Presbyterian exiting exchange, BCBS returning
Presbyterian Health Plan is one of the four carriers offering plans in the New Mexico exchange in 2016. They filed rates in May for 2017 coverage, but announced in July that they would transition to only offering off-exchange coverage in 2017. The carrier noted that their on-exchange enrollees have had 30 percent more claims than their off-exchange enrollees. Since the pricing has to be the same for the same plan sold on and off-exchange, Presbyterian determined that their on-exchange business was not sustainable.
There are about 10,000 on-exchange Presbyterian enrollees in New Mexico in 2016, and about 80 percent of them are receiving subsidies. In order to keep their subsidies in 2017, they’ll need to switch to a different carrier during open enrollment, which begins November 1.
Blue Cross Blue Shield of New Mexico is planning to return to the exchange after not participating in 2016. BCBS of NM continued to offer one off-exchange HMO plan in 2016, thus avoiding a full market exit and making it possible to rejoin the exchange for 2017. BCBS of NM has requested an average rate increase of 83.1 percent for their HMO product however (only HMOs are included in the carrier’s rate filings for 2017), and it’s unclear whether they might encounter the same roadblocks they faced last year (the reason they exited the exchange and pulled most of their products is that state regulators would not approve their requested 51 percent rate increase; more details below).
The carrier did not raise the rates on their remaining off-exchange HMO product for 2016, so the 83.1 percent rate increase would be in relation to the 2015 rates. However, according to the Albuquerque Journal, the President of BCBS of NM has said that most enrollees will see an average rate increase of about 30 percent over 2015 rates. It’s not clear how that would be the case however, as all of BCBSNM’s rate filings for the individual market have average requested rate increases of 83.1 percent (small group plans have an average proposed rate increase of 20.6 percent).
2017 rates and plans
With Presbyterian’s exit and BCBSNM’s return, the following carriers are expected to offer plans in the New Mexico exchange in 2017:
- Blue Cross Blue Shield of New Mexico
- New Mexico Health Connections
On May 31, the New Mexico Office of the Superintendent of Insurance opened up a public comment period for the rate filings that have been submitted for 2017. It runs through August. Consumers can view the proposed rate changes here. (click on the “ready to begin, start here” link, and then use the default setting to see all plans; limit by date (April through June 2016) to see the filings for 2017.
Molina’s exchange enrollment grew from 3,300 in 2015 to 18,000 in 2016, and the carrier is expanding their workforce in Albuquerque to meet the growing demand (including off-exchange enrollments, Molina had more than 19,000 enrollees as of March 2016).
At ACA Signups, Charles Gaba has roughly estimated the weighted average rate increase in New Mexico’s individual market at a little under 25 percent for 2017, with some caveats.
54,865 people enrolled in private plans through the New Mexico exchange during the 2016 open enrollment period, including renewals and new enrollees. That’s an increase of nearly five percent over the 52,358 people who enrolled during the 2015 open enrollment period, but it’s slightly short of HHS’ projection of 56,000 for the 2016 open enrollment period.
The New Mexico exchange enrollment growth for 2016 is more impressive when we consider the fact that half of the people who were enrolled through the exchange as of late 2015 were on Blue Cross Blue Shield of New Mexico plans that were discontinued at the end of the year (see details below). Some undoubtedly opted to go without insurance in 2016, and others might have purchased coverage outside the exchange or switched to the one remaining BCBSNM product still available (an off-exchange HMO). But clearly, a significant number of them opted to remain with the exchange and switch to a different carrier.
Effectuated enrollment in the New Mexico exchange stood at 47,497 as of March 31.
Open enrollment ended on January 31. The next open enrollment begins on November 1, for plans effective January 1, 2017. Between now and then, plans can only be purchased (including outside the exchange) if you have a qualifying event. And Healthcare.gov is requiring proof of qualifying events in 2016. There are some exceptions though: Native Americans can enroll in a health plan through the exchange year-round, and enrollment in Medicaid/CHIP also continues year-round.
NM Health Connections CO-OP
New Mexico Health Connections, one of the four carriers offering plans for 2016 in the New Mexico exchange, is a CO-OP (consumer oriented and operated plan) established with funding provided by the ACA. By March 2015, total enrollment in NM Health Connections had reached nearly 40,000, including on and off-exchange enrollments. And by February 2016, enrollment had grown to more than 50,000 members, and the CO-OP had added several big-name employers, including Goodwill Industries of New Mexico, Youth Development Inc., and Heritage Hotels & Resorts.
In 2014, New Mexico Health Connections had a medical loss ratio of 78 percent (the portion of premiums that are spent on medical claims). The ACA requires insurers in the individual and small group markets to spend at least 80 percent of premiums on medical expenses, but the CO-OPs have three years to reach that target. Once admin expenses were included, the CO-OP ended up with a net loss of $4.2 million in 2014. All but three other CO-OPs had significantly higher losses in 2014.
At the start of the 2016 open enrollment period, Hickey described how NM Health Connections was “in excellent shape” financially. The CO-OP in New Mexico is among just eight nationwide (out of an original 23) that are still operational, and appears to be escaping the insolvency that has crippled two-thirds of the CO-OPs. But Hickey has also noted that healthcare cost increases are currently far outpacing inflation, and that premiums and out-of-pocket costs will continue to increase (for all carriers) until we get a handle on healthcare costs. For 2016, New Mexico Health Connections has opted to drop their PPO plans in order to focus on HMO plans that allow the carrier to better control costs.
A key aspect of NM Health Connection’s success is that they weren’t counting on significant risk corridor payments from the federal government. Eight CO-OPs (in Colorado, Kentucky, Tennessee, Oregon, Arizona, South Carolina, Utah, and Michigan) failed in the wake of the 2014 risk corridor shortfall.
A technical glitch delayed the inclusion of New Mexico Health Connection’s plans on Healthcare.gov for the first two weeks of the 2016 open enrollment period. Consumers were able to begin purchasing 2016 coverage on November 1, but NM Health Connections plans didn’t show up on the exchange until November 15. During the first two weeks of November, 2016 coverage could be purchased directly from NM Health Connections – but subsidies are not available when plans are purchased outside the exchange.
Despite the delayed quoting, NM Health Connections expected to grow their membership significantly during the 2016 open enrollment period, and noted that they were poised to enroll many of BCBSNM’s insureds whose plans terminated at the end of 2015 (see details below). Total enrollment by February 2016 had grown to more than 50,000 members, including individual, small group, and large group membership. By that point, there were about 1,300 employer groups – both large and small – in New Mexico who had coverage through the exchange. A total of about 15,000 people were covered under those employer group plans.
As of the end of the first quarter of 2016, total actual enrollment in New Mexico Health Connections stood at 46,135, including both individual and group enrollees.
But in June 2016, HHS announced the results of the 2015 risk adjustment program; New Mexico Health Connections will have to pay $14.6 million to HHS. Shortly after the risk adjustment numbers were published, the CO-OPs in Connecticut and Oregon announced their impending closures due to the financial peril that the risk adjustment payments would impose. As of mid-July however, New Mexico Health Connections was still among the eight operational CO-OPs remaining.
60% of uninsured eligible for financial assistance
In New Mexico, there were still 233,000 uninsured residents in 2015. According to Kaiser Family Foundation data, 47 percent of them were eligible for Medicaid (New Mexico expanded Medicaid under the ACA, and coverage is available for people with household income up to 138 percent of the poverty level). And 13 percent were eligible for premium subsidies in the exchange. As of mid-2015, the New Mexico exchange had just 44,307 people enrolled in private plans, and enrollment grew to nearly 55,000 by the end of the 2016 open enrollment period, thanks in part to the exchange’s outreach efforts to enroll a significant number of the remaining uninsured population.
According to Gallup data, New Mexico’s uninsured rate in 2013 was 20.2 percent, and had declined to 13.1 percent by the first half of 2015. This is quite a bit higher than the average for all states that established their own exchanges and expanded Medicaid (New Mexico did both, although their exchange is now operating as a federally-supported state-based exchange).
BCBS not offering plans in the exchange in 2016, but planning to return in 2017
In the summer of 2015, Blue Cross and Blue Shield of New Mexico filed a proposal to increase premiums for 2016 by an average of 51.6 percent. The announcement generated headlines nationwide, standing out even among some of the relatively steep rate increases proposed in other states. BCBS garnered about a third of the market share in the New Mexico exchange in 2015, so their proposed rate increase would have had a significant impact on the market.
But in early August, the New Mexico Office of the Superintendent of Insurance (OSI) denied the proposed rate hike, stating that the data submitted with the rate proposal didn’t justify a rate increase of more than 24 percent. BCBS rejected the rate change offered by the state, but came back in the following days and submitted new rates that they claimed had an average rate increase of 11.3 percent. But the OSI has said that they don’t consider the secondary proposal to be a “real offer or realistic offer” and it was not accepted.
Including off-exchange business, BCBS insured about 35,000 people in 2015 in the individual market in New Mexico, and the carrier confirmed in late August that they would not be offering individual plans in the New Mexico exchange in 2016. BCBS has kept one individual off-exchange plan – a bronze level HMO – with rates unchanged from 2015. This avoided a full market exit, meaning that BCBS preserved their option to return to the individual market with additional plans in 2017, which they have decided to do. But the off-exchange bronze HMO plan had very few enrollees in 2015, so the vast majority of BCBS’s individual market insureds had to switch to new coverage for 2016 (it’s likely that many of them would have opted to find new coverage anyway, if the 51 percent rate increase had been approved, because the coverage would have become much less affordable). The carrier’s rate filing for 2017 indicates that they have 1,319 people enrolled in their HMO plan in 2016.
The individual market only comprised about ten percent of BCBS’s 2015 book of business in New Mexico. They proposed much smaller rate increases for their group market plans, and those were approved by OSI.
Lisa Reid, OSI’s director of life and health insurance, explained that BCBS had the lowest rates in the exchange in 2015, but they weren’t dramatically lower than their competitors. So their proposed 51 percent rate hike would have put their prices significantly above many of the other plans, most of which only imposed single-digit rate increases for 2016. For 2014, BCBS proposed rates so low that OSI required an increase before the plans could be approved for sale (similar to what Oregon regulators required for some plans going into 2016). And then in 2015, BCBS didn’t increase their overall weighted average rates at all (note that there were variations from one plan to another however; BCBS of NM had rate changes that varied from a 12.8 percent increase for their HMO plans to a 2.37 percent decrease for their MSPP).
Ultimately, they did end up with significant claims costs that would have justified the 24 percent average rate hike that OSI proposed – but OSI determined that the data presented by BCBS wasn’t sufficient to justify a 51 percent rate increase.
BCBS of NM did receive far more in reinsurance and risk adjustment payments than the other New Mexico carriers, based on 2014 claims. BCBS got nearly $25 million, while three other carriers – Presbyterian, Molina, and NM Health Connections – received a combined total of $11 million.
Whether or not OSI will approve BCBS of NM’s proposed rates for 2017 remains to be seen. Numerous carriers around the country have requested very significant rate increases for 2017, as reinsurance and risk corridors will end at the end of 2016, and providing coverage to the newly-insured population has proven to be more expensive than expected.
Average benchmark premium up 7%, NOT 25.8%
Overall, the average benchmark (second-lowest-cost Silver) plan in the New Mexico exchange is 7 percent more expensive in 2016 than in 2015. When HHS released a report in late October detailing average benchmark premiums in each of the states that use Healthcare.gov, they indicated that the average benchmark increase in New Mexico would be 25.8 percent. But because New Mexico Health Connections plans weren’t appearing in the quote system (due to the technical glitch that prevented their plans from displaying until mid-November), their rates weren’t taken into consideration when HHS analyzed the change in second-lowest-cost premium.
New Mexico was one of eight states where the HHS report indicated that the average benchmark premium would increase by more than 20 percent; the corrected change (just 7 percent) helps to make a small reduction in the national average benchmark premium increase. It also means that the average subsidy increases in 2016 were much more modest than they would have been if the original report had been correct, since subsidy amounts are based on the benchmark premiums.
Modest price hikes, but no PPOs available in 2016
The four remaining carriers in the exchange all said that they were ready to accept an influx of new enrollees switching off of BCBS plans. And all four of them proposed much smaller rate increases than BCBS for 2016:
- Presbyterian had asked for a 6 percent rate hike, and the approved rate change was between 3 and 6 percent.
- New Mexico Health Connections (an ACA-created CO-OP) rates increased between 4 and 17 percent, depending on the plan. The CO-OP ceased offering PPO plans in the individual market at the end of 2015, and is only offering HMO plans for 2016 (they are continuing to offer PPO plans in the group market). As explanation for their commitment to HMO’s, New Mexico Health Connections has noted that HMOs are lower-cost and make health insurance more affordable for more people. NM Health Connections had 1,900 members on PPO plans in 2015 (1,230 of them bought coverage through the exchange), and they had to switch to a different plan for 2016.
- Christus – no rate change for 2016.
- Molina didn’t ask for rate increases in their preliminary proposals; regulators ultimately approved a rate decrease of 2 percent.
None of the carriers in New Mexico’s exchange are offering any PPO options in the individual market for 2016. This is a trend nationwide, in an effort to keep premiums affordable. But it does mean that some insureds will have to switch doctors. In 2015, there were 22,000 BCBS of NM insureds who had a PPO option through the exchange; all of them had to select coverage from another insurer for 2016 in order to continue receiving coverage through the exchange (BCBS is keeping one off-exchange plan available, but it’s an HMO). And the CO-OP has also dropped its PPO plans for 2016.
Celtic entered New Mexico’s individual market for 2016, but is only selling off-exchange plans. Celtic is the only carrier in the state’s individual market that has a PPO option, but it’s only available off-exchange.
NM opts to stay with Healthcare.gov
New Mexico has a unique exchange; the state runs the small business portion, and while the individual exchange is also technically state-run, Healthcare.gov is used to enroll people in individual insurance (ie, a federally-supported state-based marketplace). Initially, the state had planned to establish a state-run website for individual enrollments, and that was still in the works until early spring 2015. But in April, the exchange board voted to continue to use Healthcare.gov, as that was viewed as the less-costly alternative.
New Mexico’s exchange had completed about 75 percent of their enrollment website when HHS changed the design guidelines in the fall of 2014. The exchange then applied for a $97 million federal grant to help pay for the website changes as well as other costs, but the grant was denied. Ultimately, it was decided that continuing to use Healthcare.gov would be the most fiscally responsible option.
But will fees make them reconsider that decision?
In the proposed Benefit and Payment Parameters for 2017 that HHS published in December 2015, HHS proposed a fee of 3 percent of premiums for states that run their own exchanges but use the Heathcare.gov enrollment platform starting in 2017 (the fee is 3.5 percent of premiums in states that have a federally-run exchange or a partnership exchange). Until 2017, these states have been using the Healthcare.gov platform for free, while funding and operating the rest of their exchange functions themselves.
Oregon and Nevada are both considering the possibility of switching back to being fully state-run exchanges in order to avoid the additional fees. Along with Oregon and Nevada, Hawaii and New Mexico are state-run exchanges that use Healthcare.gov’s enrollment technology.
When the final Benefit and Payment Parameters for 2017 were released in February 2016, HHS had agreed to cut the exchange user fee in half for the first year for state-based exchanges that use Healthcare.gov. For 2017 only, the user fee in those states will be 1.5 percent of premiums. After that, starting with the 2018 plan year, the user fee will be 3 percent for state-based exchanges that use Healthcare.gov.
2015 New Mexico exchange enrollment
By February 22, 2015, after the 2015 open enrollment period and extension had ended, 52,358 people in New Mexico had completed their private plan enrollments through the exchange, including 25,398 people who renewed 2014 coverage (4,542 of those individuals opted to switch to a new plan for 2015 rather than simply renewing their existing coverage). Of the 52,358 people who enrolled in private plans in the New Mexico exchange during open enrollment, 76 percent qualified for premium subsidies.
HHS had projected 43,000 enrollees in the New Mexico exchange by the end of open enrollment, but the state had already surpassed their official goal early in January (admittedly, the goals published by HHS were probably set on the low side for 2015, to avoid all of the hoopla we saw the year before in terms of reaching the stated target). Ultimately, the exchange ended up enrolling nearly 122 percent of their target amount.
Carriers in the NM exchange were predicting total 2015 enrollment of around 50,000 to 55,000 people, which ended up being very accurate. But the exchange itself avoided making any hard predictions for 2015 after falling far short of their goal in 2014. The exchange thought they’d enroll about 80,000 people for 2014, and ended up enrolling only about 34,000 – less than half of their target. Some of that was due to technical failures, but the predictions from carriers for 2015 indicates that perhaps the exchange set an unrealistic goal in 2014.
By the end of March 2015, effectuated enrollment in private plans stood at 44,085 people, as some enrollees didn’t pay their initial premiums, and others cancelled their coverage early in the year for one reason or another. Although attrition is to be expected, special enrollment periods mean that people can continue to enroll throughout the year if they have a qualifying event. Between February 23 and June 30, another 5,758 people enrolled in private plans through the New Mexico exchange. 458 of them enrolled during the tax season special enrollment period for people who were previously unaware of the tax penalty for being uninsured. By the end of June, in-force enrollments had grown slightly, to 44,307 people (nationwide, during the second quarter of the year, the trend was a decline in the number of people with in-force coverage, but New Mexico had a small increase instead).
Another 15,522 exchange enrollees in New Mexico were eligible for expanded Medicaid or CHIP between November 15, 2014 and February 22, 2015. Medicaid/CHIP enrollment continues year-round.
Lower 2015 rates and a new carrier
Sticker shock wasn’t a problem in New Mexico in 2015. Across the four carriers that participated in the exchange in 2014, the state announced in September 2014 that the weighted average premium change for 2015 would be a decrease of 1.65 percent. This was especially good news given that in 2014, the lowest cost bronze plan in the NM exchange averaged $217 a month, quite a bit lower than the national average of $249.
PricewaterhouseCoopers LLC conducted rate analysis across the entire individual market, including on and off-exchange plans. For New Mexico, the weighted average they found for all six carriers was an increase of 1.4 percent. But a Commonwealth Fund analysis of just the plans in the exchange found an average rate decrease of 1 percent. And for people who had the benchmark plan (second lowest-cost silver plan) in 2014, the price decrease for 2015 was even more pronounced.
Christus Health Plan also joined the exchange in 2015, bringing the total number of carriers to five. Christus joined Health Care Service Corporation (Blue Cross and Blue Shield of New Mexico), Molina Healthcare of New Mexico, New Mexico Health Connections and Presbyterian Health Plan. There were a total of more than 40 plans available through BeWellNM for 2015.
New leadership and marketing
The New Mexico exchange (NMHIX) is continuing to operate as a federally-supported state based marketplace, and is utilizing HealthCare.gov for individual plan enrollments. Small businesses use the state-run exchange portal.
In late August 2014, NMHIX hired CEO Amy Doud, who came to them from the Idaho exchange that she had run for 15 months (Idaho was a federally-supported state-based exchange in 2014, but became a fully state-run exchange in time for the 2015 open enrollment). Doud’s focus is on working with agents and brokers and promoting one-on-one assistance to drive up enrollment numbers, as much of Idaho’s success during the first open enrollment was attributed to their strong partnership with agents and brokers.
Just a few weeks before the start of the 2015 open enrollment period, NMHIX hired a new Director of Communications and Outreach. Linda Wedeen has three decades of experience in marketing and communications in New Mexico.
The exchange also hired additional enrollment counselors leading up to the 2015 open enrollment, and was particularly focused on recruiting enrollment counselors who would be able to reach out to the Native American population in the state.
New marketing and PR team
In the summer of 2013, NMHIX began working with Milwaukee-based marketing firm BVK to market and promote the exchange throughout the state. In July 2014, the exchange board unanimously voted to renew the BVK contract for $6.2 million. But in September, NMHIX Chair Dr. J.R. Damron expressed dissatisfaction with the marketing approach, and highlighted recent survey numbers that found the majority of uninsured adults in NM were unaware of the services the exchange provides, and even more had not heard about the exchange on various media sources.
The agreement with BVK was terminated and the marketing contract was put out for bidding in September 2014. In October, 18 firms submitted bids; 12 were local New Mexico companies. BVK did not bid for the new contract, but said it was committed to working with the new contractor for a smooth hand-off. The contract was ultimately awarded to Garrity Group PR in November 2014, along with K2MD.
The ACA’s subsidies
According to a report released by HHS in June 2014, the average after-subsidy premium in the New Mexico exchange was $120/month in 2014, significantly higher than the $82/month average across the 36 federally-facilitated marketplaces (FFM). And only 78% of New Mexico exchange enrollees received subsidies, compared with 87% across all of the FFMs.
The average after-subsidy premium in New Mexico was the fifth highest among the 36 FFMs, but NM Superintendent of Insurance John Franchini attributed that to one of the four carriers in the exchange charging premiums that were 20 to 25 percent higher than the other three carriers. He didn’t say which carrier it was, but noted that it was a carrier with which people were already familiar, and about a third of the enrollees picked that carrier’s plans, despite the higher premiums.
Since the tax credit subsidies are based on the cost of the second-lowest-price Silver plan, an outlier plan on the high end will mean higher average after-subsidy premiums if a significant number of people choose to apply their subsidy towards the high cost plan instead of selecting a less expensive policy. Franchini notes that even though $120/month is higher than the average in most of the other FFM states, it’s still far less expensive than people would have been paying prior to the implementation of Obamacare and the premium tax credits.
As of mid-2015, the average subsidy in the New Mexico exchange was $196/month – significantly smaller than the $270 national average. But the average pre-subsidy premiums were also lower in New Mexico: $323/month, as opposed to $364/month nationwide (as of the end of open enrollment; attrition throughout the year changes the averages). In March, the after-subsidy average premium in New Mexico was $127/month. Nationwide, it was $101/month.
Be Well New Mexico’s 2014 enrollment
By April 15, 2014, 34,966 people had completed their private plan selections through the New Mexico Exchange. This was roughly 11 percent of the eligible population, and was significantly lower than the state had projected.
An additional 30,147 exchange applicants were eligible for the state’s expanded Medicaid program during open enrollment. But Medicaid enrollment is year-round, and most eligible residents in New Mexico have enrolled directly with the state’s Medicaid program rather than going through the exchange. By November 2014, the total new enrollment in Medicaid had reached 170,000. That’s more than 76 percent of the total eligible population, making New Mexico one of the most successful states for Medicaid enrollment. By the end of 2015, New Mexico’s Medicaid enrollment had grown by about 200,000 people since the end of 2013, but three quarters of them had enrolled directly through the New Mexico Medicaid program.
New Mexico had the ninth-highest drop in uninsured rate during the first half of 2014. According to a Gallup poll released in August, the state’s uninsured rate was 20.2 percent in 2013, and had dropped to 15.2 percent by mid-2014.
An expensive exchange
New Mexico’s exchange had the seventh highest cost per enrollee in the nation in 2014, coming in at about $6,181 per enrollee when total start-up and operating expenses were divided among the 32,062 people who had selected a private plan by the end of March 2014.
However, nearly three thousand more New Mexicans completed their Obamacare enrollment in the first half of April, which brought the total cost per enrollee down to about $5,668. This was still far higher than the national average of $922 though. In 2014, the exchange was still working out the details of how to become financially self-sustaining by 2016, but ultimately they ended up switching to the Heathcare.gov platform starting with the 2015 open enrollment period.
The state-run SHOP exchange
By March 2014, the state-run SHOP exchange had enrolled 524 people, including 345 employees and 179 of their dependents. Nearly 1500 small businesses had started their applications in the SHOP exchange by the end of 2013, and several thousand employee names had been entered into the system. But by December 2014, total enrollment was still only around 800 people. SHOP enrollment runs year-round, so businesses can continue to apply throughout the year.
The SHOP exchange needed $1.5 million in annual funding starting in 2015 when it had to begin operating without financing from the federal government. In December 2014, the exchange board voted to impose a fee on all health insurance policies sold in the state of New Mexico, in order to raise the funds needed for Be Well New Mexico’s SHOP exchange in 2015 and beyond.
Establishing the exchange
New Mexico’s path to establishing an exchange was atypical. New Mexico Gov. Susana Martinez, a Republican who opposes the federal health reform law, has been the driving force in establishing an exchange and advocating for the state-run model.
Martinez designated that the Health Insurance Alliance develop the state exchange. The Health Insurance Alliance is a nonprofit association of health plans created by the state Legislature in 1994 to offer health insurance coverage to small employers. Later, the Senate and House both approved a state-run exchange.
New Mexico health insurance exchange links
Guide to the New Mexico Health Insurance Exchange
Includes details about carriers, important dates, eligibility and enrollment information
New Mexico Health Insurance Exchange
Administrative and start-up information
State Exchange Profile: New Mexico
The Henry J. Kaiser Family Foundation overview of New Mexico’s progress toward creating a state health insurance exchange.