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North Carolina health insurance marketplace

Enrollment up 33% from mid-2015

Blue Cross Blue Shield considers exiting exchange

Blue Cross Blue Shield of North Carolina covers the majority of the state’s exchange enrollees. And they’re considering the possibility of pulling out of the exchange in 2017.

In 2014, the carrier lost $123 million on their exchange business, and that figure spiked to $282 million in 2015. However, 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). BCBSNC hiked rates in the individual market by an average of 32.5 percent for 2016, and the carrier is hoping the higher rates will help to stem their losses this year.

UnitedHealthcare has also indicated that they may exit the exchanges by 2017 (nationwide). BCBSNC and UnitedHealthcare are two of just three carriers offering health plans in the North Carolina exchange, and in some areas, BCBSNC is the only carrier offering plans.

North Carolina’s Insurance Commissioner, Wayne 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.

3rd highest enrollment among 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. That’s a 33 percent increase over the effectuated enrollment total as of mid-2015 (when 459,714 people had in-force coverage through the exchange). Among the 38 states that use, 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.

As a result of the reporting change, the decline in effectuated enrollment numbers after open enrollment won’t be as sharp as it was last year, since early attrition was already taken into account in the February 1 enrollment total.

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.

The same three carriers that offered coverage in North Carolina’s exchange in 2015 are continuing to offer plans in 2016. Humana had planned to join the exchange in four counties in the Charlotte and Winsten-Salem area, but ended up withdrawing their application before plans became available for purchase. As a result, plans are available from:

  • Blue Cross Blue Shield of North Carolina
  • UnitedHealthcare
  • Aetna (Coventry of the Carolinas)

As of 2015, Blue Cross Blue Shield on North Carolina offered exchange plans in all 100 counties (still the case in 2016) in the state. UnitedHealthcare offered plans in 77 counties, and Aetna offered plans in 39 counties.

Special options for enrolling

Open enrollment for 2016 ended on January 31. Coverage for 2016 is now only available under limited circumstances, including outside the exchange. But health plans are still available outside of open enrollment if:

  • You experience a qualifying event. You have 60 days from the date of the event to sign up for insurance.
  • You are a Native American. You can sign up for health insurance at any time during the year.
  • You qualify for Medicaid. Medicaid accepts applications throughout the year.

2016 average rates at least 20% higher

The three existing exchange carriers all proposed double digit rate average increases for 2016 (at ACAsignups, Charles 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 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.”

The rates filed for 2016 – nationwide, from all carriers – represented the first time that actuaries were able to use claims data to set rates; for 2014, it was mostly an educated guess, and even for 2015, rates were filed when there were only a few months of claims data on record.  But the 2016 rates were filed after carriers had compiled more than a year of ACA-compliant plan claims data.

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 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).

2015 enrollment

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 counites.

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.randmothered plans can renew again

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, 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’s] doing that assessment right now.” But lawmakers made no progress on the issue in 2014 and 2015 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 is taking 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.

North Carolina Institute of Medicine (NCIOM)

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)

Community Care of North Carolina

Legal Aid of North Carolina (855-733-3711)