Highlights and updates
- Looking ahead to 2019: Ambetter has filed to join the exchange
- Senate GOP considers allowing non-ACA-compliant Farm Bureau plans to be sold
- Blue Cross Blue Shield of NC and Cigna offering plans for 2018
- Total enrollment down 15% since 2016
- Average 2018 rate increases: 14.1% for BCBSNC & 24.6% for Cigna
- Cost of CSR added to premiums, accounts for virtually all of BCBS rate hike
- Blue Cross Blue Shield ended grandfathered plans at the end of 2017
North Carolina exchange overview
North Carolina uses the federally-run exchange, and has not yet expanded Medicaid under the ACA. Most of the state has just one carrier — Blue Cross Blue Shield of North Carolina — offering plans in the exchange. But in five counties in the Raleigh/Durham area (Chatham, Johnston, Nash, Orange, and Wake), Cigna joined the exchange starting in 2017, and plans are available from both carriers.
519,803 people enrolled in private plans through the North Carolina exchange during the open enrollment period for 2018 coverage. For comparison, 549,158 people enrolled for 2017, and 613,487 people enrolled during the 2016 open enrollment period. So enrollment for 2018 is down about 15 percent from the high that it reached in 2016.
Across all the states that use HealthCare.gov, enrollment declined by about 5 percent in 2017, likely due to uncertainty about the future of the ACA, combined with the Trump Administration’s reduction in advertising and outreach for HealthCare.gov in the final week of open enrollment. And for 2018, enrollment in HealthCare.gov states is about 5 percent lower in 2018 than it was for 2017, due in part to continued funding cuts for advertising and outreach, combined with an open enrollment period that was half as long as it had been in prior years.
For the first time since the individual market started having open enrollment periods in the fall of 2013, the open enrollment period for 2018 coverage ended before the start of the new year. People who want to enroll or make changes to their coverage for 2018 are now required to have a qualifying event.
The shorter open enrollment period — November 1 to December 15 — applies both on and off the exchange, and will continue to be utilized for future years as well.
HHS estimated that there were 138,000 people in North Carolina who have individual market coverage outside the exchange in 2016, and who would be eligible for premium subsidies if they switched to exchange coverage instead.
Only three states — California, Florida, and Texas — have exchange enrollment numbers higher than North Carolina’s. And HHS reported that from 2010 to 2015, the number of North Carolina residents with health insurance increased by 552,000 as a result of the ACA.
Looking ahead to 2019
Insurers that wish to offer individual market coverage in North Carolina in 2019 had to file rates and forms by May 21, 2018. The two insurers that offer 2018 coverage in the North Carolina exchange — Cigna and Blue Cross Blue Shield of North Carolina — have both filed rate for 2019. Although the filings do show up in SERFF, they have very little publically available data at this point.
The North Carolina Department of Insurance has said that rate filing data will be made public as of July 25, for any insurers seeking rate increases of 15 percent or more. CMS will publicize all rate filing data (including proposed rate increases of less than 15 percent) in August.
In addition, Ambetter (Centene) has filings in SERFF for North Carolina’s 2019 individual market. Ambetter does not yet offer coverage in North Carolina, and will be new to the market, assuming their plan filings are approved. The filings include the initial applications that insurers must submit in order to become a licensed HMO in North Carolina, as well as form filings for a variety of on- and off-exchange individual market plans. The filings do not indicate where in North Carolina Ambetter is planning to enter the market, but it appears that at least some residents in North Carolina will have Ambetter as a choice when open enrollment begins in November 2018
Senate Republicans are considering allowing Farm Bureau to sell unregulated health plans
Lawmakers in North Carolina have been considering a bill (HB933) that would make it easier for school districts in the state to recruit school psychologists — a measure that passed unanimously in the House in May. But in June 2018, Republicans in the Senate Health Care Committee began overhauling the bill, adding language that would open the door to allowing the North Carolina Farm Bureau to sell health plans that aren’t compliant with the ACA.
North Carolina Farm Bureau hasn’t clarified the details of the type of coverage they’d want to offer, but they’ve indicated that it would have to be medically underwritten. That would mean that people with pre-existing medical conditions would either be ineligible for coverage under the plans, or would have to pay higher premiums or be subject to pre-existing condition exclusions (this is how all health insurance worked in the individual market in most states — including North Carolina — prior to 2014, but the ACA banned that practice, with the exception of “excepted benefits,” like short-term health insurance).
Tennessee has allowed Farm Bureau plans to be sold for many years, and opted prior to 2014 to allow those plans to continue to be sold (they’re not considered health insurance, so they’re not regulated the way other health plans are, and are thus allowed to continue to be sold, despite not being compliant with the ACA). Allowing healthy people to purchase less expensive, non-ACA-compliant coverage has been detrimental to Tennessee’s ACA-compliant market, leaving it with a sicker risk pool than other states.
Iowa enacted legislation in 2018 that will allow the Iowa Farm Bureau to partner with Wellmark to offer non-ACA-compliant plans. The plans are expected to be available for purchase in late 2018, with coverage effective in January 2019. North Carolina Senate Republicans’ proposal would allow similar plans to become available in North Carolina.
The Health Care Committee’s addition to the bill did not get a vote when it was introduced, but a vote could come at the next committee meeting. If it gets added to the bill, it would make a universally popular bill — to help schools recruit psychologists — suddenly divisive.
It’s noteworthy that North Carolina is one of the states that has not yet accepted federal funding to expand Medicaid. If the state were to expand Medicaid, hundreds of thousands of low-income residents would become eligible for Medicaid, including more than 200,000 who are currently in the coverage gap (meaning that they have no realistic access to health coverage unless the state expands Medicaid). And many more would be able to switch from private plans in the exchange to Medicaid. This population, at the low-end of the income scale (between 100 percent and 138 percent of the poverty level), tends to be in poorer health than more affluent individual market enrollees (wealth is correlated with health).
So the expansion of Medicaid would help to strengthen the ACA-compliant risk pool. But North Carolina Republicans have consistently rejected Medicaid expansion. Instead, some in the Senate are now considering the possibility of allowing non-ACA-compliant plans to compete with the ACA-compliant market, which would undoubtedly be detrimental the ACA-compliant market. And since the new plans would only be available to healthy people, the less stable ACA-compliant market would be the only option for people with health conditions. Those who are eligible for premium subsidies would be protected from substantial rate hikes, but those ineligible for premium subsidies would bear the full weight of the higher premiums that would be necessary to cover the sicker risk pool.
Virtually all of BCBSNC’s 2018 rate increase was due to Trump Administration’s elimination of CSR funding
The Trump Administration waffled throughout 2017 in terms of whether they’d continue to fund cost-sharing reduction (CSR) payments to insurers, and Congress failed to take action to appropriate funding. Under the ACA, insurers are required to provide more robust coverage to eligible low-income enrollees, and the federal government is supposed to reimburse insurers for the cost. House Republicans sued the Obama Administration in 2014 over the legality of the federal payments to insurers (which weren’t specifically appropriated by Congress), and a judge sided with House Republicans in 2016. The Obama Administration appealed, however, and cost-sharing reduction payments continued to flow to insurers for more than a year.
But President Trump repeatedly threatened to cut off funding for cost-sharing reductions, and in mid-October 2017, he announced that CSR funding would end immediately. By that point, rates were already finalized for 2018, and both North Carolina insurers had already based their premiums on the assumption that federal funding for CSR would not continue in 2018 — a prescient decision, in hindsight.
Blue Cross Blue Shield of North Carolina filed 2018 rates in May 2017, and the filing painted a clear picture of the importance of the CSR issue: Blue Cross Blue Shield of NC proposed a 22.9 percent rate increase, but they noted that 14 percentage points of that rate increase was based on an assumption that cost-sharing reductions (CSRs) wouldn’t be funded in 2018. They said they would re-file lower rates if the federal government were to provide “firm commitment to fully fund CSR payments in 2018 in a timely manner.” Had that commitment been forthcoming — which it wasn’t — the new rate filing would presumably have been in the range of 8.9 percent.
But Blue Cross Blue Shield of North Carolina filed new rates in early August, noting that “the individual market in North Carolina has become less volatile…we got information in June and July that made us confident we could reduce our requested rate increase for 2018” The new rate filing was for an average increase of 14.1 percent. That rate filing was ultimately approved by regulators, and BCBSNC clarified in October that if CSR funding had continued, the average rate increase for 2018 would have been “near zero.”
Cigna also filed rate proposals for 2018, but they had — and continue to have — a much smaller membership in North Carolina, due to their limited coverage area. Their initial rate filing was for an average increase of 32 percent, but a subsequent filing, dated in late July, proposed a rate increase of 24.61 percent. In both cases, the cost of CSR had been added to premiums, as Cigna had based their rate proposal on the assumption that CSR funding would not continue (among the filings in SERFF, one version with a 24.61 percent proposed rate increase was a revised filing that originally called for an average rate increase of 19.5 percent; that was crossed out and replaced with the 24.61 percent proposed average increase. That filing also added a notification that the cost of CSR had been added to premiums for the 24.61 percent increase. It appears that Cigna may have filed a revised average proposed increase of less than 20 percent at some point in early summer, based on the assumption that CSR funding would continue, and then revised that position again by late July).
So the average rate increases for North Carolina are:
- Blue Cross Blue Shield of North Carolina: 14.1 percent (502,000 members; coverage available statewide). BCBSNC confirmed that virtually all of their rate increase for 2018 was due to the elimination of federal funding for CSR.
- Cigna: 24.61 percent (21,968 members; coverage available in the Raleigh-Durham area, in Chatham, Johnston, Nash, Orange, and Wake counties)
The rate filings were under review all summer by the North Carolina Department of Insurance for actuarial justification. The Department of Insurance confirmed in mid-September that the state has completed its review, and the rate proposals were then sent to the federal government for final review. The revised rate filings were approved for both insurers.
As always, it’s important to note that these premium increases apply to full-price premiums. For people who receive premium subsidies (which included 93 percent of the people who were enrolled through North Carolina’s exchange in 2017), the subsidies grow in order to keep after-subsidy premiums affordable. In 2017, the average BCBSNC premium was $655/month, but for subsidized enrollees, the average after-subsidy premium was just $155/month. People who are eligible for premium subsidies are receiving larger subsidies in 2018 to offset all or most of the rate increase, although in some areas it’s possible that enrollees may have had to switch plans in order to get the most value from their premium subsidies. But people who pay full-price for their coverage, which included 7 percent of exchange enrollees in 2017, as well as anyone who has off-exchange coverage in North Carolina, felt the full impact of the premium increases as of January 2018.
50,000 with grandfathered BCBSNC plans needed to transition to ACA-compliant coverage for 2018
Blue Cross Blue Shield of North Carolina announced in August 2017 that they would terminate their remaining grandfathered plans at the end of 2017. The insurer noted that while they initially had 330,000 grandfathered plan members in 2010, enrollment has dropped to 50,000 in 2017. And since nobody was able to join the insurance pool for those plans since the ACA was enacted in 2010, the risk pool got older and sicker — and thus more expensive — over the ensuring seven years.
Members with BCBSNC grandfathered plans were able to select from all of the available ACA-compliant plans in their area during open enrollment, including on and off-exchange plans. And while open enrollment ended on December 15, there was a special enrollment period (SEP) that continued through March 1, 2018 for anyone whose plan was terminated on December 31, 2017. The special enrollment period allowed former BCBSNC grandfathered plan members to enroll in a replacement plan on or off-exchange.
Only one insurer in most of the state, but medical loss ratio is sustainable
Although most of the state has only Blue Cross Blue Shield of North Carolina as an option in the exchange, the insurer appears to be on a fairly sustainable path, particularly given their 24 percent average rate increase for 2017. Although BCBSNC lost $400 million on ACA-compliant plans in 2014-2015, they lost only $38 million in 2016. This increasing stability is reflected in their rate filings for 2018 (details above), which would be single-digit increases if the Trump Administration were to provide a firm commitment to funding 2018 cost-sharing reductions.
After spending 102.7 percent of premiums on medical claims in 2015, BCBSNC spent 83 percent of premiums on medical claims in 2016. That’s much more viable for long-term success, given that premiums have to also coverage administrative costs. The ACA requires individual market plans to spend at least 80 percent of premiums on medical costs. BCBSNC was close to that mark in 2016, and much more on track to be profitable than they had been in prior years.
Although it’s preferable to have multiple insurer options among which consumers can choose, a well-regulated insurance market can still be healthy and sustainable as long as the risk pool is well balanced (healthy enrollees as well as sick enrollees), enrollment remains steady, and insurers are able to pay claims while also making a profit.
Blue Cross Blue Shield stayed in the exchange in 2017, but sued feds
Blue Cross Blue Shield of North Carolina covers the majority of the state’s exchange enrollees, and they were the only exchange carrier that offered plans state-wide in 2016. In early 2015, they were considering the possibility of pulling out of the exchange in 2017. By May 2016, they had tentatively confirmed that they would continue to offer plans in the exchange in 2017, despite the losses they had incurred by that point. They had until September 24 to make a final decision; on September 22, they reiterated their commitment to remaining in the exchange in every county in North Carolina in 2017.
Their initial rate filings for 2017 included 24 plans, and an average rate increase of 18.8 percent. But in late August, BCBSNC filed new rates, with an average rate increase of 24.3 percent. The carrier noted that exchange enrollees (not just in NC, but nationwide) have been sicker than expected, and using more health care services than other insured populations. So the new rate filing in late August was in response to the announced departure of Aetna from North Carolina’s marketplace and the expected influx of new (potentially high-cost) enrollees for BCBSNC.
For perspective, the state approved an average rate increase of 32.5 percent for BCBSNC plans heading into 2016, so the requested rate increase for 2017 (which was approved) was not as steep as it was a year earlier. BCBSNC is not offering platinum plans in 2017.
In 2014, BCBSNC lost $123 million on their exchange business, and that figure spiked to $282 million in 2015. The carrier filed a lawsuit against the federal government in June 2016, alleging that the government failed to live up to its obligations under the ACA’s risk corridor program. Several other carriers had already filed similar lawsuits; carriers found out in the fall of 2015 that their payouts would be less than 13 percent of the total amount they were owed under the program (the Department of Justice has requested that the lawsuits be dismissed, but in February 2017, a federal claims judge ruled in favor of Moda Health, another carrier that had filed a lawsuit similar to BCBSNC’s).
In September 2016, HHS announced that risk corridor revenues from 2015 would all have to be allocated towards the 2014 shortfall, and that there would be no funding left to cover any of the money that carriers are owed under the program for 2015. In the announcement, HHS acknowledged the lawsuits that have been filed, and noted that they’re “open to discussing resolution of those claims.” Congressional Republicans have said that the federal government doesn’t have the funds or the right to pay out money under the risk corridors program (above the small amount that was collected by the program), but a New England Journal of Medicine article by Nicholas Bagley explains that the law is likely on the side of the carriers in this case.
Although BCBSNC lost $405 million on ACA-compliant plans in 2014-2015, growth in investment income and Medicare Advantage during 2015 offset the losses in the exchange market, giving BCBSNC net earnings of $500,000 in 2015, as opposed to a $51 million loss in 2014 (Wendell Potter recently detailed how carriers can be losing money in the exchanges but still doing well overall). And BCBSNC’s ACA-compliant market losses were much smaller ($38 million) in 2016.
2017: United and Aetna out, Cigna in
The same three carriers that offered coverage in North Carolina’s exchange in 2015 continued to offer plans in 2016. Humana had planned to join the exchange in four counties in the Charlotte and Winston-Salem area, but ended up withdrawing their application in 2015 before plans became available for purchase, and their plans are still only available outside the exchange in North Carolina.
In 2016, exchange plans in North Carolina were available from:
- Blue Cross Blue Shield of North Carolina – state-wide
- UnitedHealthcare – 77 counties
- Aetna (Coventry of the Carolinas) – 39 counties
But there were changes for 2017:
UnitedHealthcare exited the individual market entirely in North Carolina at the end of 2016, as was the case in the majority of the states where United offered exchange plans in 2016. In 74 of the counties where United participated in the exchange, they offered one of the two least-expensive silver plans.
Aetna announced in August 2016 that they would exit the exchange in North Carolina, along with most of the other states where they were participating in the exchanges. North Carolina Insurance Commissioner, Wayne Goodwin, expressed his dismay at Aetna’s announcement, saying “I am shocked and disappointed that Aetna and its executives have chosen to abandon their Exchange members. We at NCDOI were in the middle of reviewing Aetna’s rate requests for 2017. Never during the review did the company indicate any concern that the requested rates would not solve. I am angered by the impact Aetna’s decision will have on Tar Heel families and our market.”
Cigna filed rate proposals for exchange plans in six counties in the Raleigh/Durham area for 2017. But the exit of United and Aetna means that the majority of the state’s counties have access to only BCBSNC through the exchange (everyone outside of the Raleigh/Durham area has only BCBSNC as an option).
Insurance Commissioner Goodwin sent a letter to HHS Secretary Burwell in February 2016, noting his concerns about carriers exiting the market in the state, carrier consolidations, financial losses for carriers in the exchanges, and broker commission cuts. Goodwin has long been a proponent of the ACA, but he notes that “insurers cannot continue to have annual losses in the hundreds of millions and be expected to continue ‘business as usual’.”
Goodwin launched an investigation into BCBSNC in February 2016, after his office received more than 1,000 formal complaints about the carrier, and more than 4,000 consumer phone calls. The carrier switched to a new software system and problems with the transfer prevented many people from buying coverage during open enrollment, or verifying existing coverage. BCBSNC is cooperating with the investigation, and notes that many of the problems have already been resolved.
Average rate changes for 2017: Benchmark up 40%
Because of the exit of United and Aetna, the increase in the average benchmark (second-lowest-cost silver plan) premium in North Carolina’s exchange was more significant than the average rate increases of the two carriers that are offering plans in the exchange for 2017. HHS reported in October that the average benchmark premium in North Carolina would be 40 percent higher than the average benchmark premium in 2016 (for reference, the average benchmark premium increase across all the states that use HealthCare.gov is 22 percent).
So subsidies are substantially larger in 2017 than they were in 2016. But particularly for enrollees who had coverage in 2016 from United or Aetna, it was essential to shop around during open enrollment to select a plan that provided the best possible value for 2017.
And although 91.5 percent of North Carolina’s exchange enrollees had subsidies in 2016, there’s no protection against rising premiums for people who aren’t eligible for subsidies.
For the two carriers that are participating in the exchange in 2017, average rate increases — before any subsidies are applied — are as follows:
- Blue Cross Blue Shield of North Carolina: 24.3 percent
- Cigna: (based on 2016 off-exchange plans, which covered 1,265 enrollees that year) 15.3 percent (30 percent for bronze plans)
New rates were filed in the summer of 2016 by both carriers, after they determined that their initially-filed rate increases (18.8 percent for BCBSNC and 7 percent for Cigna) would not be sufficient. The North Carolina Department of Insurance approved the second rate filings. It’s notable that by not expanding Medicaid, and by allowing grandmothered/transitional plans to continue to renew, North Carolina lawmakers and regulators ultimately created a sicker risk pool than the state would have had if Medicaid had been expanded and grandmothered plans had ended (lower income people tend to have poorer health, and Medicaid expansion would have resulted in people with incomes between 100 percent and 138 percent of the poverty level being on Medicaid instead of exchange plans; people on grandmothered plans tend to be in better health, and ending grandmothered plans would have sent those people to the ACA-compliant individual market instead).
Aetna had proposed an average rate increase of 24.5 percent, but that is no longer applicable for exchange enrollees, as Aetna’s plans are not available in the North Carolina exchange in 2017.
Blue Cross Blue Shield of North Carolina had 62,285 enrollees on grandmothered (transitional) plans in 2016, and their average rate increase was 11.9 percent for 2017. Those plans are allowed to continue in force until at least the end of 2017. HHS has issued yet another extension for grandmothered plans, allowing them to remain in force throughout 2018 as well, although it will be up to each state to decide whether to allow that extension, and it will then be up to the insurance companies to decide whether to renew the plans again for 2018.
There are another 63,000 Blue Cross Blue Shield of North Carolina enrollees whose plans are grandfathered (meaning they were already in force as of March 23, 2010, and they can remain in force indefinitely as long as no substantial changes are made to the coverage). The grandfathered plans did not have a rate increase for 2017; average rates for those plans remained the same as they were in 2016. However, those plans will be terminated altogether at the end of 2017, as Blue Cross Blue Shield of North Carolina has decided not to renew them.
3rd highest enrollment among Healthcare.gov states
During the 2016 open enrollment period, 613,487 people enrolled in private health plans through the North Carolina exchange, including renewals and new enrollees. Among the 38 states that use Healthcare.gov, only two states – Florida and Texas – had higher enrollment totals than North Carolina.
For additional perspective, enrollment at the end of the 2015 open enrollment period stood at 560,357. North Carolina’s 2016 exchange enrollment was up 9 percent over the 2015 total, despite the fact that 2016 is the first year that HHS began subtracting unpaid and cancelled enrollments in real-time, while open enrollment was on-going. In prior years, they waited until open enrollment had ended to account for attrition.
By the end of March, 2016, effectuated enrollment through the North Carolina exchange stood at 545,345. Of those enrollees, 91.5 percent were receiving premium subsidies. The March 2016 effectuated enrollment total was an 11 percent increase from the year before, when effectuated enrollment was at 492,014.
Although enrollment declined in 2017, North Carolina still has the third-highest enrollment among HealthCare.gov states (there are 39 of them now that Kentucky is using HealthCare.gov), and the fourth-highest nationwide (among state-based exchanges, California has the highest enrollment).
In 2015, there were still 1,138,000 uninsured residents in North Carolina, and according to Kaiser Family Foundation data, a quarter of them were eligible for premium subsidies that would offset the cost of coverage purchased through the exchange. Almost as many – more than one in five – are in the coverage gap because North Carolina has not expanded Medicaid; unfortunately, the ACA can’t provide any assistance for those people unless North Carolina accepts federal funding to expand Medicaid.
2016 average rates at least 20% higher
The three existing exchange carriers all proposed double digit rate average increases for 2016 (at ACAsignups, Gaba estimated that the weighted average proposed rate increase for the whole individual market in North Carolina was around 27 percent). But subsidies offset a significant portion of any rate increases for the vast majority of exchange enrollees, particularly if they shopped around during open enrollment (almost 92 percent of effectuated enrollments in North Carolina were receiving subsidies as of June 2015).
Subsidies are based on the price of the benchmark plan (second-lowest-cost Silver plan) in each area. In North Carolina, the average benchmark plan in 2016 is 22.8 percent more expensive than the average benchmark plan in 2015 (note that the benchmark plan isn’t necessarily offered the same carrier that offered it in 2015). So subsidies are higher in 2016, but variations in premium changes from one plan to another were significant.
Blue Cross and Blue Shield of North Carolina initially proposed an average rate increase of 25.7 percent in June 2015, but in early August they retracted that proposal and asked instead for an average rate hike of 34.6 percent (ranging from 5 to 42 percent, depending on the plan), applicable to 380,000 people who had ACA-compliant individual plans from BCBS in North Carolina, including both on and off-exchange plans. The carrier noted that enrollees have been older and sicker than expected, and that “pent-up demand” had not leveled off in 2015 as anticipated. They explained that costs exceeded revenues by $123 million in 2014, despite the fact that the carrier received $343 million from the ACA’s “3Rs” to offset their losses. In October, the NC Department of Insurance approved an average rate increase of 32.5 percent for Blue Cross Blue Shield, with rate increases for specific plans varying from 5 percent to 40 percent.
BCBS also eliminated some plans in the Triangle and Charlotte areas of the state for 2016, a move that resulted in about 55,000 people having to switch plans. BCBS is still offering plans in those areas, but with narrower networks (those narrower network plans are less expensive, and already account for about 60 percent of BCBS’s insureds in those areas).
For about 117,000 people who had coverage from Aetna (Coventry Health Care of the Carolinas) in 2015, rates increased by an average of 23.6 percent for 2016, assuming they opted to keep their existing coverage. Aetna’s average proposed rate increase for exchange plans was 17 percent for their HMOs, and 23 percent for POS plans.
United Healthcare proposed an average rate increase of about 20 percent for plans sold in the exchange, which was approved by the Department of Insurance. Rate changes for specific plans from UnitedHealthcare vary from a 2.5 percent increase to more than a 50 percent increase. UnitedHealthcare had 86,223 insureds enrolled in ACA plans in North Carolina in 2016.
In December, UnitedHealthcare announced that they would no longer pay agent commissions for plans sold in January 2016 or later (this applies nationwide) in an effort to scale back their enrollment growth and stem the losses they’ve incurred in 2015. It’s likely that the result will be fewer UnitedHealthcare enrollments in 2016, although the final impact is yet to be determined.
For all three carriers, the weighted average rate increase in the North Carolina exchange was about 29 percent across all plans, assuming nobody changed plans for 2016. But nationwide, the 2016 open enrollment saw far more people actively shopping around, as opposed to automatically renewing their coverage. Only 40 percent of 2014 enrollees (in Healthcare.gov states) actively shopped during the 2015 open enrollment period (the rest relied on auto-renewal). But for 2015, that grew to 60 percent, with only 40 percent opting for auto-renewal.
Insurance Commissioner blames state for rate hikes
North Carolina’s Insurance Commissioner Wayne Goodwin blamed the state’s spiking premiums on the General Assembly, because they refused to establish a state-based exchange or expand Medicaid.
In states that have expanded Medicaid, enrollees with income up to 138 percent of the poverty level are eligible for Medicaid. But in states like North Carolina, where coverage has not been expanded, applicants with income between 100 percent and 138 percent of the poverty level are eligible for premium subsidies in the exchange, instead of Medicaid. Lower incomes are correlated with increased health problems, and a state’s rejection of Medicaid expansion puts that segment of the population into the individual market risk pool, rather than state/federal-funded Medicaid.
Goodwin explained that “if [North Carolina] had a state-based system, we would have had more companies competing. There would have been more leverage on my end as the Insurance Commissioner and rates would have been lower. If there had been Medicaid expansion, rates would have been lower.”
Subsidies safe for nearly half a million in NC
The Supreme Court issued a ruling in King v. Burwell in June 2015, upholding the legality of subsidies in states like North Carolina that use Healthcare.gov rather than running their own exchanges. The ruling protected subsidies for more than 421,000 North Carolina residents in 2015, and subsidies continue to be available for new and renewing enrollees. Only two states – Florida and Texas – have more people whose subsidies were at risk in King v. Burwell, and the market disruption that would have resulted from the elimination of subsidies would have caused “incredible chaos,” according to Insurance Commissioner Wayne Goodwin.
If subsidies had been eliminated, premiums for people receiving subsidies would have increased an average of 336 percent. But even those who were paying full price for their coverage would have faced the possibility of being priced out of the insurance market; the Urban Institute had projected a rate increase of 55 percent on unsubsidized policies, in addition to the normal annual rate increases. Because of the upward pressure on rates, the analysis concluded that the individual insurance market pool size would have dropped by 70 percent if subsidies had been eliminated.
But challenges remain
Despite the preservation of subsidies, the lack of Medicaid expansion in North Carolina continues to be a significant obstacle to improving access to healthcare in the state. More than 500,000 people in North Carolina have no realistic access to health insurance: They aren’t eligible for Medicaid because the state hasn’t accepted federal funds to expand the program, and they aren’t eligible for subsidies in the exchange because their incomes are below the poverty level.
In 2013, the uninsured rate in North Carolina was 19.9 percent, and by 2014 it had fallen to 17.3 – a 13 percent reduction. By the first half of 2015, that number had fallen to 14.7 percent, according to Gallup. It’s a significant improvement, but considerably below the 8.9 percent average uninsured rate attained by states that have expanded Medicaid and established their own exchanges (North Carolina has done neither).
As of February 22, when the 2015 open enrollment period and extension had ended, 560,357 people in North Carolina had finalized their private plan enrollments through the exchange. 51 percent – 274,227 people – were new to the exchange for 2015. The other 49 percent already had coverage through the exchange in 2014.
HHS had projected North Carolina’s total exchange enrollment to reach 455,000 by the end of open enrollment, but the state had already surpassed that number more than a month prior to the end of open enrollment, and ended up at 123 percent of the projected total.
Although open enrollment ended in February, another 55,518 people enrolled in private plans through the North Carolina exchange between February 23 and June 30, taking advantage of special enrollment periods. Most were triggered by qualifying events, but more than ten thousand North Carolina residents were able to enroll thanks to the special enrollment period that was created in 2015 for people who were unaware – prior to filing their taxes – that they would have to pay a penalty for being uninsured in 2014.
Some enrollees don’t pay their initial premiums however, and others cancel their coverage for various reasons (sometimes the coverage and/or subsidies are terminated because of lack of documentation for immigration or financial data). So although enrollment can continue to grow slowly throughout the year due to special enrollment periods, attrition also has to be taken into consideration. As of the end of June, effectuated enrollments in the North Carolina exchange stood at 459,714 people. 91.6 percent of them were receiving premium subsidies, and 64 percent were receiving cost-sharing subsidies.
Another 47,920 exchange enrollees in North Carolina were eligible for Medicaid or CHIP during the 2015 open enrollment, despite the fact that the state has not yet expanded Medicaid and eligibility is still based on the unchanged guidelines. Medicaid/CHIP enrollment continues year-round, but tends to increase during open enrollment due to the additional marketing and outreach from the exchange.
More competition in NC exchange in 2015
In September 2014, Carolinas HealthCare System announced that it would be partnering with Blue Cross and Blue Shield of NC to offer a new health plan called Blue Local. The plan became available for 2015 through the federally-run exchange in North Carolina.
In addition, United Healthcare joined the individual health insurance exchange in North Carolina in 2015 (United already had a strong market share in North Carolina, outside the exchange). In 2014, coverage was only available through two carriers: Blue Cross Blue Shield of North Carolina and Coventry Health Care of the Carolinas (Aetna). But nearly two thirds of the state’s 100 counties had only Blue Cross Blue Shield as an option, because Coventry only offered plans in 39 counties.
But rates still higher than average in 2015
For 2015, PricewaterhouseCoopers LLC determined a weighted average rate increase of 9.8 percent for individual coverage in North Carolina, including on and off-exchange carriers (nine carriers total in NC). This was higher than the national average of 5.4 percent.
The Commonwealth Fund’s analysis of exchange plans in North Carolina came up with an average rate increase of 12 percent for 2015. And a Kaiser Health News analysis found that premiums for silver plans in 2015 were 8.5 percent higher in North Carolina than they were in 2014.
But in the Charlotte area, the benchmark plan (second-lowest cost silver plan) and the lowest cost silver plan were offered by a different carrier in 2015 than they were in 2014, and in some areas of the state, people who were willing to switch to the new benchmark plan were able to get very modest rate increases or even rate decreases. Throughout the state, there was significant variation in prices depending on zip code.
Among the 34 states with fully-HHS-run exchange, only four states (Alaska, Maine, New Jersey and Wyoming) had 2015 premiums for the lowest-cost silver plans that were as high or higher than North Carolina’s average.
Double digit 2015 rate hike for BCBSNC enrollees
The dominant carrier in the NC individual market, Blue Cross Blue Shield of NC, announced its 2015 rates in October 2014. For ACA-compliant plans, BCBSNC increased rates by an average of 13.5 percent. This applied to about 315,000 customers in North Carolina. About 232,000 of them purchased their 2014 coverage through the exchange, while the rest purchased ACA-compliant coverage outside the exchange.
BCBSNC’s grandfathered plans saw similar premium increases – an average of 13.4 percent (initially, the carrier sent out incorrect notices to some policy-holders with grandfathered plans).
North Carolina accepted President Obama’s proposal that individual policies slated for termination at the end of 2013 be renewed into 2014, and then allowed to renew again until as late as October 2016 (these policies are called grandmothered or transitional plans). For grandmothered BCBSNC plans (those that were purchased after the ACA was signed into law, but before the end of 2013), the average rate increase was 19.2 percent for 2015.
Neither grandfathered nor grandmothered plans can be purchased anymore, but at the end of 2014, about 239,000 people in North Carolina still had those older plans that were not fully compliant with the ACA.
2014 enrollment success
As of mid-April, when the 2014 open enrollment period ended, North Carolina’s exchange had the third highest enrollment among the 36 states where HHS was running the exchange, and was fifth highest for the whole country. 357,584 people had finalized their private plan selections, and another 73,898 were eligible for existing Medicaid, even with its strict eligibility guidelines (NC has not expanded Medicaid under the ACA).
In terms of the rate that the uninsured population is enrolling in new plans, North Carolina was by far the leader in 2014 among states that have generally resisted implementing the ACA. The private plan enrollment total in the North Carolina exchange was nearly double what HHS projected before open enrollment began. By July 2014, the uninsured rate in North Carolina had dropped to 16.7 percent, down from 19.6 percent in 2013.
Keys to NC’s success
So why did North Carolina do so much better in 2014 than other states where lawmakers have not embraced the ACA? Although many of North Carolina’s political leaders have been less than enthusiastic about the ACA, the state already had an excellent Medicaid managed care program – Community Care of North Carolina. This public-private collaboration of health care providers, social services workers and other community leaders took an all-hands-on-deck approach, and worked steadily to enroll as many of their patients and residents as possible.
North Carolina’s legal aid program has also been very instrumental in getting people enrolled, and has established a phone number (855-733-3711) where residents can call to get help with their insurance questions. These grass-roots programs have demonstrated that even in the absence of political leadership, states can have successful enrollment if they have a solid framework of community and health care leaders who are focused on getting people covered.
Researchers from the University of North Carolina’s NC Rural Health Research Program announced in October 2014 that Robeson County – the largest county in the state by land area, and a predominately low-income, rural county – had the highest percentage of eligible residents enroll through the exchange during the 2014 open enrollment period. 49.9 percent of the county’s eligible residents enrolled, highlighting the importance of grass-roots efforts on the part of navigators and advocacy organizations.
Exchange history and legislation
North Carolina’s path towards ACA implementation was a complicated one that covered all bases. The state took official actions toward each one of the options for a health insurance marketplace: state-run, partnership, and federally operated. In June 2011, North Carolina passed a law stating an “intention” to develop a state-run health insurance exchange.
The House at one point authorized a state-run exchange, but the Senate did not. Outgoing Gov. Bev Perdue announced in November 2012 that the state would partner with the federal government to run the marketplace. Finally, new Gov. Pat McCrory announced in February 2013 that North Carolina would default to the federal marketplace.
Hands-off approach from state leaders
While the federal government is running the marketplace in North Carolina via Healthcare.gov, the state department of insurance reviews the rates proposed by insurers who want to sell policies in North Carolina through the federal exchange. Much to the dismay of state Insurance Commissioner Wayne Goodwin, this is the only involvement that the state has with the exchange.
North Carolina also rejected federal funds to expand Medicaid, although Governor McCrory said in October 2014 that he’s “trying to figure out what to do with Medicaid and whether to expand that or not… [he was] doing that assessment right now.” But lawmakers made no progress on the issue from 2014 to 2016, with Republicans in the state legislature generally opposed to expanding Medicaid, while state leaders grapple with the idea that if they don’t expand Medicaid, North Carolina will continue to miss out on significant federal tax funding. As of early 2016, there were still 1,138,000 uninsured people in North Carolina, and 21 percent of them were in the coverage gap – ineligible for Medicaid, and also ineligible for premium subsidies in the exchange.
Support for the ACA in North Carolina is relatively low, no doubt a result of the clear opposition to the law voiced by the state’s leaders. The state is not doing any marketing or outreach to explain the insurance marketplace to state residents. Instead, the federal government and insurers themselves have taken on that responsibility. Blue Cross and Blue Shield of North Carolina currently dominates the individual insurance market in the state, and the organization took a lead role in promoting the marketplace. Its outreach efforts include operating retail stores and taking a trailer to fairs, farmers markets, and other community events across the state.
North Carolina health insurance exchange links
State Exchange Profile: North Carolina
The Henry J. Kaiser Family Foundation overview of North Carolina’s progress toward creating a state health insurance exchange.
Health Insurance Smart NC
Assists people insured by private health plans, Medicaid, or other plans in resolving problems pertaining to their health coverage; assists uninsured residents with access to care.
Toll free: 1-877-885-0231
Managed Care Patient Assistance Program
Serves consumers who are members of managed health benefit plans.
(919) 733-6272 / Toll-Free: 1-866-867-6272 (in North Carolina only)
Legal Aid of North Carolina (855-733-3711)
Louise Norris is an individual health insurance broker who has been writing about health insurance and health reform since 2006. She has written dozens of opinions and educational pieces about the Affordable Care Act for healthinsurance.org. Her state health exchange updates are regularly cited by media who cover health reform and by other health insurance experts.