Highlights and updates
- Year-over-year enrollment down about 4% in 2018
- Lawmakers pass another reinsurance bill; program could be in effect in 2019
- Withdrawn 1332 waiver would have created reinsurance program for 2018
- 8% rate hike in 2018, but after-subsidy rates much lower for some enrollees
- Cost of CSR added to all premiums in 2017; only to silver premiums for 2018
- With reinsurance, rates would have decreased by 34% in 2018
- Oklahoma had to withdraw 1332 waiver after HHS delays
- State plans additional 1332 waivers as part of long-range plan
- Law enacted to allow out-of-state insurers to sell plans in OK
Oklahoma exchange overview
Oklahoma uses the federally facilitated exchange, which means enrollees use HealthCare.gov. During the 2017 open enrollment period, 146,286 people enrolled in qualified health plans (private plans) through the Oklahoma exchange. As of February 2017, 129,060 had effectuated coverage and 91 percent of those enrollees were receiving premium subsidies.
Blue Cross Blue Shield of Oklahoma is the only carrier offering plans in the exchange in 2017, but they already had 95 percent of the exchange market share in 2016. BCBSOK revised their individual market rate filing in August 2016, proposing an average rate increase of 76 percent for 2017; state regulators confirmed in October that the 76 percent average rate increase would take effect in January 2017. Oklahoma’s average rate increase for the individual market was by far the highest in the country for 2017.
But for 2018, the average rate increase is expected to be in the single digits. The state’s proposed reinsurance program, which would have resulted in a premium reduction, did not get HHS approval in time to be effective for 2018.
In addition to Oklahoma, South Carolina, Wyoming, Alabama, and Alaska also have just a single carrier in their exchanges for 2017, although Alabama will have two insurers in the Birmingham area in 2018. Several other states — Delaware, Iowa, Mississippi, and Nebraska — each have just a single insurer offering plans in the exchange for 2018.
140,184 people purchased plans in Oklahoma’s exchange during open enrollment for 2018 coverage, which began November 1, 2017, and ended December 15, 2017. That was about 4 percent lower than the 146,286 people who enrolled the year before. Nationwide, across all states that use HealthCare.gov, enrollment declined by about 5 percent from 2018 to 2017, due in part to the shorter open enrollment period in 2018, and the Trump Administration’s decision to sharply reduce funding for exchange marketing and enrollment assistance.
Lawmakers pass bill calling for another reinsurance waiver proposal
In 2017, Oklahoma submitted 1332 waiver proposal to CMS, seeking federal pass-through funding for a reinsurance program (details below). But the waiver proposal wasn’t submitted until August, and the state withdrew it in late September, when it was clear that CMS approval was not going to happen in time for 2018 premiums to be adjusted (rates were expected to decrease by about 34 percent if the reinsurance program had been implemented, but instead, rates increased by an average of just under 8 percent).
In the 2018 legislative session, lawmakers again considered a reinsurance program. S.B.1162 passed the Senate in March, and passed the House in April. The legislation initially called for the state to seek federal pass-through funding in addition to state-based funding that would be generated by fees assessed on health insurers in the state, but the amended version of the legislation removes the ability for the state to assess fees, and instead calls for the state to only seek federal funding for a reinsurance program. But the bill clarifies that the Marketplace Stabilization Program (the reinsurance program) “may accept funding from other sources.”
Federal “pass-through” funding for reinsurance is generated when a state’s reinsurance program results in lower premiums, which, in turn, result in smaller premium subsidies. The amount that the federal government saves on premium subsidies is passed on to the state (assuming a 1332 waiver has been approved) and used to fund the reinsurance program. Alaska, Oregon, and Minnesota have all implemented reinsurance programs using federal pass-through funding in addition to state-based funding, and several other states are considering similar approaches in 2018.
Assuming S.B.1162 is signed into law and the state moves ahead with the 1332 waiver process, Oklahoma could be among the states utilizing reinsurance in 2019 to stabilize the individual market and keep premiums in check. However, Trevor Brown, state capitol reporter for Oklahoma Watch, notes that the state does not have immediate plans to submit a 1332 waiver, and the legislation was passed as a backup measure, in case they want to submit a reinsurance proposal in the future. It’s also noteworthy that the yes votes on S.B.1162 in the House came exclusively from Republicans. There were no House Democrats in favor of S.B.1162.
Modest rate hike for 2018, but HHS approval of 1332 waiver would have resulted in significantly lower rates
Oklahoma relies on the federal government to review plans that are sold in the exchange, although that would have changed under the terms of the 1332 waiver proposal that the state submitted (and later withdrew — details below) in 2017. Only two other states, Texas and Wyoming, rely on the federal government — as opposed to state regulators — to review rates and plans offered for sale in the state.
In late March 2017, Oklahoma Insurance Commissioner, John Doak, who is opposed to the ACA, said that Blue Cross Blue Shield of Oklahoma was “making preparations to withdraw” from the health insurance exchange in Oklahoma, which would have left the exchange with no participating insurers in 2018. However, Blue Cross Blue Shield of Oklahoma reported at that point that no decision had been made regarding their continued participation in the exchange, and that they were working with regulators at the state and federal level to “ensure a stable and sustainable insurance marketplace for [BCBSOK] members.”
And as of the beginning of June, Blue Cross Blue Shield of Oklahoma had filed forms indicating that they would continue to offer exchange plans in Oklahoma in 2018. When rates were filed, Blue Cross Blue Shield of Oklahoma proposed an average rate increase of 8.3 percent (2.8 percent for Blue Preferred plans, and 11 percent for Blue Advantage), which was far lower than the national average proposed rate increase for 2018. BCBSOK had a total of 144,180 members on ACA-compliant plans in Oklahoma in 2017, including on and off-exchange.
In August, the proposed average increase was revised to 7.8 percent, which was deemed justified by federal regulators. However, Oklahoma had proposed a reinsurance program that would have resulted in premiums for 2018 declining by an average of about 34 percent instead of increasing by 8.3 percent. The state’s waiver proposal to obtain federal funding for the reinsurance program has since been withdrawn (details below), so pre-subsidy rates are increasing slightly in Oklahoma in 2018, rather than decreasing sharply.
BCBSOK had already added the cost of CSR to their rate increases for 2017, but they used broad load for 2017 and silver load for 2018
Throughout the summer and fall of 2018, insurers in most states were scrambling to add the cost of cost-sharing reductions (CSR) to their premiums for 2018. But in Oklahoma, they already did that — a year ago. Blue Cross Blue Shield of Oklahoma is the only insurer offering plans in the exchange for 2018, and that was also the case for 2017. Their rate filing for 2018 notes that they added the cost of CSR to their premiums for 2018, but they did the same thing in 2016, when they filed rates for 2017.
So Blue Cross Blue Shield of Oklahoma essentially had the sort of rate hikes in 2017 that many insurers in other states implemented for 2018, with the cost of CSR newly added to premiums. That load is still incorporated into the 2018 premiums, but there wasn’t much of a rate increase necessary, since it was already part of the 2017 rates, which were nearly adequate for 2018 as well.
But applicants in Oklahoma may have found that after-subsidy premiums are more affordable in 2018 than they were in 2017. A 30-year-old in Stillwater who earns $30,000 in 2018 can get a premium subsidy of $375 per month. After that subsidy is applied to her premiums, she can get one bronze plan that’s entirely premium-free, another that costs $22/month, or a third that costs $33/month. In 2017, her premium subsidy would have been $238 per month, and the cheapest plan available to her would have cost $77/month in after-subsidy premiums.
It’s a similar story in Oklahoma City, where a 45-year-old earning $35,000 can get a plan with no premium at all in 2018, whereas his lowest-priced option would have cost $115/month in after-subsidy premiums in 2017 (his subsidy amount in 2018 would be $504/month, versus just $279/month in 2017).
If that 45-year-old in Oklahoma City earns $25,000/year, he can choose from three bronze plans with no premiums for 2018, as well as a silver plan that has no premium — and includes some built-in CSR benefits (the same free plans would be available for this individual in Stillwater).
BCBSOK confirmed that although they added the cost of CSR to premiums in 2017 and again for 2018, they didn’t use the same approach in both years. For 2017, the cost of CSR was added to the premiums for all of their plans (ie, “broad load”), whereas for 2018, the cost of CSR was added only to silver plans (“silver load” which is the approach that most states and insurers have taken for 2018).
This is why the subsidy amounts are so much larger for 2018, despite the modest overall rate increase. And it’s also why enrollees with premium subsidies will find that after-subsidy prices for non-silver plans tend to be lower than they were in 2017. Since the cost of CSR has been added only to silver plan premiums for 2018, the rates for silver plans have gone up significantly more than the rates for other plans. The result is larger premium subsidies, and particularly affordable coverage at other metal levels for people who are subsidy-eligible (people who can get CSR benefits should still consider a silver plan, since CSR benefits are only available on silver plans. And as noted above in the example of a 45-year-old earning $25,000, some people may be able to get the best of both worlds: the lower out-of-pocket that comes with CSR benefits on a silver plan, in addition to low — or even $0 — premiums, if a silver plan with a lower-than-average premium is available).
Amid HHS delays, state withdrew 1332 waiver reinsurance proposal in 2017
Oklahoma H.B.2406 was passed by the state legislature in May 2017, and signed into law by Governor Mary Fallin on June 6. The legislation called for the state to create a reinsurance program that would offset high-cost claims in the ACA-compliant individual market, both on and off-exchange. For each enrollee whose total claims exceed $15,000 during the year, the reinsurance program would have been designed to reimburse the insurer 80 percent of the total claims in excess of $15,000, up to a cap of $400,000 in claims (insurers would be fully responsible for claims above that threshold, but those are rare).
Oklahoma planned to use federal “pass-through funding” in addition to assessments on insurers to fund the reinsurance program, with total funding of $325 million per year. In 2018, the state assessments on insurers were expected to generate $16 million (via a $0.76 per-member-per-month fee on health insurance plans sold in the state) and the other $309 million would come from the federal pass-through funding. But by 2022, the state assessment was expected to generate $56 million, with the per-member-per-month fee rising to $2.59 by that point.
The federal pass-through funding is the crux of the 1332 waiver. ACA Section 1332 allows states to use innovative programs (like reinsurance, in this case) to implement state-based reform. If the reform results in less federal spending on premium tax credits (premium subsidies), the state gets to use the savings to run their new program.
Oklahoma’s 1332 waiver proposal for the reinsurance program was just the first step in their proposed reform plan, which would involve additional 1332 waivers later on (details below). The first waiver proposal, submitted to HHS in August 2017, called for $309 million in pass-through funding for reinsurance in 2018, with gradually decreasing amounts for the following four years. The lower premiums that would result from the reinsurance program would, in turn, result in lower premium subsidies, since the subsidies wouldn’t have to be as large to get the smaller premiums down to an affordable level. The state would then use the federal savings as pass-through funding to cover the bulk the cost of the reinsurance program.
The reinsurance program was also expected to result in more people with health insurance coverage, since premiums would become more affordable for those who don’t qualify for premium subsidies and have to pay full price for their coverage. Oklahoma estimated that without the reinsurance program, they’d have 150,000 individual market enrollees (on and off-exchange), but with reinsurance, that number was projected to increase to 172,000. The waiver notes that “without a reinsurance program, the Federal government will continue to pay high APTC amounts; with lower premiums, Oklahoma can make coverage accessible to more residents for the same amount of Federal dollars absent the waiver.”
Oklahoma is one of just three states that does not have an effective rate review process and instead defers to the federal government for rate review of ACA-compliant health plans. In addition to granting federal pass-through funding for a reinsurance program, the 1332 waiver that Oklahoma submitted in August would also have transitioned the state to an effective rate review process as of plan year 2019.
Oklahoma submitted their 1332 waiver proposal in mid-August and requested a quick decision from HHS in order to implement the program for the 2018 plan year. After seeing an average rate increase of 76 percent (before subsidies) in 2017, rates were expected to decrease by about 34 percent for 2018 if the 1332 waiver had been approved in time to finalize those rates.
However, Oklahoma withdrew the waiver proposal on September 29, due to HHS delays in approving the waiver. The withdrawal letter states that HHS and Oklahoma had agreed that the approval would be complete by September 25, but that did not happen. September 27 was the deadline for insurer to commit to the exchange for 2018; the withdrawal letter states that “Oklahoma is forced to withdraw our waiver request due to failure of the Departments to provide timely waiver approval… While we appreciate the work of your [HHS and Treasury Dept.] staff, the lack of timely waiver approval will prevent thousands of Oklahomans from realizing the benefits of significantly lower insurance premiums in 2018.”
The lack of timely response from HHS came despite the agency’s March 2017 letter to states encouraging them to develop innovative approaches to health care reform via 1332 waivers. It’s notable that Minnesota also submitted a 1332 waiver to establish a reinsurance program, but HHS approval was delayed by over a month, and came with an unexpected decrease in MinnesotaCare funding.
Oklahoma’s ambitious plans for future innovation with a series of 1332 waivers
Thus far, Oklahoma has been one of the most hands-off states in terms of implementing the ACA. In general, they’ve rejected the ACA at every opportunity, and have deferred to the federal government on regulatory and enforcement measures.
Oklahoma did not establish its own exchange, did not expand Medicaid, and filed an amicus brief in the King v. Burwell lawsuit, urging the Supreme Court to rule that ACA premium subsidies were illegal in states like Oklahoma that use HealthCare.gov (details below; ultimately the Court ruled in 2015 that the subsidies were legal, preventing tens of thousands of Oklahoma residents from losing their subsidies).
But with all of that history, Oklahoma positioned itself in 2017 to propose a far-reaching innovation waiver under the ACA. Section 1332 of the ACA allows states to set up their own innovative approaches to health care reform, but there are rules involved: the state’s proposal has to cover at least as many people, with coverage at least as comprehensive and affordable as it would be without the innovation waiver, and the state’s approach can’t create an additional financial burden on the federal government.
In March 2017, Oklahoma’s Secretary of Health and Human Services published recommendations for a 1332 waiver. The state’s goals were ambitious, and would involve Oklahoma taking a much more hands-on approach to health care reform. The state notes that “potential regulatory shifts at the federal level” (ie, the transition from the Trump Administration to the Obama Administration) provide the state the opportunity to make a variety of changes via the 1332 waiver system. Here’s what the Oklahoma Department of Health and Human Services recommended, although the state has not moved forward with this (note that the only official 1332 waiver Oklahoma has submitted as of September 2017 is the one to obtain federal funding for the state’s reinsurance program, which was withdrawn in September 2017 amid HHS delays in the approval process; the additional changes described below would require additional 1332 waivers that have not yet been submitted, andS.B.1162, passed in April 2018, only calls for another 1332 waiver seeking federal funding for reinsurance):
- The state would assume regulatory control over rates and plans, instead of deferring to the federal government for rate review (this would align with what nearly every other state already does). This provision was included in the 1332 waiver proposal that Oklahoma submitted in August 2017 and withdrew in September 2017.
- The state would also begin to focus on quality measures, value-based payments, and care coordination in an effort to decrease costs and improve quality.
- Oklahoma would allow a wider range of age-based premiums. The ACA caps the ratio at 3:1 for older versus younger enrollees. The AHCA, which was pulled before it reached a vote in the U.S. House, would have increased that ratio to 5:1. Oklahoma wants to implement something similar on a state level.
- Switch from HealthCare.gov to the Insure Oklahoma platform (Insure Oklahoma is a state-run program currently used for low-income residents; more details below)
- Establish “consumer health accounts” that would be similar to HSAs. The consumer health accounts would be funded with federal subsidy money, and the state is considering the possibility of automatic enrollment in individual market plans coupled with consumer health accounts (a similar proposal was part of the Patient Freedom Act, introduced earlier in 2017 by Senators Bill Cassidy (R, Louisiana) and Susan Collins (R, Maine).)
- The ACA’s metal level designations would be eliminated, and replaced with two standardized benefit designs: either a robust, traditional plan, or a high-deductible plan that works with the consumer health accounts.
- The state would “re-evaluate and reduce” the ACA’s essential health benefits requirements. The recommendations note, however, that preventive health care and behavioral health services (including substance abuse treatment) should be retained in the state’s guidelines. Those services are of particular importance to the state’s Native American tribes, and the 1332 waiver recommendations include efforts to preserve health care access and affordability for Native Americans (which was greatly expanded by the ACA).
- Subsidies (standardized based on age and income, so presumably not tied to the cost of insurance in a particular area) would be available to offset the cost of insurance for people with income in the 0-300 percent of federal poverty level range. Currently, ACA subsidies are available to those with income between 100-400 percent of federal poverty level. The 1332 recommendations note that nearly 40 percent of Oklahoma’s uninsured population has income under the poverty level, and are thus not able to take advantage of the ACA’s subsidies; the 1332 waiver would allow them access to affordable coverage (it’s worth noting that the ACA called for covering those residents via Medicaid; the reason they’re not eligible for assistance in Oklahoma is because the state has steadfastly refused to accept federal funding to expand Medicaid. In other words, it’s an Oklahoma decision, rather than an ACA design flaw, that has left those residents uninsured).
- The ACA’s three-month grace period for overdue premiums (for people with premium subsidies) would be reduced to 30 days.
- Special enrollment period eligibility verification would be tighter (including the SEP that currently exists when an applicant is denied eligibility for Medicaid), and the state might consider changes to open enrollment structure, including tying enrollment periods to consumers’ birthdays (as opposed to enrolling everyone at the same time during the year).
- Administrative processes for health insurers would be simplified, including requirements for reporting, risk mitigation, and enrollment.
Innovation waiver effective dates were allowed to begin in 2017, but very few states have proposed waivers, and the proposed changes have generally been modest (with the exception of Vermont, which had proposed a single-payer system but ultimately abandoned that effort at the end of 2014). California also abandoned their waiver proposal, which would have allowed undocumented immigrants to purchase full-price insurance through the state’s exchange.
Alaska received federal approval for the 1332 waiver to allow federal pass-through funding for the state’s reinsurance program as of 2018 (very similar to what Oklahoma was pursuing). Hawaii also received approval for a 1332 waiver; Hawaii’s waiver allows the state to forego the ACA’s requirement that each state have a small business (SHOP) exchange. And for 2018, Oregon and Minnesota also both received federal approval to use pass-through funding to establish reinsurance programs.
State enacts legislation allowing out-of-state insurance sales
In May 2017, Oklahoma Governor Mary Fallin signed S.B.478 into law. The measure, dubbed the Health Care Choice Act, passed unanimously in the Senate, and 88-1 in the House. S.B.478 allows the state to enter into compacts with other states (approved by the legislature) so that health plans domiciled in those states could be sold to Oklahoma residents without having to obtain an Oklahoma certificate of authority (note that this is allowed under ACA Section 1333, although the Oklahoma Insurance Department noted that S.B.478 was “constructed and passed without regard to Section 1333 of the ACA”).
But the insurer would have to obtain written permission from the Oklahoma Insurance Commissioner before offering coverage in Oklahoma. The approval process has not yet been developed, although the Oklahoma Insurance Department indicated that it will likely be more expedited than the process of obtaining a normal certificate of authority. Out-of-state insurers would be able to rent existing provider networks or create their own networks in Oklahoma, and HMOs would have to follow Oklahoma law in terms of HMO network adequacy requirements.
Changes to the bill made by a Senate committee require out-of-state plans to cover all benefits that are mandated in Oklahoma before the plan can be marketed in the state. Retaining this element of Oklahoma-based consumer protection was a key part of getting strong legislative support for the bill.
The Oklahoma legislation is intended to provide additional insurance alternatives in Oklahoma. The bill cannot, however, require insurers in other states to offer their plans for sale in Oklahoma, and it’s unclear whether insurers in other states would be willing or able to establish provider networks and offer coverage in Oklahoma. According to the Oklahoma Insurance Department, out-of-state insurers have not yet expressed interest in offering plans in Oklahoma.
Rhode Island, Wyoming, Georgia, Kentucky, and Maine have all enacted laws over the last several years that allow out-of-state insurers to offer plans, but insurers have thus far not shown interest in doing so.
Oklahoma has not yet begun to develop compacts with other states, but will reach out to other states in the near future to see if there is interest in doing so. The compacts would have to be approved by lawmakers in each state, and then ratified by Congress. So this is not something that could be completed in time for 2018 coverage.
H.B.1712, which was introduced in February but never advanced out of committee, would have allowed insurers to offer plans without various state-mandated benefits that pre-date the ACA (Oklahoma has 28 such mandates). It’s important to note, however, that Oklahoma legislation cannot preempt the ACA, which is a federal law. That means health plans sold in Oklahoma — and every other state — still have to include the ACA’s essential health benefits, until if and when that federal regulation changes. The American Health Care Act (AHCA) was passed by the US House in early May, and would allow states to seek waivers in order to redefine essential health benefits and/or allow insurers to base premiums on applicants’ medical history when they enroll after having a gap in coverage during the previous year.
146,286 people enrolled in qualified health plans through the Oklahoma exchange during the 2017 open enrollment period, which ran from November 1, 2016, through January 31, 2017. That’s an increase of 0.7 percent over the prior year’s enrollment, in contrast to most HealthCare.gov states, where year over year enrollment declined by an average of almost 5 percent.
All of the enrollees for 2017 selected Blue Cross Blue Shield of Oklahoma coverage, as that’s the only participating carrier in the exchange. BCBSOK increased their focus on customer service and consumer outreach during the 2017 open enrollment period, in order to avoid a deferred fine levied by the Oklahoma Insurance Department for “problems in customer service and claims handling” that were discovered in a market conduct examination that was carried out from 2013 to 2015.
United exited exchange, but BCBSOK already had 95% of market share
At the end of 2016, UnitedHealthcare exited the individual market in Oklahoma, as was the case in all but three of the 34 exchanges where they offered plans in 2016. United was new to the Oklahoma exchange for 2016, and garnered very little market share — Blue Cross Blue Shield of Oklahoma is the only other carrier in the exchange, and covered 95 percent of the exchange enrollees in 2016.
According to an analysis by Kaiser Family Foundation, UnitedHealthcare offered coverage through the exchange in all 77 counties in Oklahoma in 2016, but didn’t have the lowest or second-lowest-priced silver plan anywhere in the state. Those tend to be the most popular with enrollees, and price likely has a lot to do with United’s small market share in Oklahoma.
Aetna scrapped plan to rejoin exchange
Aetna participated in the exchange in Oklahoma in 2014, but exited the exchange (and the entire individual market in Oklahoma) just prior to the start of open enrollment for 2015 coverage. They did not offer individual market coverage in Oklahoma in 2015 or 2016, on or off-exchange.
But for 2017, they had indicated that they would rejoin the Oklahoma exchange, albeit only in the metropolitan areas of Tulsa and Oklahoma City. Aetna’s exchange plans do appear in the Oklahoma SERFF filings for 2017, although the carrier indicated earlier in the summer that their plan to rejoin the exchange for 2017 had not yet been finalized.
In early August, Aetna announced that they were canceling their plans to expand their exchange presence in 2017. They already offered coverage in 15 exchanges, but had planned to expand into five more in 2017, including Oklahoma. Their change of heart meant that Blue Cross Blue Shield was the only carrier offering plans when open enrollment for 2017 got underway in November 2016.
From a practical standpoint, the impact of United’s exit was modest, because nearly everyone in the exchange already had coverage from BCBS of OK. And although Aetna reversed course on their plan to offer coverage in the exchange, their participation was going to be limited to Tulsa and Oklahoma City, so most of the state was going to have only BCBS of OK even before Aetna decided not to participate.
2017 rates and carriers
Rate filings for plans sold through the exchange in Oklahoma are reviewed by CCIIO, as the state does not have an effective rate review program. Blue Cross Blue Shield of OK initially filed average proposed premium increases for 2017 that range from 49.8 percent to 51.7 percent, with an overall average of 49.2 percent. But in August 2016, BCBSOK filed a new rate increase proposal, with an overall average rate increase of 76 percent across their entire block of ACA-compliant individual market business in Oklahoma (range is 58.2 percent to 96.7 percent). The carrier noted that they had 163,992 people enrolled in those plans as of August 2016, including both on and off-exchange members.
CCIIO’s rate review process does not give the federal government the power to deny rate increases, so was unsurprising when state officials confirmed in October 2016 that the proposed rate increases would take effect in January without any modifications. But 87 percent of exchange enrollees in Oklahoma were receiving premium subsidies in 2016, and for many of them, the subsidies cover the bulk of the premium hikes.
Community Care and Freedom Life continue to offer plans only outside the exchange in Oklahoma in 2017.
33k could get subsidies if they switched to exchange
BCBSOK noted that they had 163,992 people enrolled in those plans as of August 2016, including both on and off-exchange members. For enrollees who currently have coverage outside the exchange, it’s important to also consider options in the exchange during open enrollment. HHS announced in October that there are an estimated 33,000 people in Oklahoma who currently have individual market coverage outside the exchange, but who would be eligible for subsidies if they shopped in the exchange instead.
For people who already have coverage through the exchange, it’s always essential to log back onto the exchange during open enrollment and select a plan for the coming year, rather than relying on auto-renewal. But that will be especially important this year in states like Oklahoma where rates are increasing dramatically.
2016 enrollment up 15% over 2015
During the 2016 open enrollment period, 145,329 people enrolled in private health plans through the Oklahoma exchange, including new enrollees and renewals. For perspective, 126,115 people enrolled in private plans through the Oklahoma exchange during the 2015 open enrollment period. So the 2016 enrollment tally is a 15 percent increase over the prior year.
Attrition is a normal part of the individual market landscape, as some enrollees don’t pay their initial premiums, and others end up cancelling their coverage before the end of the year. As of March 31, 2016, effectuated enrollment in the Oklahoma exchange stood at 130,178. Of those enrollees, 87 percent were receiving premium subsidies. The 10 percent attrition rate by the end of the first quarter is a little lower than the national average of about 13 percent.
Open enrollment ended on January 31. Enrollment in a 2016 plan – including off-exchange – now requires a qualifying event, although Native Americans can enroll year-round, as can anyone eligible for Medicaid or CHIP.
A dynamic carrier landscape
Oklahoma had four carriers in its exchange in 2015, but only two are offering plans for 2016 – one of which is exiting the exchange at the end of 2016. For 2016 coverage, enrollees can choose from plans offered by Blue Cross Blue Shield of Oklahoma and United Healthcare. The market landscape in the state’s exchange has changed significantly for 2016, and will do so again for 2017:
- UnitedHealthcare is new to the Oklahoma exchange for 2016, but offered plans outside the exchange in 2015. They will exit the exchange at the end of 2016.
- Blue Cross Blue Shield of Oklahoma no longer offers the Blue Choice provider network in the individual market in 2016 (but continues to offer it in the group market). There are about 40,000 insureds in Oklahoma who had to switch to plans that use the Blue Advantage or Blue Preferred networks – both of which are PPOs, but narrower than Blue Choice. The Blue Advantage network is concentrated in the Tulsa and Oklahoma City metro areas, and is not available at all in 25 of the state’s 77 counties. Most existing enrollees were eligible for auto-renewal, but Blue Choice network insureds who opted for auto-renewal were mapped to a plan with a different network. Blue Cross Blue Shield of Oklahoma ended up with 95 percent of the exchange market share for 2016.
- CommunityCare is no longer offering plans in the exchange. State officials have said that the carriers had fewer than 2,000 insureds in late 2015, but they needed to secure coverage from BCBS or UnitedHealthcare if they wanted to continue receiving premium subsidies in the exchange. The deadline to pick a plan with a January effective date was December 17, but insureds had the option to switch to an on-exchange plan with a February or March start date if they missed the deadline to get January coverage.
- Global Health offered plans in the exchange in 2015, but exited the individual market at the end of 2015, and is not offering individual plans either on or off-exchange in 2016.
- Time/Assurant exited the individual market nationwide, and is not offering plans for 2016 on or off the exchange.
- Enrollees who had coverage through Global Health, CommunityCare, and Time/Assurant needed to select new coverage from one of the carriers offering plans in 2016. Although according to Lexology, those three carriers accounted for less than three percent of Oklahoma’s exchange enrollees in 2015. The exchange had 108,614 effectuated enrollees as of the end of June, so there were somewhere around 3,200 people who are impacted by the withdrawal of those three carriers from the market in Oklahoma. The rest of the enrollees – about 97 percent of the total in 2015 – were covered under Blue Cross Blue Shield of Oklahoma plans. BCBS is continuing to offer coverage, but enrollees on the Blue Choice network were transitioned to plans that use one of BCBSOK’s other networks – they also had the option to shop around during open enrollment to see if UnitedHealthcare offered a better alternative.
- Humana continues to offer plans only outside the exchange in Oklahoma.
- For 2017, BCBS of Oklahoma will continue to offer plans in the exchange.
2016 rates: 22 to 34% increase for most enrollees
Oklahoma is one of five states that leaves the on-exchange rate review process entirely up to HHS; the state only actively reviews proposed rates for off-exchange plans.
In the individual market, BCBS of OK, which had the lion’s share of the individual market in the state in 2015, proposed a 31.2 percent average rate increase across all of their ACA-compliant plans. The rates that were ultimately approved range from 22 percent to 34 percent, but the approved rate increase for Blue Preferred PPO plans ended up at 32 percent, which was significantly lower than the 44 percent rate hike the carrier had proposed. For Blue Cross Blue Shield’s PPO multi-state plan and the Blue Advantage PPO, the approved rates were very similar to what was proposed.
UnitedHealthcare is new to the exchange for 2016. Prior to open enrollment, a state official said that their rates would be competitive with BCBS of Oklahoma’s rates in 2016. But a quick check of rates on Healthcare.gov (sample zip codes include Oklahoma City, Tulsa, Edmund, Lawton, and Norman) indicates that UnitedHealthcare’s lowest-priced plans are significantly more expensive than BCBS of Oklahoma’s lowest-priced plans – in most areas, by at least $100/month for a 40-year-old.
Statewide, the average benchmark premium (second-lowest-cost-Silver plan) in the Oklahoma exchange is 35.7 percent more expensive in 2016 than it was in 2015. This is the sharpest increase in any of the 37 states that used Healthcare.gov in 2015.
The good news for enrollees is that premium subsidies are tied to benchmark premiums, so average premium subsidies are higher in 2016 to account for the higher benchmark rates. But it appears that the promise of added competition from UnitedHealthcare didn’t extend to plans on the lower end of the premium scale. Enrollees looking for low premiums likely found that BCBS of Oklahoma had little in the way of competition, despite their sharp rate increase for 2016.
For the plans that UnitedHealthcare offered outside the exchange in 2015, the average approved rate increase was 12.5 percent (a little higher than the 9.96 percent rate increase that UnitedHealthcare proposed for those plans).
How many people enrolled for 2015?
126,115 people in Oklahoma had enrolled in private plans through the exchange by February 22, when the 2015 open enrollment period and extension had ended. Total enrollment was far higher than the 90,000 HHS had predicted for the second open enrollment period – in fact, the exchange had already exceeded the projected target early in January.
54 percent of the 2015 enrollees were new to the exchange for 2015, while 46 percent already had a plan in 2014.
Some enrollees didn’t pay their initial premiums though, and others cancelled their coverage or it was terminated due to lack of immigration status documentation. By the end of June, effectuated enrollment in the Oklahoma exchange stood at 108,614 people. 80 percent were receiving for premium subsidies that average $207 per month.
In addition, 12,946 people in Oklahoma enrolled in Medicaid or CHIP through Healthcare.gov from November 15 to February 22. Medicaid/CHIP enrollment continues throughout the year.
Premium subsidies are safe…
On June 25, the Supreme Court issued a ruling in King v. Burwell, upholding subsidies in every state, regardless of whether the exchange is run by the state or federal government. Subsidies for 86,000 Oklahoma residents are safe, and the insurance market there is not going to head into a “death spiral.”
Actuaries had predicted that the elimination of subsidies would have increased premiums by 55 percent (in addition to the regular annual rate increases based on medical cost growth) even for people who don’t currently receive subsidies. For those who do currently get subsidies, premiums would have increased by an average of 243 percent in Oklahoma. Because coverage would have become unaffordable for so many people, the size of the individual market would have dropped by about 70 percent, leaving only the sickest insureds with coverage.
… despite state’s effort to take them away
But despite the disastrous outcome that would have resulted if the Supreme Court had eliminated subsidies in states like Oklahoma that use the federally-run exchange, Oklahoma was actively fighting to have the subsidies eliminated.
In late December, Oklahoma filed an amicus brief with the Supreme Court, urging the Court to side with King in the King v. Burwell hearing (ie, to do away with subsidies in states like Oklahoma that use Healthcare.gov). Five other states (Alabama, Georgia, Nebraska, South Carolina, and West Virginia) joined Oklahoma in filing the amicus brief. This is in contrast to Virginia, which headed a group of 18 states that filed an amicus brief in the similar Halbig v. Burwell case in November, but urging an opposite ruling, in favor of keeping the subsidies in all states regardless of who runs the exchange.
Oklahoma has also generated headlines because of a court ruling on the Oklahoma v. Burwell lawsuit over the legality of subsidies in states with a federally-run exchange. Oklahoma’s Attorney General, Scott Pruitt, initiated the lawsuit. Last fall, a federal judge in Oklahoma ruled that subsidies cannot be issued by exchanges that are run by the federal government, but can only be issued in the 17 states where the state is running the exchange. That case was presented to the Supreme Court, but they declined to hear it, and the ruling in King v. Burwell (ie, that subsidies are legal in the federally-run exchange) overrides the lower court’s decision in Oklahoma v. Burwell.
Following the Court’s ruling on the King case, Oklahoma Governor Mary Fallon expressed her disappointment: “The Supreme Court’s decision today in King v. Burwell means that taxpayers will be, for the time being, stuck with a law that is deeply flawed, disruptive to the lives of American families and a destructive force in our economy.”
2015 rates and carriers
In the HHS-run Oklahoma exchange, five carriers were initially slated to offer plans for 2015, up from four in 2014. Plans were to be available from Coventry/Aetna, Blue Cross Blue Shield of Oklahoma, and Time, as well as newcomers GlobalHealth and CommunityCare. But at the eleventh hour, Coventry/Aetna decided to only offer group plans, outside the exchange, with no individual market presence in Oklahoma in 2015.
Four carriers offered dental plans on the exchange: Best Life, Dentegra, Delta Dental, and Guardian.
Across the four existing exchange carriers, premium changes for 2015 ranged from a decrease of 9.1 percent to an increase of 29 percent. The weighted average was a 12.2 percent rate increase (as calculated by ACAsignups.net). But the addition of two new carriers helped to improve competition in the exchange and provide enrollees with greater plan choice.
If we focus just on the cheapest silver plans, Oklahoma is a good example of why it was so important to shop around for 2015 coverage – and continues to be important going forward. People with the cheapest silver plan from 2014 who are willing to shop around and switch to the cheapest silver plan for 2015 were able to obtain price decreases in most of the state. If they auto-renewed their 2014 plan however, their price went up instead.
How many people enrolled in 2014?
69,221 people in Oklahoma had finalized their private plan enrollment in the state’s exchange by April 19. The vast majority (about 60,000) of the private plans were sold by Blue Cross Blue Shield of Oklahoma, and the carrier reported that another 25,000 people purchased their ACA-compliant plans off-exchange.
Obamacare enrollment can continue year-round when qualifying events trigger special enrollment periods. When 2015 rates were announced in early September, the data included a mention of the fact that 73,071 people were currently covered under private plans through the Oklahoma exchange at HealthCare.gov. That’s an increase of nearly four thousand people over the summer, even after accounting for attrition.
According to a Gallup poll released in August, Oklahoma’s uninsured rate was 21.4 percent in 2013, and had fallen to 17.5 percent by mid-2014.
Oklahoma was already allowing insurers to renew existing pre-ACA policies into 2014 prior to President Obama’s announcement in November 2013 that states and carriers could renew – rather than terminate – plans that were not ACA compliant for another year. So the state has largely avoided widespread cancellations in the individual and small business markets.
Medicaid and Insure Oklahoma
By April 2014, 17,374 Healthcare.gov applicants were eligible for Medicaid or CHIP under existing rules (they were already eligible pre-2014, but not enrolled). Oklahoma is not participating in Medicaid expansion at this time. Instead, in early September 2013, the state negotiated with the federal government to get a one year extension for the Insure Oklahoma program. The state received a second extension in June, 2014 to keep Insure Oklahoma functional throughout 2015, and a third extension in June 2015 that will fund Insure Oklahoma through the end of 2016.
Insure Oklahoma subsidizes private health insurance for low income residents (up to 100 percent of poverty level – this is a decrease from the previous 200 percent limit that was in place prior to 2014), using tobacco taxes matched with federal funds that were scheduled to expire at the end of 2013 to make way for Medicaid expansion. The program still receives federal funds, but it now covers about 19,000 of the 30,000 people who were enrolled as of 2013, since Insure Oklahoma members with incomes above 100 percent of poverty were able to transition to the federally-run Oklahoma exchange instead (roughly 225,000 residents in Oklahoma would have benefited from the expansion of Medicaid).
Despite the fact that Oklahoma has not expanded Medicaid, the state’s program is facing a budget shortfall and in July 2014 announced a 7.75 percent cut in Medicaid reimbursement rates for providers, which will result in a $48 million savings for the state, but leaves providers facing reduced payments, even as they provide healthcare for more than 17,000 new enrollees in the state’s Medicaid program – a figure that continues to grow, despite the lack of Medicaid expansion (by June 2015, total enrollment in Oklahoma’s Medicaid/CHIP program was nearly 26,000 higher than it had been in 2013)
Political leadership’s opposition to the ACA
Gov. Mary Fallin announced in November 2012 that Oklahoma would not implement a state-run health insurance exchange. In the same press release, Fallin expressed her support for a lawsuit brought by Oklahoma Attorney General Scott Pruitt. The suit contends the federal government cannot enforce the employer mandate or dispense tax subsidies in a state that has not authorized an exchange.
On August 12, 2013, a federal judge denied the federal government’s motion to dismiss the case, and then on September 30, 2014, a federal judge sided with Pruitt and ruled that subsidies could not go to people in states with exchanges run by HHS. Similar cases were heard in other courts in the summer of 2014, and this issue is likely to eventually end up before the Supreme Court.
In addition to the lawsuit, on November 6 Pruitt joined AGs from nine other states in petitioning HHS Secretary Kathleen Sebelius to support “immediate legislative action” to correct various aspects of the ACA’s implementation. And in February 2014, Republican Rep. Jon Echols introduced HB3364, which would provide a state tax credit to offset any shared responsibility penalties (individual mandate) incurred by Oklahoma residents. The bill did not proceed any further than introduction however.
Not surprisingly, a study released in late January 2014 found that Oklahoma was one of just five states that were “die-hard hold outs” with regards to the ACA – doing nothing at all to help implement the law. And heading into the 2015 legislative session, Oklahoma state Representative Mike Ritze, a family physician, is focused on doing “everything we can to try and reverse [the ACA]” through state-based legislation.
The road to a federally-run exchange
The Fallin administration state officials initially showed some openness to a state-run exchange — if only as a slightly less distasteful option than a federally operated exchange. The Oklahoma Joint Committee on Federal Health Care Law studied exchange options and issued its final recommendations in February 2012. The committee supported a state-run exchange open to small businesses, but not individuals. A bill for this type of exchange, which is similar to Utah’s exchange, was introduced but not passed in 2012.
In line with state leaders’ opposition to the ACA, Oklahoma is not actively marketing the exchange to residents. However, three state organizations have received grants to act as navigators: Cardon Outreach in Oklahoma City, Oklahoma Community Health Centers, Inc., and Little Dixie Community Action Agency, Inc.
HHS is running the exchange in Oklahoma. You can compare plan, determine subsidy eligibility and enroll in coverage at Healthcare.gov.
Oklahoma health insurance exchange links
State Exchange Profile: Oklahoma
The Henry J. Kaiser Family Foundation overview of Oklahoma’s progress toward creating a state health insurance exchange.
Oklahoma Insurance Department
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. (405) 521-2991 / Toll Free in OK: (800) 522-0071 / email@example.com