Highlights and updates
- Open enrollment for 2021 health plans will run from November 1, 2020 to January 15, 2021 (a month longer than it’s been for the past few years). Residents with qualifying events can still enroll or make changes to their coverage for 2020.
- Pennsylvania will have its own exchange (Pennie) starting in the fall of 2020; progress on exchange implementation is well underway
- Pennsylvania will also have a reinsurance program in effect by 2021; approval was granted by HHS in July 2020.
- Insurers have proposed an overall average rate decrease of about 2.6% for 2021 (without reinsurance, it would have been an increase)
- For 2020, average rates for plans sold in the exchange increased by about 3.8% (before any subsidies are applied).
- Oscar joined the exchange in the Philadelphia area for 2020, and Highmark expanded into 14 additional counties.
- Enrollment decreased again in 2020, with only about 333,000 people purchasing private plans during open enrollment.
- Short-term health plans can be sold in Pennsylvania with initial plan terms up to 364 days.
- Nearly a million people in Pennsylvania have affordable coverage thanks to the ACA’s expanded Medicaid and premium subsidies.
- Ambetter (Centene) joined the exchange in three counties as of 2019, and Oscar joined in the Philadelphia area for 2020.
Pennsylvania exchange overview
Pennsylvania initially opted not to establish its own exchange (although the state seriously considered establishing its own exchange in 2015, when the King v. Burwell lawsuit threatened premium subsidy access in states that didn’t run their own exchanges). So for the first several years of ACA implementation, Pennsylvania has used the federally run exchange at HealthCare.gov. But Pennsylvania enacted legislation (H.B.3/Act 42) in 2019 that calls for the state to transition to running its own exchange platform and also create a reinsurance program that will help to make coverage more affordable.
The state obtained federal approval (via a 1332 waiver, which the state submitted in February 2020) for the reinsurance program in July 2020; it will take effect in 2021. And the process of creating the state-run exchange — which will be known as Pennie — is well underway.
Pennsylvania has nine carriers participating in the exchange market for 2020, although some of them offer plans via multiple subsidiaries. Ambetter from PA Health & Wellness joined the exchange for 2019, offering plans in the Philadelphia area, and Oscar joined the exchange for 2020, also offering plans in the Philadelphia area.
Average premiums in Pennsylvania’s individual market decreased slightly for 2019, and although they increased by an average of almost 4 percent for 2020, a rate decrease could come again in 2021, thanks to the transition to a state-run exchange and the implementation of a reinsurance program.
Pennsylvania exchange applicants are enrolled in Medicaid if their income is up to 138 percent of the poverty level, and 685,809 people were enrolled in the state’s expanded Medicaid program as of December 2019. This was slightly lower than the enrollment total in late 2018, so enrollment in Pennsylvania’s expanded Medicaid, which took effect in 2015, appears to have stabilized.
The expansion of Medicaid is a major cornerstone of Obamacare; many enrollees supported Trump in the 2016 election, perhaps unaware that the reason they have access to Medicaid in Pennsylvania is a result of the ACA (Obamacare).
Another 279,881 people were receiving premium subsidies to offset the cost of private coverage purchased through the Pennsylvania exchange as of mid-2019. All told, there are nearly a million people in Pennsylvania who are receiving either expanded Medicaid or premium subsidies in the exchange to make private coverage more affordable.
Governor Tom Wolf announced in September 2017 that the uninsured rate in Pennsylvania had fallen to 5.6 percent as of 2016 — the lowest it had ever been, and down from nearly 10 percent before the ACA was implemented.
Open enrollment for 2021 health plans will continue until January 15, 2021 in Pennsylvania
Open enrollment for 2021 health plans will be longer in Pennsylvania than it’s been in prior years, thanks to the new state-run exchange (described below). The exchange board of directors settled on November 1, 2020, through January 15, 2021 for the upcoming open enrollment window. In states that use HealthCare.gov (including Pennsylvania for the first seven years), the federal government sets the enrollment window, which has ended on December 15 for the last few years. But states that run their own exchange enrollment platforms have more flexibility on this, and most of them have opted to extend open enrollment most years.
State-run health insurance exchange, “Pennie,” will debut in the fall of 2020
Pennie — the new Pennsylvania Insurance Exchange — will be in use by the fall of 2020. The website will debut in late August, and Pennsylvania residents will use Pennie (instead of HealthCare.gov) to enroll in coverage for 2021 once open enrollment starts on November 1, 2020. As noted above, the enrollment window will continue through January 15, 2021, giving Pennsylvania residents an additional month to sign up for coverage.
Pennie’s implementation process is well underway. As of June 2020, the exchange had a full-time staff of 19 people and was beginning a second hiring wave. The system is undergoing the various testing procedures that are necessary in order to ensure a seamless transition in the fall. The Pennsylvania Insurance Department is maintaining a page devoted to the creation of the state-run exchange, which includes links to all of the board meeting and advisory committee meeting minutes.
Pennie stems from legislation that Pennsylvania enacted in 2019, calling for the state to establish its own health insurance exchange that would be operational in time for the 2021 plan year. This move will save money and also give the state significantly more control over its exchange.
In August 2019, Governor Wolf announced the appointees for the Pennsylvania Health Insurance Exchange Authority’s board of directors. The group is overseeing the implementation and operations of the state-run marketplace. And Zachary Sherman, who previously served as the director of Rhode Island’s health insurance exchange, is leading Pennsylvania’s exchange. In November 2019, Pennsylvania’s exchange board approved a seven-year contract with GetInsured, the vendor that is creating the state’s exchange platform and running the call center. GetInsured is the exchange vendor for several other state-run exchanges, including Nevada’s recent transition away from HealthCare.gov in the fall of 2019.
In a press release earlier in 2019, Governor Wolf’s office noted that the user fee that was currently being collected by the federal government (for the use of HealthCare.gov, the federal call center, etc.) amounted to $98 million in 2019. It was set at 3.5 percent of premiums in 2019, and although that dropped to 3 percent in 2020 (actually 2.5 percent for Pennsylvania, since the state has transitioned to a state-based exchange using the federal platform, as described below), it was still going to be $88 million (now $73 million) that Pennsylvania insurers — and thus, Pennsylvania insureds — have to send to the federal government to use the federally-run exchange.
Wolf’s office noted that the state-run exchange is expected to cost “as little as $30 million per year,” likely in the range of $30-$35 million per year. As described below, Pennsylvania plans to use the savings to fund the state’s portion of a reinsurance program that will bring down the cost of coverage for people who aren’t eligible for premium subsidies.
Pennsylvania already switched to having a state-based exchange on the federal platform (SBM-FP) as of the fall of 2019. This means Pennsylvania is responsible for a variety of exchange functions and oversight, but uses HealthCare.gov for enrollment (five other states have the same exchange model). This change reduced Pennsylvania’s exchange user fee to 2.5 percent of premiums for 2020, instead of 3 percent. The state had indicated that they would likely keep the fee at 3 percent of premiums and use the excess for “any unexpected transition costs” that arise as the state switches from HealthCare.gov to its own enrollment platform.
In addition to financial savings, states that run their own exchanges also have flexibility regarding their open enrollment schedules (Pennie’s first enrollment window will continue until January 15, 2021, which is an extra month beyond what it would be if the state had continued to use HealthCare.gov), call center operations, and navigator grants. They also have much better access to enrollment data, which can be used to better understand enrollment trends and seek opportunities to better serve the state’s population. Jessica Altman, Pennsylvania’s Insurance Commissioner, testified before the PA House Insurance Committee in May 2019 and outlined the myriad benefits of switching to a state-run exchange.
Pennsylvania’s new reinsurance program will take effect in 2021
Pennsylvania’s plan is to also implement a reinsurance program, and to fund the state’s portion of the cost of the reinsurance program with the savings (roughly $42-66 million) that come from switching to a state-based exchange. The state plans to keep a 3 percent exchange user fee assessed on insurers that offer plans in the exchange. The cost to run the state-based exchange will be covered by that fee, and the leftover revenue will be used to cover the state’s share of the cost for the reinsurance program.
The state published its 1332 waiver proposal for the reinsurance program in mid-November 2019, and submitted it to CMS in February 2020. It was approved in July 2020, and will be in effect from 2021 through 2025. The reinsurance program will reimburse insurers 60 percent of the cost of claims that fall between $60,000 and $100,000.
Actuarial modeling in the state’s proposed waiver indicated that with the reinsurance program in place, unsubsidized premiums in the individual market would be 4.9 to 7.5 percent lower in 2021 than they would otherwise have been. In announcing that the waiver proposal had been approved, Gov. Wolf clarified that premiums were expected to be 5 percent lower in 2021 than they would have been without reinsurance. The proposed rates that insurers have filed for 2021 amount to an average decrease of about 2.6 percent from 2020 rates; we can assume insurers would have proposed an overall average rate increase without the reinsurance program. Initial rate filings were due in Pennsylvania by May 19, and although CMS had not approved the state’s reinsurance waiver at that point (approval came in late July), the filing instructions included directives for how insurers were to account for the expected implementation of the reinsurance program.
Reductions in premiums primarily benefit people who pay full price for their coverage, as premium subsidies (for those who are eligible) rise and fall in line with premiums. With the reinsurance program in place, Pennsylvania estimates that the number of subsidized enrollees in the state’s individual market will remain roughly level from 2020 to 2021, but that the number of unsubsidized enrollees will grow by about 4,000 people.
Assuming the state’s waiver proposal is approved, the federal government would provide a substantial amount of pass-through funding. The state’s final waiver proposal projects total funding of about $139 million in 2021, with the federal government paying about $95 million of that via pass-through funding (when a reinsurance program results in lower premiums, the necessary premium subsidies are also lower, resulting in savings for the federal government; pass-through funding refers to the process of using a 1332 waiver to allow the state to use the savings, instead of having the federal government keep the money).
Overall rates expected to decrease in Pennsylvania’s individual market in 2021
Eleven insurers plan to offer 2021 individual market plans through Pennsylvania’s health insurance exchange (Pennie). Most of them have proposed average rate decreases for 2021, although a few have proposed modest rate increases. Pennsylvania’s new reinsurance program, described above, is playing a role in keeping premiums down for 2021; the expectation is that insurers would have proposed a small overall average rate increase if the reinsurance program had not been created.
The following average rate change proposals are being considered by regulators in Pennsylvania:
- Capital Advantage Assurance: a decrease of 14.3 percent.
- Geisinger Health Plan: a decrease of 11.3 percent.
- Geisinger Quality Options: a decrease of 13.6 percent.
- Highmark, Inc. (EPO and PPO): a decrease of 0.7 percent.
- Highmark Benefits Group: a decrease of 4 percent.
- Highmark Coverage Advantage an increase of 3.1 percent.
- Keystone Health Plan East (Independence Blue Cross HMO): a decrease of 2.1 percent.
- QCC Insurance Company (Independence Blue Cross PPO): a decrease of 2 percent.
- UPMC Health Options (PPO and EPO): an increase of 1.3 percent.
- PA Health and Wellness: a decrease of 6.6 percent (plans are currently available in rating area 8; expanding into rating areas 3 and 6 for 2021).
- Oscar Health: an increase of 6.9 percent.
In Pennsylvania, Highmark’s individual market plans are available through several affiliates. One of them — Highmark Choice Company — is discontinuing its current plans (which are offered on- and off-exchange) at the end of 2020 and will instead only offer one bronze plan outside the exchange. Highmark Choice Company’s filing indicates that they expect to have very low enrollment (only two members) in 2021. Approximately 3,720 enrollees who currently have Highmark Choice Company plans will need to switch to another plan for 2021.
Across the entire individual market in Pennsylvania, which includes five additional insurers that only offer plans outside the exchange, the overall proposed rate change is a decrease of about 2.6 percent. In the small group market, insurers have proposed an overall average rate increase of about 2.3 percent — which is similar to what they would likely have proposed in the individual market if the reinsurance program had not been created.
Approved rate changes for 2020, plus a new insurer in Philadelphia area
In July 2019, the Pennsylvania Insurance Department published the proposed rate changes for 2020. Pennsylvania’s insurance commissioner also announced that Highmark would be expanding their coverage area into 14 additional counties for 2020, and Oscar would be joining the exchange in the Philadelphia area (Bucks, Chester, Delaware, Philadelphia, and Montgomery counties).
Final approved rates were published in October, with a slightly smaller overall average rate increase than insurers had proposed (for the small group market, the final approved rate increase was slightly larger than insurers had proposed).
The insurers that sell plans in the Pennsylvania exchange are implementing the following average rate changes for 2020:
- Capital Advantage Assurance: an increase of 0.2 percent.
- Geisinger Health Plan: a 6.5 percent increase.
- Geisinger Quality Options: a 7.8 percent increase.
- Highmark, Inc. (EPO and PPO): a decrease of 1.2 percent.
- Highmark Benefits Group: New to Pennsylvania’s market, so no applicable rate change
- Highmark Choice Company: a decrease of 2.3 percent.
- Highmark Coverage Advantage: No rate change (average of 0 percent)
- Keystone Health Plan East (Independence Blue Cross HMO): a 5.4 percent increase.
- QCC Insurance Company (Independence Blue Cross PPO): a 5.1 percent increase.
- UPMC Health Options (PPO and EPO): a 3.2 percent increase.
- PA Health and Wellness: a decrease of 1.4 percent.
- Oscar Health: New to Pennsylvania’s market, so no applicable rate change
At ACA Signups, Charles Gaba calculated an average proposed rate increase of 4.6 percent for Pennsylvania’s individual market, including plans sold off-exchange. Once rates were finalized, the average increase stood at 3.8 percent instead. Final approved rates for some insurers were slightly higher than the insurers had proposed, but the overall impact of the rate review process was a somewhat smaller overall average rate changes across the whole market.
For perspective, here’s a look at how average premiums have changed in Pennsylvania’s exchange over the years:
2015: In 2014, rates for coverage in the Pennsylvania exchange were lower than the national average. As of November 2014, across 13 carriers, PricewaterhouseCooper was reporting an average premium increase of 10.4 percent in Pennsylvania for 2015. And a Commonwealth Fund analysis found an average rate increase of 12 percent in the Pennsylvania exchange, across all plans and metal levels, for a 40-year-old non-smoker. But the Kaiser Family Foundation looked at the average cost of the benchmark plan for a 40-year-old enrollee in a major metropolitan area in each state. In the Philadelphia area, the average premium was decreasing by 10.7 percent in 2015.
2016: In October 2015, the Pennsylvania Insurance Department published final 2016 rates for the individual and small group markets, including plans sold through the Pennsylvania exchange. At ACAsignups, Charles Gaba calculated the overall weighted average rate change for 2016, which came out to be 12 percent for the entire individual market.
Statewide, the average benchmark premium (second-lowest-cost Silver plan) was 10.9 percent more expensive in 2016 than it was in 2015. The average subsidy in the Pennsylvania exchange in 2016 was $251/month (lower than the Healthcare.gov average of $290), whereas it was $226 in 2015. But for people who qualify for premium subsidies in the Pennsylvania exchange, the average pre-subsidy premium was $396/month in 2016, which was exactly the average across the 38 states that use Healthcare.gov.
2017: When the final rates were approved, the Pennsylvania Insurance Department noted that the average individual market rates (including off-exchange plans) would increase by 32.5 percent for 2017. And HHS announced in October 2016 that the average cost of a benchmark plan (second-lowest-cost silver plan) in Pennsylvania for a 27-year-old would be 53 percent higher in 2017 than it was in 2016 (significantly more of an increase than the 22 percent average across all the states that use HealthCare.gov).
2018: All of Pennsylvania’s exchange insurers filed rates for 2018, which are available on the Pennsylvania Insurance Department’s website. The initial rate filings were based on the assumption that funding for cost-sharing reductions (CSR) would continue in 2018. In June 2017, the Pennsylvania Insurance Department had published a press release detailing the impact that changes to the ACA would have on premiums for 2018. [Note that the press release indicated that there were five insurers in Pennsylvania’s exchange, while the list of entities offering coverage in the exchange in 2017 is more robust. But several insurer entities are part of the same parent group. If you look at the second column in that list, the four-letter codes at the start of each plan’s tracking number indicate their parent company: CABC = Capital Blue Cross; HGHM = Highmark; GSHP = Geisinger; INAC = Independence Blue Cross; UPMC = UPMC.]
Some of the insurers revised their filings after HHS finalized risk adjustment data in July 2017, and rates were again revised based on the assumption that CSR funding would not continue (this was after it became evident that neither Congress nor the Trump Administration planned to provide commitment for ongoing CSR funding; the Trump Administration later confirmed on October 12 that federal funding for CSR would end immediately). Insurers in Pennsylvania added the cost of CSR to the premiums for on-exchange silver plans. Insurers were also able to create new off-exchange-only silver plans that don’t have the cost of CSR added to their premiums. The final average rate increase was 30.6 percent for 2018; it would have been in the range of 7.6 percent if CSR funding had been committed for 2018.
The Pennsylvania Insurance Department and the CEOs of the five individual market insurers had sent a letter in April 2017 to HHS, asking the federal government to take swift action to ensure stability in the individual insurance markets. HHS had already finalized market stabilization rules earlier in the month, but they didn’t address two of the most pressing issues for insurers: enforcement of the individual mandate, and continued funding for the ACA’s cost-sharing subsidies.
The Pennsylvania Insurance Department addressed those issues in its letter, asking the federal government to vigorously enforce the individual mandate and to confirm that CSR money would continue to flow to insurers. Ultimately, the loss of federal CSR funding ended up being a boon for many consumers, as insurers added the cost to silver plan rates, and that, in turn, resulted in larger premium subsidies for all subsidy-eligible enrollees.
2019: Initially, in June 2018, Pennsylvania insurers filed plans with an overall rate increase of 4.9 percent. But they modified their rate filings in July, resulting in an overall average proposed rate increase of 0.7 percent (the Pennsylvania Insurance Department noted that this was because the average load to account for the cost of cost-sharing reductions was reduced from 28 percent to 20 percent).
And when the rates were approved (details here), some additional reductions resulted in rates decreasing by an average of 2.3 percent, although there was considerable variation from one insurer to another. But it’s important to note that the average benchmark premiums in Pennsylvania decreased more significantly than the overall average premiums. Benchmark premiums in Pennsylvania were an average of 15 percent lower for 2019 than they were for 2018. Premium subsidies are based on the cost of the benchmark plan, so average subsidies were smaller in 2019 than they were in 2018, for people whose income remained the same. For 2018, the average subsidy amount in Pennsylvania was $625/month, whereas it was $539/month in 2019.
The Insurance Department’s summaries of the proposed and approved rates made it very clear that the federal government’s actions with regards to the ACA had been destabilizing, and highlighted the “Wolf Administration efforts to combat the effects of sabotage on health insurance markets by the federal government and specifically the Trump Administration to dismantle the Affordable Care Act (ACA).”
The Insurance Department credits the state’s decision to have insurers add the cost of cost-sharing reductions (CSR) only to on-exchange silver plans for 2018 with helping to stabilize the market and resulting in “only a small decline [in exchange enrollment] from the previous year.” Pennsylvania’s exchange market shrank by 9 percent in 2018, while the average across all states that use HealthCare.gov was about 5 percent. But it’s true that adding the cost of CSR only to on-exchange silver plans is the option that protects the greatest number of consumers.
Although overall average rates in Pennsylvania’s exchange declined slightly for 2019, they would have declined even more if the individual mandate penalty hadn’t been eliminated and if the Trump Administration hadn’t expanded access to short-term plans and association health plans (AHPs). According to an analysis by the Urban Institute, the combined effect of those changes was expected to drive Pennsylvania premiums 19.2 percent higher in 2019 than they would otherwise have been.
Insurer participation in Pennsylvania’s exchange: 2014-2020
Pennsylvania’s exchange is fairly robust in terms of overall insurer participation, but it’s gone from having four or more insurers offering plans in every county in 2015, to several areas of the state having only one insurer option in 2018 and 2019.
Three carriers that participated in 2014 left the exchange, but four more — including giants Assurant (Time) and UnitedHealthcare — joined the exchange, making Pennsylvania among the many states where consumer choice increased for 2015. But Assurant ceased sales of new policies nationwide on Jun 15, 2015, and UnitedHealthcare exited the exchanges in most states, including Pennsylvania, at the end of 2016. United’s total exchange enrollment in Pennsylvania was 65,159 in 2015.
Aetna also left the exchange in Pennsylvania (and ten other states) at the end of 2016. Aetna insured about 31,000 exchange enrollees in Pennsylvania in 2016, all of whom needed to switch to a new plan during open enrollment for 2017 coverage. Aetna then exited the off-exchange market at the end of 2017. Freedom Life/National Foundation Life also exited the off-exchange market at the end of 2017, but the Pennsylvania Insurance Department confirmed that Freedom Life/National Foundation Life never marketed their plans and didn’t have any enrollees in 2017.
Geisinger Quality Option (PPO) stopped being available on-exchange as of 2017, although Geisinger Health Plan (HMO) continued to be available on-exchange (nationwide, insurers have trended towards offering HMOs and/or EPOs in the individual market, especially in the exchange, instead of PPOs). But for 2019, Geisinger Quality Options has returned to Pennsylvania’s exchange.
Keystone Health Plan Central also stopped offering plans in the exchange in 2017, according to the rate approval notice published by the Pennsylvania Insurance Department. They were not offering silver plans at all in the individual market in 2017, which is a prerequisite of offering coverage in the exchanges under ACA rules. As of 2019, Keystone Health Plan Central is continuing to only offer plans outside the exchange, although they have over 2,000 enrollees.
All of the insurers that offered plans in Pennsylvania’s exchange in 2018 continued to do so for 2019 — and several expanded their coverage areas — and Ambetter (Centene) joined the exchange. Ambetter from PA Health & Wellness is offering plans in the Philadelphia area (Bucks, Montgomery, and Philadelphia counties). Residents in nearly half of Pennsylvania’s counties had additional plan options for 2019. In 31 of Pennsylvania’s 67 counties, there were more health insurers offering coverage in the individual market in 2019 than there were in 2018 (a map is available here, showing which counties had additional insurers in 2019). And in addition to a new entrant into the market, four of the five insurers already in the individual market expanded their coverage areas for 2019. Further, the number of counties with just one health insurer offering coverage in the individual market decreased from 20 to eight.
For 2020, all of the existing insurers remained in the exchange, and Oscar joined in the Philadelphia area. Highmark also expanded into 14 additional counties for 2020. State officials have noted that they’re hopeful that the state’s new reinsurance program — assuming it’s approved for 2021 — will attract more insurers into the market.
Exchange enrollment: 2014-2020
2014: 318,077 people enrolled during the first open enrollment period. By the end of the 2014 open enrollment period, private plan Obamacare enrollment in Pennsylvania was the fourth highest out of the 36 states where HHS was running the exchange (trailing Texas, Florida, and North Carolina).
2015: 472,697 people enrolled during the second open enrollment period, for 2015 coverage.
2016: 439,238 people enrolled during the third open enrollment period, for 2016 coverage. Despite the fact that the 2016 enrollment tally accounted for early attrition (through February 1), which the 2015 tally did not, most states saw a year-over-year increase in enrollment at the end of open enrollment 2016 versus 2015 — that was not the case in Pennsylvania. However, Charles Gaba of ACAsignups noted that some of the decline was likely because of people switching from private health plans to Medicaid. Medicaid was expanded in Pennsylvania as of January 2015, but it was initially with a waiver, and didn’t switch to straight expansion until later in the year. The messy nature of the transition to expanded Medicaid in Pennsylvania resulted in some people being enrolled in private plans in 2015 when they were technically eligible for Medicaid instead.
2017: 426,059 people enrolled during the fourth open enrollment period, for 2017 coverage. Across all states that use HealthCare.gov, enrollment was about 5 percent lower in 2017, so Pennsylvania’s decline (about 3 percent) wasn’t quite as significant as the average. The lower enrollment totals across HealthCare.gov states in 2017 were due to a variety of factors, including higher prices, insurer exits from the exchanges/individual market, uncertainty about the future of the ACA, and the Trump Administration’s decision to cut advertising for HealthCare.gov in the final week of open enrollment.
2018: Open enrollment for 2018 coverage began November 1, 2017, and ended December 15, 2017. This was a much shorter open enrollment period than was used in previous years. 389,081 people enrolled in private plans through the Pennsylvania exchange for 2018, which was almost 9 percent lower than 2017’s enrollment.
Most of the states that use HealthCare.gov did end up with lower enrollment for 2018 than they had in 2017, due to the shorter enrollment period as well as sharp reductions in federal funding for exchange marketing, outreach, and enrollment assistance. The perception that the individual mandate had been repealed also served to hamper enrollment for 2018, despite the fact that the penalty repeal didn’t take effect until 2019.
2019: 365,888 people enrolled during the sixth open enrollment period, for 2019 coverage. Federal funding for marketing and enrollment assistance had been reduced again in the fall of 2018, and the federal individual mandate penalty was eliminated at the end of 2018, which contributed to enrollment declines in many states, including Pennsylvania. The expansion of short-term health plans also created an alternative for some healthy enrollees (Pennsylvania defaults to the federal rules for short-term plans, so longer short-term policies have been available in the state since the fall of 2018).
2020: 331,825 people enrolled during the seventh open enrollment period, for 2020 health plans. This was the fifth straight year of enrollment declines in Pennsylvania’s exchange.
Insurers cut commissions, provider reimbursements
As is the case in many states, many insurers in the Pennsylvania exchange lost money in 2014 and 2015. And the risk corridor payments that were supposed to make up some of the 2014 losses ended up being just 12.6 percent of what they were supposed to be. In an effort to avoid selling plans that weren’t proving to be profitable, some carriers in Pennsylvania reduced or eliminated broker commissions for 2016.
Highmark insured nearly 60 percent of the people who enrolled in coverage through the Pennsylvania exchange in 2015. The carrier cut broker commissions to zero in northeastern Pennsylvania, and cut commissions in the rest of the state to $6 per-member-per-month (down from $15 to $25 PMPM previously). Highmark told brokers that they would reinstate commissions for 2017, although their broker commissions were still $0 as of 2018. Highmark was clearly hoping to reduce sales for 2016 — particularly in northeastern Pennsylvania. As such, their loss of market share to UPMC might have been in line with their marketing strategy.
Highmark also announced in February 2016 that they would cut reimbursements to doctors by 4 percent for patients covered under an individual exchange plan.
UPMC Health Plan has cut broker commissions by one-third, to $10 PMPM, for premium network individual plans, noting that “commissions and pricing are determined by competition and market dynamics.”
UnitedHealthcare stopped paying broker commissions for any exchange enrollments submitted January 1, 2016 or later, in any of the 34 states where they offered plans in the exchange (United has since exited the exchanges in nearly all of those states, and now only offers individual market coverage in a few states).
Independence Blue Cross told Pennsylvania brokers in October that they would no longer be paying commissions for new business enrolled through the exchange for 2017, and that commissions would only apply to some HMO plans sold off-exchange.
Cutting commissions has an immediate effect on sales, as brokers are less likely to work with carriers that aren’t paying them, or that are paying far less than other carriers. But this tactic allows the carriers to remain on the exchange (albeit with reduced sales) and keep their options open for sales the following year.
Pennsylvania’s approach to Medicaid expansion
On August 28, 2014, Pennsylvania became the 28th state (including DC) to expand Medicaid under the ACA in an agreement reached with HHS after many months of discussion. Eligible enrollees were able to begin enrolling on December 1, for coverage effective January 1, 2015. Interest in the program was very high in the early days of enrollment. In the first two days alone, 41,500 people enrolled (30,000 of them did so through HealthCare.gov).
Then-Governor Tom Corbett’s office announced the details of the approved Healthy Pennsylvania program, and HHS released an extensive explanation of how the state’s Medicaid waiver would work (a waiver is required if a state is doing anything other than straight Medicaid expansion as laid out in the ACA). There were three plan options under Healthy PA: One for healthy enrollees, one for sick enrollees, and the third for the newly-eligible population with incomes up to 138 percent of poverty (as opposed to the single Medicaid program for all enrollees that the ACA’s straight Medicaid expansion uses)
But then in November 2014, Democrat Tom Wolf defeated Corbett in the election, and took over as Governor in January 2015. Wolf had long been an advocate of fully expanding Medicaid under the ACA, without any state-specific waiver or modifications. It was unclear initially how the transition would play out, but Wolf said he would abandon Healthy Pennsylvania in favor of straight Medicaid expansion, and Democratic state lawmakers urged him to move quickly in doing so.
In February, Wolf began the process of moving away from Healthy Pennsylvania. The new system, HealthChoices, is the managed care system that Pennsylvania has used for years, although the benefits have been modified. But instead of three different plan designs, the new system has a single benefits package for all Medicaid enrollees. In late April, the state began transitioning people off of Healthy PA and onto HealthChoices, the change took effect on June 1.
Enrollees who were already on Pennsylvania Medicaid prior to the launch of Healthy PA, as well as new applicants, were in the first group of people transitioning to HealthChoices. The rest of the Healthy PA enrollees received notification of the transition over the summer, and their switch to HealthChoices was effective September 1. Enrollment in expanded Medicaid had grown to 684,297 people as of July 2019.
Pennsylvania is among the states that have allowed pre-2014 plans to continue to renew and remain in force until the end of 2020, at the discretion of health insurance carriers.
Pennsylvania allowed insurers to extend existing 2013 policies into 2014 following the policy cancellation compromise that President Obama offered in mid-November 2014. Prior to the President’s announcement, a quarter of a million Pennsylvania residents — about one-third of the individual market in the state — had received cancellation notices. By the end of November, two Pennsylvania carriers had agreed to extend some existing policies — including one guaranteed-issue, limited benefit plan for low-income residents — for at least the first few months of 2014.
The Pennsylvania Insurance Department’s website has a page that shows rate filings for transitional plans, but the only recent individual market transitional plan filing shown on that page is for Geisinger, for a plan that had 1,791 enrollees as of 2018.
In December 2012, then-Governor Corbett announced Pennsylvania would use the federal health insurance exchange rather than implementing a state-run exchange. Corbett said the U.S. Department of Health & Human Services had failed to provide adequate information, making it irresponsible for the state to proceed on its own. And although the Wolf Administration in Democratic instead of Republican, Insurance Commissioner Jessica Altman, who has been a driving force behind the state’s impending switch to running its own exchange, agrees that the state made the right decision in opting to let HHS run the exchange in the early years.
Earlier in 2012, Corbett had repeatedly indicated his administration preferred a state-run exchange, and feedback gathered by a consultant showed broad-based public agreement. Corbett’s administration proposed establishing several, regional exchanges. However, consumer groups and legislators did not support the concept.
On May 1, 2015, Pennsylvania Governor Tom Wolf announced that Pennsylvania had a contingency plan to create a state-run exchange if the Supreme Court ruled that subsidies could not be provided via the federally facilitated marketplace (Healthcare.gov). Pennsylvania was one of 37 states that used Healthcare.gov in 2015, and subsidies hung in the balance for millions of enrollees in those states, including 382,000 people in Pennsylvania.
On June 15, Pennsylvania was one of three states that got conditional approval from the Obama Administration to operate a state-run exchange. Pennsylvania was the first state to officially announce that they’d create a state-run exchange if necessary in order to protect subsidies in the state. The state’s proposal called for a state-run exchange that uses Healthcare.gov for enrollments (this is the approach currently used by Arkansas, Kentucky, Oregon, Nevada, and New Mexico).
But on June 25, shortly after the Supreme Court issued their verdict upholding subsidies in the federally-run exchange, Governor Wolf announced that the state would withdraw its proposal for a state-run exchange and continue using the federally-run exchange. There was no longer a need for the transition to a state-run exchange, since subsidies continued to be available regardless of who runs the exchange.
By the 2021 plan year, however, Pennsylvania is planning to have its own exchange platform.
Pennsylvania health insurance exchange links
State Exchange Profile: Pennsylvania< The Henry J. Kaiser Family Foundation overview of Pennsylvania’s progress toward creating a state health insurance exchange.
Health Care Matters, Pennsylvania Office of the Attorney General
Serves Pennsylvania consumers with health-related problems.
(717) 705-6938 / Toll-free: 1-877-888-4877 (only in Pennsylvania)
Pennsylvania Consumer Assistance Program
Assists people with private insurance, Medicaid, or other insurance with resolving problems pertaining to their health coverage; assists uninsured residents with access to care.
(877) 881-6388 / firstname.lastname@example.org
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.