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Pennsylvania health insurance marketplace: history and news of the state’s exchange

2018 rate hikes will be single-digit if ACA is left intact. If not, rates will climb sharply

Highlights and updates

Pennsylvania exchange overview

Pennsylvania opted not to establish their own exchange, so the state utilizes the federally-run exchange at Healthcare.gov. Pennsylvania has nine carriers planning to participate in the exchange market for 2018, although some of them share a parent company.

Pennsylvania exchange applicants are enrolled in Medicaid if their income is up to 138 percent of the poverty level, and 711,000 people were enrolled in the state’s expanded Medicaid program by September 2017. 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).

All told, there are more than a million people in Pennsylvania who are receiving either expanded Medicaid or premium subsidies in the exchange to make private coverage more affordable in 2017. 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’s ever been, and down from more than 10 percent before the ACA was implemented.

Pennsylvania regulators warned that lack of CSR funding would drive rates up sharply

On June 1, the Pennsylvania Insurance Department published a press release that succinctly describes the impact that changes to the ACA would have on premiums for 2018. They noted that all of the state’s exchange insurers had filed rates for 2018, and every county would continue to have options available in the exchange.

[Note that the press release indicated that there are 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.]

Nearly two months before the details of each insurer’s rate proposal became public, the Pennsylvania Insurance Department succinctly described the aggregate impact of the rate filings, including the way they would look if the ACA is left intact, versus how they’ll look if changes are made:

  • Statewide average rate increases will be just 8.8 percent in the individual market if the individual mandate continues to be enforced, and if cost-sharing reduction payments continue to be made to insurers. Insurance Commissioner Teresa Miller noted that the single-digit average rate increase is an indication that Pennsylvania’s insurance market is stabilizing.
  • Statewide average rate increases will be 23.3 percent if the individual mandate is repealed. The version of the American Health Care Act passed by the House in early May would eliminate the individual mandate penalty retroactively to the start of 2016. If that bill were to be enacted, the impact would be sharply higher premiums in Pennsylvania in 2018 (note that the CBO has projected that nationwide, rates will be 20 percent higher in 2018 if the AHCA is enacted, versus keeping the ACA).
  • Statewide average rate increases will be 20.3 percent if the Trump Administration stops funding cost-sharing reductions (CSRs). CSRs are currently the subject of a pended lawsuit (House v. Price, formerly House v. Burwell), and President Trump has, on more than one occasion, indicated that he might cut off funding in an effort to get Democrats to negotiate on health care reform. If he did so, premium increases in the individual market would be substantial.
  • Statewide average rate increases will be 36.3 percent if the individual mandate penalty is eliminated and cost-sharing reduction funding is also cut off.
  • Ultimately, the final average approved rate increase ended up being 30.6 percent. The Pennsylvania Insurance Commissioner noted that the original proposals from insurers had been for an average increase of 7.6 percent.

Note that all of these numbers are averages — the rate changes for each plan vary considerably (details below). It’s also important to note that these average increases are before any premium subsidies are applied. Under the ACA, subsidies grow to offset higher premiums from one year to the next, so people who qualify for subsidies (which includes 80 percent of Pennsylvania exchange enrollees) won’t bear the whole brunt of the rate increases, as long as they’re willing to switch plans if necessary in order to minimize costs.

2018 approved rate increases: Average rates up more than 30%, due mostly to lack of CSR funding

Open enrollment for 2018 coverage began November 1, 2017, and will end December 15, 2017. This is a much shorter open enrollment period than we’ve had in previous years; all enrollments will need to be completed by December 15, and enrollments after that point will only be allowed for people who have a qualifying event.

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.

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). 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.

Insurers in Pennsylvania have 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. For people who get premium subsidies, the subsidies will grow to offset the higher premiums. For people who don’t get premium subsidies but who wish to purchase a silver plan, the off-exchange-only plans will be a better value than the on-exchange silver plans.

The earlier filings are crossed out in the following list, and have been replaced with the revised filings:

  • Capital Advantage Assurance: 12.48 percent revised to 12.15 percent, and later revised again to 49.2 percent, with the cost of CSR added to on-exchange silver plans (53,206 members; plans available in rating areas 6, 7, and 9 — A list of the counties in each rating area in Pennsylvania is here).
  • First Priority Health (HMO): 8.65 percent, revised to 13.88 percent (23,251 16,772 members; plans available in rating area 7)
  • Geisinger Health Plan: 8.14 percent revised to 8.2 percent, revised to 31.3 percent, with the cost of CSR added to on-exchange silver plans, and non-silver plan premiums increasing by a much smaller amount (46,937 members; plans available in rating areas 2, 3, 5, 6, 7, and 9). Geisinger’s revised filing notes that they have created five new off-exchange-only silver plans, which don’t have the cost of CSR added to their premiums.
  • Highmark, Inc. (EPO and PPO): 19.65 percent, revised to 25.27 percent (20,404 members; plans available in rating areas 1, 2, 4, 5, and 6)
  • Highmark Health Insurance Company (PPO): 8.77 percent, revised to 8.9 percent, revised to 9.68 percent (30,200 members; plans available in rating areas 1, 2, 4, 5, 6, 7, and 9)
  • Highmark Choice Company: N/A — the filing states that “HCC’s 2018 offering does not include any renewing plans. Therefore, there is no requested rate change.” (185 members, plans available in rating areas 1 and 4)
  • Keystone Health Plan East (Independence Blue Cross HMO): 4.71 percent, revised to 4.6 percent, revised to 21.7 percent (151,360 members; plans available in rating area 8)
  • QCC Insurance Company (Independence Blue Cross PPO): 14.11 percent, revised to 13.9 percent, revised to 28.24 percent (53,205 members; plans available in rating area 8)
  • UPMC Health Options (PPO and EPO): 7.96 percent revised to 7.99 percent, revised to 41.15 percent (142,651 members; plans available in rating areas 1, 2, 4, 5, and 6, and UMPC is expanding into rating areas 3 and 7 for 2018).

Although the rate increases for 2018 are substantial, the most significant increases are for silver on-exchange plans. Premium subsidied are tied to the cost of the second-lowest-cost silver plan in each area, and are based on keeping the cost of that plan at an affordable level for each subsidy-eligible enrollee. That means that premium subsidies in Pennsylvania are much larger for 2018 than they were for 2017. Subsidized enrollees with silver plans are no worse off than they were in 2017, and subsidized enrollees at other metal levels are in many cases going to be better off than they were in 2017, because their larger premium subsidies (based on the cost of a silver plan) can still be applied to plans at other metal levels, which have smaller rate increases for 2018.

There are two off-exchange insurers — Aetna and Freedom Life/National Foundation Life — that did not file rates for 2018 and will no longer be offering off-exchange plans in Pennsylvania after the end of 2017.

The Pennsylvania Insurance Department confirmed by phone that Freedom Life/National Foundation Life never marketed their plans and don’t have any enrollees in 2017. People with off-exchange Aetna plans in 2017 need to secure new coverage from a different insurer for 2018. They can do so during open enrollment, but they also have a special enrollment period that continues for 60 days after the end of 2017 (triggered by involuntary loss of coverage) during which they can pick a new plan for 2018. If they pick a plan after December 31, they will have a gap in coverage, as their earliest possible effective date for the new plan at that point would be February 1.

Pennsylvania Insurance Department & insurers asked feds to enforce individual mandate, ensure CSR funding

The Pennsylvania Insurance Department and the CEOs of the five individual market insurers sent a letter on April 26 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 cost-sharing subsidy money will continue to flow to insurers.

Nothing has changed about individual mandate enforcement as of November 2017. But rather than acquiese to states’ requests for continued CSR funding, the Trump Administration opted in October 2017 to definitively end CSR funding. The result is sharply higher premiums (mostly for silver plans) in most exchanges throughout the country, including Pennsylvania’s. Ironically, the federal government will end up picking up most of the tab for the higher costs associated with the lack of federal funding for CSR. This is because they’ll have to pay much larger premium subsidies to offset the higher premiums necessary to cover the cost of CSR. An August 2017 CBO analysis estimated that over the next decade, it will cost the federal government an additional $194 billion to not fund CSR.

For the time being, the ACA remains unchanged, despite the fact that federal funding for CSR has been eliminated. Medicaid expansion provides coverage in Pennsylvania for people with income up to 138 percent of the poverty level, and 80 percent of the people who have enrolled in private plans through the state’s exchange are receiving premium subsidies to offset the cost of their coverage (this number is expecte to rise in 2018, as more people qualify for premium subsidies and some unsubsidized enrollees switch to off-exchange silver plans that don’t have the cost of CSR added to the premiums). And as has been the case since 2014, medical history is no longer a factor that determines eligibility for new major medical coverage in the individual market.

But the future of the ACA is uncertain, and it’s worth noting that Pennsylvania’s individual market prior to the ACA was very challenging for people with pre-existing medical conditions. It was described in this Kaiser Health News article as “the wild, wild west.”

2017 enrollment

426,059 people enrolled in private plans (QHPs) for 2017 through the Pennsylvania exchange during the 2017 open enrollment period. For perspective, total enrollment during the 2016 open enrollment period reached 439,238, so enrollment declined by 3 percent in 2017.

Across all states that use HealthCare.gov, enrollment was about 5 percent lower in 2017, so Pennsylvania’s decline wasn’t quite as significant as the average. The lower enrollment totals across HealthCare.gov states in 2017 are 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.

Full-price (ie, before any subsidies are applied) premiums in the Pennsylvania exchange average $533/month in 2017. But 80 percent of enrollees (341,210 people) are receiving premium subsidies, and the average after-subsidy premium is just $193/month.

HHS estimated that there were 111,000 people in Pennsylvania who had off-exchange coverage in 2016, but who would be eligible for subsidies if they switched to the exchange. Some of them may have done so for 2017, but that was more than offset by an overall decline in exchange enrollment.

Pennsylvania exchange and the Trump Administration

HHS reported that 479,000 people gained health insurance coverage in Pennsylvania from 2010 to 2016 as a result of the ACA. That includes people who became newly insured in the individual market, as well as people who obtained coverage under expanded Medicaid (Pennsylvania was a year behind many other states, expanding coverage as of 2015 rather than 2014).

The newly insured total also includes 89,000 young adults who were able to remain on their parents’ health insurance as a result of the ACA (Pennsylvania already had a law — Act 4 — that allowed fully insured employer-sponsored plans to continue to cover dependents up through age 29; it was far more restrictive than the ACA’s provision, however, and didn’t apply to self-insured plans or the individual market).

By March 2017, there were 716,000 people who had gained coverage under Medicaid expansion in Pennsylvania (63,000 of those people received treatment for substance abuse in 2015 alone, helping to avert the opioid crisis that has hit Pennsylvania hard). And in 2017, there are more than 341,000 people in Pennsylvania who are receiving premium subsidies to offset the cost of private health insurance. They are all at risk of losing coverage if the ACA is repealed and not replaced with something equally robust.

The American Health Care Act (AHCA) passed the House in May, but three different versions of it failed in the Senate in July. By September, ACA repeal was back in the Senate with the Graham-Cassidy-Heller-Johnson legislation, but failed to advance to a vote due to lack of support from Republican lawmakers.

Prior to the ACA, Pennsylvania was among the states that did not have a state-run high-risk pool. Pennsylvania relied instead on an “insurer of last resort” in each area of the state, and a state-run program called Adult Basic that provided coverage to low-income people (up to 200 percent of the poverty level) who weren’t eligible for Medicaid. The Adult Basic program covered 42,000 people as of 2011 when the program terminated, but there were half a million people on a waiting list for coverage, and the state simply didn’t have the money to provide coverage for them in the Adult Basic program.

2017: 4 carriers exited, average rates up 32.5% (subsidies offset for many, but not all)

UnitedHealthcare and Aetna exited the individual market in Pennsylvania at the end of 2016 (details below).

And Geisinger Quality Options (PPO) is not available on-exchange in 2017, although Geisinger Health Plan (HMO) is still available on-exchange.

Keystone Health Plan Central also exited the exchange in Pennsylvania, although they are continuing to offer plans outside the exchange with an average rate increase of 32.4 percent (Keystone Health Plan East has remained in the exchange for 2017).

The remaining carriers that offer plans in the exchange in 2016 filed rates for 2017 plans, but some filed new rate proposals after the initial filings were submitted. Final rates were approved in October, and the Pennsylvania Insurance Department noted that the average individual market rates (including off-exchange plans) would increase by 32.5 percent for 2017.

That was calculated before any subsidies or plan changes are taken into account — for people who are eligible for subsidies, the subsidies will mitigate much of the rate hikes; and for people who shop around during open enrollment, lower-priced options may be available. The following pre-subsidy average rate increases apply to the plans that will offer coverage in the Pennsylvania exchange in 2017:

  • Capital Advantage Assurance: 27 percent 43.3 percent rate increase approved
  • First Priority Health (HMO): no rate change (First priority Life, a PPO, is available off-exchange, with an approved average rate increase of 45.8 percent)
  • Geisinger Health Plan: 42.08 percent rate increase (HMO only; the PPO plans, sold under the Geisinger Quality Options name, will not be available on-exchange for 2017)
  • Highmark, Inc. (EPO and PPO): 38.4 percent 50.1 percent rate increase requested, 45.42 percent approved
  • Highmark Health Insurance Company (PPO): 48.1 percent 50.1 percent rate increase requested, 55.07 percent approved
  • Keystone Health Plan East (Independence Blue Cross HMO): 19.87 percent 27.97 percent rate increase approved
  • QCC Insurance Company (Independence Blue Cross PPO): 22.52 percent 28.38 percent rate increase
  • UPMC Health Options (PPO and EPO): 9.7 percent requested 22 percent rate increase for Select and Partner networks (EPO), and 27 percent rate increase for Premium network (PPO). Approved average rate increase is 26.5 percent.

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.

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).

Premium subsidies are tied to the cost of the benchmark plan, and 78 percent of Pennsylvania exchange enrollees were receiving premium subsidies as of March 2016. Since the benchmark plan premiums have increased significantly, subsidies have increased to keep pace with the increase in the price of the benchmark plan in each area.

For people who shop in the exchange and are eligible for premium subsidies, the subsidies will offset a significant portion of the rate increases, assuming the enrollees are willing to shop around during open enrollment (as opposed to simply accepting whatever rate increase applied to the plan they already had in 2016).

For those who are not eligible for subsidies, however, rates are sharply higher than they were in 2016. Pennsylvania Insurance Commissioner, Teresa Miller, advised residents who don’t qualify for subsidies to shop both on and off the exchange to see what plan would provide the best value (it’s essential to shop on-exchange if you’re eligible for subsidies; if you’re not, it doesn’t matter, although you can’t switch to a subsidized plan mid-year if your income drops, unless you have a qualifying event).

The Pennsylvania Insurance Department requested permission in October 2016 to support Highmark in their lawsuit over the federal government’s payment shortfall for the risk corridors program. There were about a dozen similar lawsuits filed by carriers around the country in 2016; Land of Lincoln (Illinois CO-OP) filed a suit but it was dismissed by a U.S. Court of Claims judge in November 2016.

There are nine rating areas in Pennsylvania. The state Insurance Department has a page that shows each area, with a list of the carriers that offered 2017 coverage in the area both on and off the exchange. Six of the nine areas had at least three carriers available in the exchange in 2017. The other three rating areas had only two carriers available in the exchange.

UnitedHealthcare, Aetna, Keystone Health Plan Central and Geisinger Quality Options were shown on the list of participating exchange carriers, but with footnotes indicating that they would not actually be offering plans in 2017 (in the case of Keystone Health Plan Central, the footnotes indicated that they are not selling silver plans in Pennsylvania in 2017; offering silver plans is a prerequisite for being allowed to sell plans in the exchange).

UnitedHealthcare exited exchange at the end of 2016

In April 2016, UnitedHealthcare announced that at the end of 2016, they would exit most of the 34 exchanges where they offered plans in 2016. They are not offering individual market plans in Pennsylvania in 2017, on or off-exchange (they did file rates for small business plans in the state though).

United’s total exchange enrollment in Pennsylvania was 65,159 in 2015. That was 16 percent of the effectuated enrollment total as of June 2015, and less than 14 percent of the total enrollment at the end of the 2015 open enrollment period. All UnitedHealthcare enrollees in the exchange had an option to switch to a different carrier during the first half of open enrollment; those who didn’t pick a new plan were mapped to a plan that most closely matched their old one, but can still pick a different option if they do so by January 31.

Aetna exited exchange at the end of 2016

In August 2016, Aetna announced that they would exit the exchanges in 11 states, including Pennsylvania. Aetna insured about 31,000 exchange enrollees in Pennsylvania in 2016, all of whom needed to switch to a new plan during open enrollment. They had the option to pick a plan by mid-December, and the exchange picked a new plan for those who didn’t log back into their account to choose their own plan.

Geisinger Quality Options and Keystone Health Plan Central exited at the end of 2016

Geisinger is the parent company of Geisinger Health Plan (HMOs) and Geisinger Quality Options (PPOs). Both had planned to continue to offer plans in the exchange in six of the nine rating areas in Pennsylvania in 2017 (albeit with a proposed 65.1 percent rate increase for Geisinger Quality Options), but Geisinger Quality Options subsequently opted to exit the exchange at the end of 2016.

In all six of those rating areas (Areas 2, 3, 5, 6, 7, and 9), the Pennsylvania exchange still has HMO options available from Geisinger Health Plan, but there are no Geisinger Quality Options plans available in any of the rating areas.

This New York Times article is a good look at the story behind Geisinger’s proposed rate increases for 2017. Geisinger had requested similarly large rate hikes for 2016, but regulators only approved average rate hikes of 20 percent for 2016. For 2017, regulators approved a 42 percent increase for Geisinger Health Plan, which is still available in the exchange.

Keystone Health Plan Central is not offering plans in the exchange in 2017, according to the rate approval notice published by the Pennsylvania Insurance Department. They are 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.

2016 enrollment

During the 2016 open enrollment period, 439,238 people enrolled in private plans through the Pennsylvania exchange, including new and renewing enrollees. At the end of the 2015 open enrollment period, the enrollment count stood at 472,697.

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 is 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 (see details below). 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. This was also part of the reason for the significant attrition by mid-2015, and the issue is much more settled now in 2016.

By March 31, effectuated enrollment in the Pennsylvania exchange stood at 412,347. Of those enrollees, about 78 percent were receiving premium subsidies that average $248 per month.

Open enrollment ended January 31. Coverage for 2016 (including off-exchange coverage) is now only available for people who experience a qualifying event that triggers a special enrollment period. Native Americans can enroll year-round however, as can anyone eligible for Medicaid or CHIP.

Carrier competition shakes up market share

UPMC lowered its rates in Western Pennsylvania by a whopping 41 percent for 2015, making them the lowest priced carrier in the western part of the state. UPMC expected to retain most of their 2014 enrollees and also gain market share in 2015 because of their competitive premiums – and that certainly ended up being the case, as they went from having 4,000 enrollees in 2014 to more than 50,000 in 2015 (according to their rate filing for 2016, the total ended up being 58,000).

Highmark Blue Cross Blue Shield garnered a third of the market share during the first open enrollment period (Highmark had 104,324 exchange enrollees, plus an additional 43,679 enrollees outside the exchange) and were priced significantly lower than other carriers in 2014. But Highmark increased premiums by about 10 percent for 2015, and their network became narrower than it was in 2014.

For 2016, UPMC’s rates increased an average of 9.7 percent, while Highmark’s increased by an average of 20.1 percent. In February 2016, UPMC claimed that they had enrolled 67 percent of the people who signed up for private plans through the exchange, up from 18 percent the year before.

UPMC also said that their total market share – including individual plans, commercial plans, Medicare Advantage, and Medicaid managed care plans – had grown to 1,095,000 members, and that it exceeded Highmark’s total enrollment. UPMC said most of their market share growth came from the individual market and Medicaid managed care.

As of February 2016, UPMC’s analysis indicates that UPMC and Highmark each had about 28 percent of the total market share in Western Pennsylvania, with other carriers – including Aetna and UnitedHealthcare – and Original Medicare covering the remaining portion of the insured market. This is in contrast to five years ago, when UPMP says that Highmark had about 60 percent of the market share in Western Pennsylvania.

Highmark didn’t confirm UPMC’s analysis, but released their own data later in February. Their membership numbers are for all ACA-compliant plans, including those purchased outside the exchange. In Pennsylvania, Highmark’s in-force ACA-compliant membership stood at 123,000 as of February 2016. That included 53,000 people in Western Pennsylvania, plus 35,000 in Central Pennsylvania and 35,000 in Northeastern Pennsylvania. That a drop of almost 17 percent since 2014, when Highmark’s total enrollment in ACA-compliant plans in Pennsylvania stood at 148,000.

Highmark also offers individual market plans in Delaware and West Virginia. Across all three states, their total ACA-compliant membership stood at 195,000 as of February 25, 2016. That was down from about 350,000 in 2015. The drop in enrollment is described by Highmark as a “market adjustment” as the carrier noted that their enrollment in 2014 and 2015 was significantly higher than they had expected.

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 aren’t proving to be profitable, some carriers in Pennsylvania have 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 has cut broker commissions to zero in northeastern Pennsylvania, and has has cut commissions in the rest of the state to $6 per-member-per-month (down from $15 to $25 PMPM previously). Highmark has told brokers that they will reinstate commissions for 2017, but the carrier is clearly hoping to reduce sales for 2016 – particularly in northeastern Pennsylvania. As such, their recent loss of market share to UPMC might be in line with their current marketing strategy.

Highmark also announced in February 2016 that they would cut reimbursements to doctors by 4 percent for patients who are 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 will not pay broker commissions for any exchange enrollments submitted January 1, 2016 or later, in any of the 34 states where they offer plans in the 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.

2015: 2/3 of uninsured eligible for Medicaid or subsidies

In 2015, there were still 994,000 uninsured residents in Pennsylvania, according to the Kaiser Family Foundation. Two-thirds of them were eligible for either subsidies in the exchange or the state’s expanded Medicaid coverage. Nearly half – 477,000 people – were eligible for Medicaid, and 180,000 were eligible for premium subsidies to make private coverage more affordable.

Although the state has made considerable progress in reducing its uninsured rate there is still much work to be done. In September 2015, the federal government awarded more than $3.1 million in Navigator grants to six organizations in Pennsylvania that will provide outreach and enrollment assistance through 2018. Pennsylvania Navigator grants in 2016 totaled nearly as much, coming in at $3.07 million.

2016 rates and carriers

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 promptly crunched the numbers to determine the overall weighted average rate change for 2016, which came out to be 12 percent for the entire individual market (including four carriers that only offer off-exchange plans, although their total enrollment was less than a thousand people, out of nearly 427,000 in the whole individual market in Pennsylvania).

The 12 percent weighted average rate increase assumed that everyone would keep their existing plan. But in Pennsylvania’s robust insurance market, 52 percent of people who re-enrolled through the exchange selected a different plan for 2016 (across all the states that use Healthcare.gov, 43 percent of re-enrollees picked new plans). This was not surprising, given the variation in rate changes for 2016, and the fact that insureds were able to select from among 15 different carriers during open enrollment, including Highmark Select Resources, which was new for 2016.

Statewide, the average benchmark premium (second-lowest-cost Silver plan) is 10.9 percent more expensive in 2016 than it was in 2015. Premium subsidies are tied to the price of the benchmark plan, so average premium subsidies in Pennsylvania are higher in 2016, offsetting much of the rate increase for many insureds.

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 is exactly the average across the 38 states that use Healthcare.gov.

Carriers offering individual plans in the exchange for 2016 and their approved rate changes are as follows:

  • Aetna: 5.6 percent rate increase
  • Capital Advantage Assurance: 1.6 percent rate increase
  • First Priority: 21.5 percent rate increase
  • Geisinger Health Plan: 20 percent rate increase
  • Geisinger Quality Options: 20 percent rate increase
  • Highmark BCBS: 20.1 percent rate increase
  • HM Health Insurance: 26.2 percent rate increase
  • Keystone Health Plan Central: 1.4 percent rate increase
  • Keystone Health Plan East: 1.9 percent rate increase
  • QCC Insurance Company: 4.53 percent rate increase
  • UnitedHealthcare: 5.6 percent rate increase
  • UPMC Health Options: 9.7 percent rate increase

In most cases, the Insurance Department approved final rates that were slightly lower than the carriers had proposed, although rates for Geisinger were significantly lower than proposed. Geisinger had requested a 58 percent increase for their Quality Options (PPO) plans, and an increase of nearly 41 percent for their Geisinger Health Plan. But the final approved rate increases for both plans was 20 percent. HM Health Insurance, First Priority, and Highmark also all ended up with final rate increases at least five percentage points lower than they had proposed.

Only one carrier – QCC Insurance – ended up with a final rate higher than they had proposed (they requested a 2.8 percent rate increase, but regulators approved a 4.53 percent increase).

UPMC requested modest rate hikes for 2016, all below ten percent. UPMC noted in their rate filings that their individual market share was just 4,000 enrollees in 2014, but increased to 58,000 in 2015 – likely as a result of their decreased premiums for 2015 (more details below). In Western Pennsylvania in 2016, UPMP once again has the lowest rates in the exchange for silver plans.

Time Insurance left the exchange after announcing in mid-2015 that they would exit the health insurance market nationwide, including on- and off-exchange markets.

Highmark: rates, merger, tiered networks

Highmark generated headlines last summer due to a relatively high initial rate filing (25.5 percent, which was ultimately reduced to 20.1 percent) coupled with the news of hundreds of millions of dollars in losses on exchange plans in 2014 and 2015.  The rate proposal that Highmark filed earlier in 2015 indicated that 20,394 people would be impacted by the new rates.

But in June, Highmark merged with Blue Cross of Northeastern Pennsylvania, gaining new insureds in the process. The final 2016 rate approval document that the Insurance Department released indicated that Highmark’s new rate (an average of 20.1 percent higher than the current rates) would impact 117,857 insureds in the state.

The rate filing from Highmark was based on claims data through January 2015, but the carrier announced in September 2015 that they lost $318 million on exchange plans during the first half of 2015, up from about a $78 million loss during the first half of 2014. The higher losses during the first half of 2015 were not reflected in the 25 percent rate increase that the carrier requested for 2016 (for perspective, Highmark had revenue in 2012 that totaled $15.2 billion). Highmark noted earlier in 2015 that they would probably shift towards fewer plans and narrower networks in 2016, in an effort to reduce losses in the coming year; they confirmed that as open enrollment drew nearer.

Although the Insurance Department concurred that Highmark is losing money, they felt that a rate increase in excess of 25 percent would be too onerous for insureds, and instead proposed a 20.1 percent rate increase, but clearly stated that they expected Highmark to spread their rate hikes across successive years. Thus it’s likely that we could see another relatively sharp rate increase for Highmark next year, if current claims trends continue.

Leading up to the start of the third open enrollment period, Highmark announced that they would offer their Connect Blue plan to individuals starting in 2016; it was already available to groups. Connect Blue is a low-cost, narrow network plan that divides providers into four tiers and gives consumers the lowest out-of-pocket costs for visiting preferred tier providers (in New Jersey, Horizon Blue Cross Blue Shield – a different company – unveiled a similar program for 2016). In addition to offering the new Connect Blue plans, Highmark also ceased offering some of their previously-available plans at the end of 2015.

No transition to state-run exchange

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 is 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 set-up similar to Oregon, Nevada, and New Mexico (and now Hawaii), with a state-run exchange that uses Healthcare.gov for enrollments.

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. This will be less expensive for the state, and there was no longer a need for the transition to a state-run exchange, since subsidies will continue to be available regardless of who runs the exchange.

2015 enrollment data

472,697 people enrolled in private plans through the Pennsylvania exchange during the 2015 open enrollment period (through February 22, including the week-long extension).  HHS had projected 410,000 enrollees, so the exchange ended up with 115 percent of the projected total.  Of the people who selected a plan during the 2015 open enrollment period, 41 percent were new to the exchange for 2015.

As expected, however, some enrollees didn’t pay their initial premiums, and others opted to cancel their coverage early in 2015 for a variety of reasons.  By the end of March, 427,454 people had in-force coverage through the exchange in Pennsylvania.  By the end of June, that total had dropped to 397,967, partially due to stepped-up enforcement of immigration/financial documentation in the federally-facilitated marketplace.  Of those enrollees, 80.4 percent are receiving premium subsidies, and 55.3 percent are receiving cost-sharing subsidies.

An additional 126,853 people enrolleed in Medicaid or CHIP through the exchange between November 15 and February 22.  Pennsylvania expanded Medicaid (under the Healthy PA program) in 2014, and newly-eligible resident were able to begin enrolling on December 1 (prior to December 1, people could still enroll if they were eligible under the old guidelines).  Under Gov. Tom Wolf, the state is transitioning to straight Medicaid expansion as called for in the ACA (ie, no waiver needed).  By July 27, Pennsylvania was reporting that 439,000 people had already enrolled in expanded Medicaid.

Open enrollment for 2015 is over, so most applicants can only purchase a plan for 2015 – on or off the exchange – if they have a qualifying event (Medicaid enrollment is year-round, and Native Americans can enroll in coverage through the exchange year-round as well).  The next open enrollment period begins on November 1, but coverage won’t be effective until January 1, 2016.

2015 rates

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 published in December 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.

Although automatic renewal for 2015 was possible for the majority of 2014 enrollees, it was generally a better choice to shop around and compare options during open enrollment.  Ultimately, however, almost 161,000 people in Pennsylvania had their coverage auto-renewed for 2015.

The NY Times put together an analysis of how enrollees in the 2014 benchmark plan (second lowest cost silver plan) would fare for 2015, depending on whether they opted to renew their coverage or switch to the new benchmark plan.  In Pennsylvania, there was a range of results, with enrollees in some areas eligible for rate decreases if they shopped around. But letting the benchmark plan automatically renew resulted in a rate increase in all areas of the state.

In a similar, but more specific analysis, 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.

Andrew Sprung, writing at Xpostfactoid, predicted that Pennsylvania would have a lot more people selecting Bronze plans in 2015 compared with 2014, and his explanation made a lot of sense.  While the difference between the cheapest Silver plan and the cheapest Bronze plan in most areas of the county was usually at least $50 to $100 per month, in southeast Pennsylvania – the Philadelphia area – the difference was only $20 in 2014.

So people who were eligible for cost-sharing subsidies if they purchased Silver plans were more able to do so than in other parts of the country where there were Bronze plans that were very attractive because of their premiums, despite the fact that they didn’t include any cost-sharing subsidies.  But for 2015, the difference in price from Bronze to Silver is much greater in the Philadelphia region, because there’s no longer a Silver plan priced well below the benchmark (second-lowest-cost) Silver plan (ultimately, 11 percent of Pennsylvania exchange enrollees have Bronze plans as of mid-2015).

More choices for enrollees in 2015

Pennsylvania’s federally-run exchange has 15 carriers offering plans for 2015.  Three carriers that participated last year left the exchange, but four more – including giants Assurant (Time) and United Healthcare – joined the exchange, making Pennsylvania among the many states where consumer choice increased for 2015 (Assurant will not be participating in 2016 however, and they ceased sales of new policies nationwide on Jun 15, 2015).

15 insurers put Pennsylvania’s exchange near the top in terms of the total number of participating carriersn in 2015, but in some cases the total represents multiple affiliates of a single parent company.  And most of the carriers focus on a single region rather than the whole state, so local competition will vary from one area to another.  Nearly all regions of the state had at least three carriers available in 2014, and the overall trend is towards more consumer choice in 2015.

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 has 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 625,000 by April 2016.

2014 enrollment numbers

By April 19, 318,077 Pennsylvania residents had completed their private plan selections in the exchange, nearly double the number who had enrolled by March 1.  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 is running the exchange (trailing Texas, Florida, and North Carolina).

In contrast with the national trend, Pennsylvania had more uninsured residents in 2012 than in 2011 – an increase of  156,000 people.  But thanks to the ACA, the uninsured rate declined – albeit only slightly – during the first half of 2014.  A Gallup poll found that the uninsured rate in the state was 11 percent in 2013, and had declined to 10.1 percent by mid-2014. By mid-2015, a similar Gallup poll found the uninsured rate to be 7.7 percent.

Prior to the first open enrollment period, Families USA estimated that almost 900,000 Pennsylvania residents would be eligible for tax credits to help them pay for coverage purchased through the health insurance exchange.  During the 2014 open enrollment period, more than 257,000 people received tax credits (81 percent of the total exchange enrollment) in Pennsylvania.

Although expanded coverage didn’t take effect until 2015, 42,335 exchange applicants had been found to be eligible for Medicaid or CHIP under the state’s existing 2014 guidelines by mid-April 2014.  There is no open enrollment window for Medicaid; enrollment continues year-round.

Grandmothered plans

Pennsylvania is among the states that allowed pre-2014 plans to be renewed again and remain in force as late as 2017, 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 most recent filings are in the small group market, filed in December 2015 for renewals effective July 2016. There are no transitional individual market plan filings.

Despite the fact that policies slated for cancellation were allowed to be extended, and the fact that nearly 160,000 people had enrolled through the exchange by the beginning of March 2014 – and another 42,500 off-exchange through just one carrier – then-Governor Tom Corbett continued to criticize Obamacare, focusing on the fact that supposedly, 250,000 people were “losing their health coverage due to the ACA.”  Corbett was opposed to the ACA from the get-go, and relied on his Obamacare opposition during his campaign to win reelection in PN.  Ultimately, he was defeated by Tom Wolf, who took office in January 2015.

Community Blue, UPMC network controversy

During the 2014 open enrollment period, Highmark BCBS enrolled a total of 148,003 members in Pennsylvania, and 80 percent of them – about 120,000 people – chose a Community Blue plan.  33 percent of the total private plan enrollment within the exchange in Pennsylvania was with Highmark, and the majority of them selected a Community Blue plan.

There was some confusion surrounding the Community Blue network, as the new plans do not include UPMC providers. Community Blue offered insureds a transition period to have one final visit with a UPMC provider, or to complete (out-of-network) appointments that were scheduled before the end of December 2013.

In early March 2014, the transition period ended, and Community Blue plans no longer provide coverage for UPMC facilities or providers.  If you have a UPMC provider and a new Community Blue policy, be sure to check with your carrier and your provider to make sure that you know what providers are in your network.

This issue has caused considerable consternation in Pennsylvania in 2014.  The state Senate decided in late June to allow senators, staff and retirees in 29 western Pennsylvania counties to opt for either a UPMC policy or a Highmark plan so that they can continue to receive care at a UPMC facility if that’s their choice.

Exchange history

In December 2012, Gov. 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.  Thus HHS is running the exchange in Pennsylvania.  You can use Healthcare.gov to get quotes, compare plans, determine subsidy eligibility and enroll in coverage.

Leading up to the December announcement, 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.

Although the state government has not involved itself in promoting the exchange, $7 million in federal funds went to various organizations around the state that served as navigators to assist people during the first open enrollment, for 2014 plans.  $2.4 million in funding was provided to Navigator organizations in Pennsylvania for the second open enrollment period. Prior to the third open enrollment period, six navigator organizations in the state received $3.1 million to fund enrollment efforts through the summer of 2018.

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 Section, 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 / ra-in-consumer@state.pa.us

More Pennsylvania coverage

Insurance Guide

A guide to health insurance in your state.


Your state’s Medicaid expansion, eligibilty, contacts


Insurance for those over 64 (off-site)