a 19.8 percent average rate increase (range of 13.7 to 25.3 percent), but a later rate filing in mid-August proposed a 33.2 percent average increase. They have about 8,500 enrollees, and Montana regulators determined that the rate increase is justified.
  • Mountain Health Cooperative proposed an average rate increase of 22 percent (range of 14 to 38 percent), although another rate filing in June indicated an average increase of 26.1 percent. The final approved rate increase averages 31 percent, and Montana regulators determined that the rate increase is justified. They have about 15,000 enrollees.

Monica Lindeen, Montana’s Insurance Commissioner in 2016, noted that the 62 percent proposed rate increase for BCBSMT was the highest she’s ever seen in the state, and possibly the highest that’s ever been requested in Montana. Ultimately, her team found BCBSMT’s final rate proposal of 55.3 percent to be unjustified, but they did not have the authority to block the rate increase from taking effect.

However, it’s important to note that most Montana exchange enrollees were receiving premium subsidies in 2016, and as average benchmark premiums rise, so do subsidies. For most enrollees, the subsidies increased to cover a large portion of the rate hikes. But for the people who don’t receive subsidies, average rates are significantly higher in 2017 than they were in 2016.

2016 rates

Montana has three carriers offering individual plans in the exchange for 2016. Rates were considerably higher than they were in 2015, with average rate increases ranging from 22 percent to 34 percent. But premium subsidies offset all or most of the premium increase for enrollees who were eligible for subsidies.

In September 2015, Montana Insurance Commissioner Monica Lindeen announced that rates had been finalized in Montana for 2016. Her office had an outside actuary review proposed rates, in an effort to get final rates as low as possible. But as noted above, the Commissioner’s office doesn’t have the authority to deny rate requests the way regulators in some states can.

2015’s individual market premium increase in Montana was “historically low” at an average of just 1.6 percent. But 2016 was a different story. Rates increased between 22 and 34 percent across the individual market in Montana, very much in line with the rates that were submitted earlier in the year by each carrier.

  • Blue Cross Blue Shield of Montana had proposed rate increases averaging 20 percent to 22 percent for their individual plans.
  • PacificSource had proposed a 32 percent average rate increase.
  • Montana Health Cooperative (Mountain Health Cooperative) requested an average rate increase of 34 percent, and the CO-OP eliminated their platinum plan option for 2016, as the rich benefits of the plan attracted insureds with significant healthcare needs and resulted in losses for the CO-OP. Out of 14,000 enrollees, just 120 insureds generated about half of the CO-OP’s claims expenses.
  • A fourth carrier, Time, also proposed steep increases for 2016, but their parent company, Assurant, subsequently announced that they would exit the insurance market nationwide, and would no longer offer coverage in 2016. As of June 2015, there were 7,283 Montana residents who had individual coverage from Time; all of them had to select replacement policies for 2016.

When plan selections for 2016 had been finalized, 83 percent of Montana exchange enrollees qualified for premium subsidies. Their average pre-subsidy premium is $421 per month, but their average after-subsidy premium is just $115 per month. That’s actually one dollar per month lower than the average after-subsidy rate in Montana’s exchange in 2015, when 84 percent of Montana enrollees received subsidies. That year, their average pre-subsidy premium was $346 per month, but after subsidies, they paid an average of $116 per month.

Of the 37 states that used Healthcare.gov in 2015, Montana had the highest average benchmark premium increase for 2016, at 34.5 percent. Benchmark plans are the second lowest-cost Silver plan in each area, and their price is used to determine subsidy amounts. The steep increase in benchmark premiums in Montana meant that subsidies would generally keep pace with the overall rate hikes in the state; that’s reflected in the virtually identical after-subsidy rates in 2016, compared with 2015.

But as always, it was vitally important for people to shop around during open enrollment, since different plans had different rate increases. Montana’s notice about the 22 to 34 percent rate increases stated that it only applied to people who weren’t receiving subsidies (ie, either on-exchange but ineligible for subsidies, or off-exchange). They noted that the total unsubsidized population in the individual market in 2015 was about 41,000 people, versus 42,000 who were receiving premium subsidies in the exchange.

Enrollment in expanded Medicaid exceeds expectations

Until April 2015, Montana had opted out of expanding Medicaid. Unfortunately, it was an accidental “no” vote that doomed the expansion effort, but there’s no way to undo such a vote after it happens.

The governor’s office was supportive of some aspects of Medicaid expansion, but the legislature only meets every other year in Montana, so the issue couldn’t be re-addressed from a legislative standpoint until 2015.

But Montana made headlines in the spring of 2015, becoming the 29th state to approve Medicaid expansion. Governor Steve Bullock signed Senate Bill 405 into law on April 29, paving the way for Medicaid expansion in the Big Sky Country.

In September 2015, Montana submitted their Medicaid expansion waiver to CMS for review. The proposal had several deviations from straight Medicaid expansion, including premiums and copays for some enrollees. On November 2, CMS approved Montana’s Medicaid expansion waiver, and enrollment commenced immediately for coverage effective January 1, 2016. As of November 3, Healthcare.gov’s system had already been updated with the new Medicaid eligibility guidelines in Montana for applicants enrolling in 2016 coverage.

In December 2015, Blue Cross Blue Shield of Montana entered into a contract with the state and is administering the expanded Medicaid program in Montana. By early 2017, more than 71,000 people had enrolled in Montana’s expanded Medicaid program. The state’s waiver from CMS is valid through the end of 2020 (assuming Medicaid expansion changes aren’t made at the federal level under the Trump Administration), but ongoing expansion is contingent on the state’s legislature reauthorizing expansion after June 30, 2019, when the current legislation schedules it to sunset. If lawmakers don’t agree to extend it, expansion would end at that point.

Uninsured rate dropped to 7.4% after Medicaid expansion

According to U.S. Census data, 16.5 percent of Montana’s population was uninsured in 2013. By 2015, that had fallen to 11.6 percent. That was still above the national average of 9.4 percent, but Montana’s Medicaid expansion had not yet taken effect by 2015. As of mid-2016, after Medicaid expansion had been in effect for six months, Montana’s Insurance Commissioner reported that the uninsured rate had fallen to 7.4 percent.

Navigator outreach

Two organizations in Montana received a total of $535,000 in September 2015 to fund their navigator and enrollment assistance efforts for 2016. Planned Parenthood and the Montana Health Network are serving as navigator organizations in the state.

Navigators in Montana are focusing on outreach targeted at uninsured populations within the state, particularly Native Americans. Native Americans are exempt from the ACA’s individual mandate, and they have access to Indian Health Service care. But Native American leaders caution that relying solely on IHS can mean foregoing some care, and there are excellent plans available through the ACA that provide enhanced benefits for Native Americans.

There’s also monthly enrollment year-round for Native Americans; the normal open enrollment deadline does not apply. But despite the enhanced benefits and extended enrollment, an April 2015 report indicated that there’s still a significant disparity in terms of access to healthcare, and that many Native Americans in Montana lack adequate access to healthcare. There’s hope that the progress being made on Medicaid expansion will help to address the disparity.

2015 enrollment in Montana’s exchange

54,266 people enrolled in private plans through the Montana exchange during the 2015 open enrollment period (through February 22, including the week-long extension). HHS had projected 47,000 enrollees, and Charles Gaba of ACAsignups projected 57,000 enrollees in Montana by the end of open enrollment. Ultimately, the final total was in the middle, but closer to the higher number that Gaba had predicted.

As expected, some enrollees never paid their initial premiums (meaning their coverage never became effective), and some cancelled their coverage soon after it began. By the end of June, 48,591 Montana residents had in-force private coverage through the exchange. 83 percent are receiving premium subsidies and 51 percent are receiving cost-sharing subsidies.

Of the people who selected a plan during the 2015 open enrollment period, 41 percent were new to the exchange for 2015.

An additional 2,683 people enrolleed in Medicaid or CHIP through the exchange between November 15, 2014 and February 22, 2015, qualifying under the state’s pre-ACA guidelines.

Healthcare reform in the legislature – 2015

Montana’s legislature only has regularly-scheduled sessions in odd-numbered years, so there’s no session in 2016. But several healthcare reform bills were introduced in the 2015 session.

In addition to signing SB 405, Governor Bullock vetoed another healthcare bill on April 29, 2015. Senate Bill 349 would have required health insurance carriers that offer elective abortion coverage to also offer plans without elective abortion coverage. It passed the House and Senate, but was not supported by any health insurance carriers in the state, and was ultimately vetoed.

Two other ACA-related – but very disparate – bills were introduced in the 2015 legislative session in Montana. HB 249, the “Healthy Montana Act” would have expanded Medicaid and enhanced access to healthcare and health insurance under the ACA. But on the other end of the spectrum, HB 256, introduced by Republican Representative Matthew Monforton of Bozeman, would require legislative approval for any further implementation of Obamacare in Montana, including the expansion or Medicaid or the creation of a state-run exchange.

HB 249 stalled in the House in March 2015, but Medicaid expansion was approved by the legislature using SB 405. HB 256 passed the House and moved to the Senate in February 2015, but was indefinitely postponed by the Senate in late March.

2015 rate increase “historically low”

Across all carriers, the lowest cost bronze plan in the Montana exchange averaged $251/month in 2014, which was very close to the national average of $249.

And 2015’s rate increase was historically low, with rates only increasing an average of 1.6 percent for individuals (when combined with small group premiums, the average increase was even smaller, at 1.35 percent). Insurance Commissioner Monica Lindeen described the 2015 rate hike as “historically low”

In all rating areas in Montana, the benchmark plan (second-lowest-cost Silver plan) was less expensive for 2015 than it was in 2014. But in order to get the lower rates, consumers needed to shop around in the exchange during open enrollment. People who had the benchmark plan in 2014 and let it automatically renew saw higher premiums state-wide for 2015. And because the benchmark plans were less expensive in 2015, subsidies were lower too, highlighting the importance of shopping around during open enrollment.

2014 enrollment numbers

As of mid-April 2014, private plan Obamacare enrollments had been completed for 36,584 Montana residents. Another 4,638 people had qualified for Medicaid (this was under the pre-expansion guidelines).

In addition to the people who purchased plans through the exchange, nearly 35,000 people enrolled in Obamacare-compliant plans outside the exchange by mid-April. One of the provisions of the ACA requires that carriers use a single risk pool for all of their individual plans in a state, so each carrier’s off-exchange enrollments are merged with its on-exchange enrollments for risk purposes – meaning that the additional off-exchange enrollments are helpful in stabilizing rates.

By mid-July, the number of uninsured residents in Montana was about 30,000 lower than it had been in 2013 – more than a 15% drop in the uninsured rate in the state. This was achieved with both on and off-exchange enrollments of previously uninsured folks, as well as the “woodwork” effect that increased Medicaid enrollment even in states like Montana that didn’t initially expand Medicaid under the ACA.

Exchange history in Montana

Montana’s legislature not only failed to authorize a state-run exchange, it also passed a bill in 2011 to prohibit the creation of an insurance exchange in Montana.

While Democratic Gov. Brian Schweitzer vetoed that bill, neither he nor Monica Lindeen, the state auditor and insurance commissioner, were able to generate legislative or public support for an exchange.

Consequently, the federal government is operating the exchange in Montana at Healthcare.gov. Montana is also one of nineteen states that has passed laws making it more difficult for people to serve as navigators for the exchange.

Under the federal model, most aspects of the exchange are managed by the federal government. However, states can retain control of “plan management” functions, and Montana opted to do so. Lindeen’s office released final exchange rates for the first round of open enrollment in mid-August 2013, nothing that the premiums were similar to what they would have been without the ACA. Her office regulates plans that operate on the exchange, as it does for plans sold outside the exchange.

HHS is also running the SHOP exchange in Montana, providing health insurance for small businesses. Montana is one of 18 states where the employee-choice feature of the SHOP exchange was delayed until 2016 – meaning that instead of allowing employees to select from among a variety of options, there was only one plan for each group in 2015.

Three organizations in Montana received federal grants in 2013 to serve as navigators and assist residents with the enrollment process during the first open enrollment period: Planned Parenthood, Montana Primary Care Association, and the Montana Health Network.

Grandmothered plans

On November 25, 2013 Lindeen announced that Montana would allow health insurance carriers to extend 2013 policies that had been scheduled to terminate at the end of the year, but it was left up to each carrier to decide how to proceed. Insureds with a policy that was eligible for renewal into 2014 also had the option of switching to an exchange plan.

Ultimately, none of the insurance carriers in Montana’s individual market opted to keep transitional plans in place, and all non-grandfathered plans in the individual market in Montana are now ACA-compliant.

Montana health insurance exchange links


State Exchange Profile: Montana
The Henry J. Kaiser Family Foundation overview of Montana’s progress toward creating a state health insurance exchange.

Montana Consumer Assistance Program, Office of the Commissioner of Securities and Insurance
Serves as the state government watchdog for citizens of Montana in the insurance industry

Health Insurance Exchange Page from Montana Commission of Securities and Insurance
Details about how the exchange works, along with legislative history in Montana regarding the exchange creation process.

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