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

Both insurers have filed plans for 2019; weighted average proposed rate hike just under 10%

Highlights and updates

Rhode Island exchange overview

HealthSource RI is the state-run exchange in Rhode Island. Zachary Sherman began serving as HealthSource RI’s acting director since November 2015, and was named as the permanent director in March 2016. As of April 4, 2016, the contact center moved to 401 Wampanoag Trail in East Providence. This replaced the previous location on Royal Little Drive, and in-person assistance is available at the new center.

HealthSource RI is an active purchaser exchange (as opposed to a clearinghouse model), which means that the exchange negotiates directly with insurers, and determines which plans will be made available each year, rather than simply accepting all qualified health plans that insurers offer.

Funding and enrollment growth are ongoing issues for HealthSource RI, as the administrative costs of operating a state-run exchange are more burdensome in smaller states with fewer enrollees. And since Rhode Island has among the nation’s lowest uninsured rates, there aren’t a significant number of remaining uninsured residents in the state for the exchange to target; there were only about 40,000 uninsured residents remaining in Rhode Island as of 2017.

Rhode Island is one of two states where people can normally enroll as late as the 23rd of the month and still get coverage the first of the following month. In most states, the deadline is the 15th of the month, but Massachusetts and Rhode Island use the 23rd. (Washington’s state-run exchange also had a 23rd of the month deadline until April 2017, when they switched to a 15th of the month deadline)

Rhode Island’s exchange also collects premium payments on behalf of enrollees and remits them to the insurers (in most states people pay their insurer directly, even if they’re enrolled through the exchange). To provide more flexibility for payments, Health Source RI has partnered with CVS so that enrollees can pay their health insurance premiums at any CVS in the country, using credit cards, debit cards, or cash. Previously, there was no option to pay with cash, debit cards, or credit cards. The only way to pay premiums was online (via electronic transfer from a bank account) or with a check or money order either mailed to the exchange or submitted in person at the Health Source RI contact center. In addition, enrollees paying at CVS have the option to break up their monthly premium payment into smaller, more manageable chunks if they choose to do so.

Looking ahead to 2019

Rate filings for 2019 coverage were due in Rhode Island in mid-May, 2018. On May 30, the Office of the Health Insurance Commissioner published the proposed average rate changes. There are two insurers in Rhode Island’s exchange, and both intend to remain in the market in 2019, with the following weighted average proposed rate increases:

  • Blue Cross Blue Shield of Rhode Island: 10.7 percent increase
  • Neighborhood Health Plan of Rhode Island: 8.7 percent increase

At ACA Signups, Charles Gaba has calculated a weighted average proposed rate increase of 9.66 percent.

As was the case for 2018, Rhode Island’s insurers will add the cost of cost-sharing reductions (CSR) to on-exchange silver plan premiums (this results in larger premium subsidies, which is beneficial for everyone who qualifies for premium subsidies).

Blue Cross Blue Shield of Rhode Island notes in their filing that they have not added any premium adjustment to account for the elimination of the individual mandate penalty in 2019. Neighborhood Health Plan attributed a 1.9 percent rate increase to the impending repeal of the individual mandate penalty, so their average proposed rate increase would be 6.8 percent if the individual mandate penalty were remaining in place.

Market Stability Workgroup’s recommendations: Reinsurance (legislation has passed), individual mandate, and regulations for short-term plans

Health Source RI and the Rhode Island Office of the Health Insurance Commissioner partnered in 2018 to create a Market Stability Workgroup, tasked with creating state-level strategies to stabilize Rhode Island’s health insurance market. The workgroup met eight times between mid-April and early June, and published their recommendations on June 5.

Congress and the Trump Administration have made repeated efforts to destabilize the insurance markets, including the proposed expansion of short-term and association health plans, the elimination of federal funding for cost-sharing reductions (CSR), and the elimination of the individual mandate penalty. The Market Stability Workgroup considered actions that Rhode Island can take to counter the Trump Administration’s efforts to “dismantle the Affordable Care Act” and “jeopardize the progress Rhode Island has made in recent years under the [ACA].”

Rhode Island Governor Gina Raimondo noted that “the recommendations of the Market Stability Workgroup will help protect our market against Washington’s actions.”

The workgroup discussed how various federal actions have affected, or will affect, Rhode Island’s market, including the elimination of the individual mandate penalty starting in 2019, the shorter open enrollment period, the elimination of CSR funding, and the proposed expansion of short-term and association plans. They also discussed a wide range of potential solutions, including looking to other states to see what’s already been done or is being considered as far as market stabilization tactics.

The group was focused on ensuring that Rhode Island doesn’t lose ground in terms of the insured population (96 percent of Rhode Island residents are insured, and the uninsured rate has dropped by two-thirds since 2012), ensuring that consumer protections remain in place, and maintaining the affordability of health insurance, for both subsidized and unsubsidized enrollees.

There’s a lot that states can do to stabilize their insurance markets and push back against federal actions to weaken the ACA. Several states have considered legislation to implement an individual mandate as of 2019 or 2020. California has codified a three-month open enrollment period for all future years, and DC will have a three-month open enrollment period for 2019 coverage. Some states have limited or banned short-term plans, or are considering doing so. Alaska, Minnesota, and Oregon have secured federal funding to implement reinsurance programs to stabilize their individual markets, and several other states are considering reinsurance as a solution.

Ultimately, Rhode Island’s workgroup recommended that the state take the following actions:

  • Implement a state-based individual mandate (likely effective in 2020)
  • Seek a 1332 waiver to implement a reinsurance program (the workgroup estimated that it would cost $26 million to implement a reinsurance program that would result in premiums being 10 percent lower than they’d otherwise be. Of that amount, $15 million would come from federal pass-through funding via the 1332 waiver, while the state would have to come up with the other $11 million).
  • Implement new rules that give the state additional regulatory control over short-term health insurance plans. These plans are already highly regulated in Rhode Island, and none are currently for sale. But the workgroup is recommending additional regulations, and legislation to that effect is under consideration.

The workgroup acknowledged that the individual mandate and the reinsurance program would have to be implemented for 2020, as there’s not enough time to get them established for 2019. The plan was for legislation to be considered in the 2019 session, in time for insurers to base 2020 premiums on whatever changes are implemented by lawmakers in 2019.

Lawmakers in Rhode Island got started right away on legislation to authorize a reinsurance program in Rhode Island (S2934 / H8391). The legislation passed in June 2018, and is expected to be signed into law, although the reinsurance program it will create won’t take effect until 2020.

If the reinsurance legislation is enacted, the state will have to identify how it will come up with the $11 million in state funds that will be necessary for the program, and then submit a waiver proposal to CMS, seeking federal pass-through funding for the other $15 million, with the program taking effect in 2020. The idea is that premiums would be lower with the reinsurance program (by an estimated 10 percent), which would result in smaller premium subsidies, since the subsidies wouldn’t have to be as large in order to get after-subsidy premiums down to an affordable level. By using a 1332 waiver, the state can get those savings (instead of having the federal government keep the savings) and use it to fund the reinsurance program. Alaska, Minnesota, and Oregon are already doing this, and it’s having a stabilizing effect on their insurance markets.

Ideally, Rhode Island would have been able to implement a reinsurance program effective in 2019, but the legislation to authorize the program didn’t pass until late June (the state’s portion of the reinsurance program funding still has to be secured with additional legislation in the 2019 session), and the waiver approval process with CSM, including the public comment periods, is typically at least a few months. Rates have to be finalized for 2019 this summer, so the timeframe is too tight for 2019. Instead, the plan is that insurers would base their rate filings for 2020 (submitted in the spring of 2019) on having the reinsurance program in place. That’s clarified in the text of S2934, which specifies that the reinsurance program would take effect for the 2020 plan year.

Lawmakers also introduced legislation to bring short-term health insurance under the umbrella of “health insurance coverage” (S2931). The measure passed the Senate in early June, but had not yet passed the House by late June (the legislative session ends June 30 in Rhode Island). Under the legislation, the other state regulations that apply to individual market coverage would also apply to short-term plans (this includes guaranteed issue coverage and guaranteed renewability).

It’s notable that Rhode Island does already regulate short-term plans much more than other states, and requires them to cover pre-existing conditions. As a result, there are no short-term plans for sale in Rhode Island. S2931 would take effect immediately if enacted, but from a practical standpoint, it wouldn’t change anything. However, it would likely prevent short-term insurance from becoming available in Rhode Island in the future, even after the Trump Administration finalizes plans to expand access to short-term coverage.

33k enrolled for 2018

In April 2017, HHS announced that open enrollment for 2018 coverage would be half as long as originally scheduled, running from November 1, 2017, to December 15, 2017. They noted in the regulation that state-run exchanges would have flexibility to add special enrollment periods to effectively lengthen open enrollment, as they might not otherwise be able to prepare for the new enrollment schedule on such short notice.

HealthSource RI used their flexibility on this issue, and allowed residents until the end of December 2017 to enroll in a plan for 2018. They also granted January 1 effective dates for anyone who enrolled by December 31. So not only did they extending open enrollment, they also extended the normal deadline for getting a first of the following month effective date (which is usually the 23rd of the month in Rhode Island — unlike most of the country, where it’s the 15th).

By December 31, enrollment in private plans through Health Source RI had reached 33,021. But at that point, the exchange noted that people who had begun the enrollment process by December 31 but had not completed it, would be given until January 23 to finish enrolling. So the final enrollment total was still in flux at that point. Health Source RI later confirmed that the special enrollment period for people who began the enrollment process by December 31 had been extended until January 31, “depending on the circumstances.” So there was ample time for people to complete their applications, as long as they started the process by the end of December. Final enrollment data is expected to be available by mid-February.

For perspective, Health Source RI had reported in February 2017 that 29,420 had enrolled during open enrollment (Health Source RI removes people from the enrollment tally if they don’t pay their initial premiums by the due date). So 2018 enrollment was well above 2017’s enrollment, even before adding people who would finish up the enrollment process after the deadline (note that people will also be removed from the 2018 enrollment tally in January if they don’t pay their initial premiums). Enrollment for 2018 did not quite reach 2016’s high, however, when 34,670 people enrolled.

Approved 2018 premiums slightly lower than proposed, but silver plan rates increased another 18% due to CSR defunding

June 16, 2017 was the rate and form filing deadline for 2018 individual market health plans in Rhode Island. On July 6, the Rhode Island Insurance Commissioner publicized the rate change proposals that the two individual market insurers had proposed. Both insurers offered plans on HealthSource RI in 2017, and both continue to do so in 2018.

In August, the Rhode Island Health Insurance Commissioner announced that the rate review process was complete, and that the overall average approved rate was slightly lower than proposed. The following average rate increases were approved for 2018:

  • Blue Cross Blue Shield of Rhode Island: 12.1 percent increase (BCBSRI had proposed a 13.9 percent average increase)
  • Neighborhood Health Plan of Rhode Island: 5 percent increase (approved as requested)
  • But the silver plan rates for both insurers ultimately ended up being higher than initially approved, due to the Trump Administration’s decision to cut off funding for cost-sharing reductions (CSR). For both insurers, the premiums for silver on-exchange plans increased by an average of an additional 18 percent.

Neighborhood had a slight majority of the market share (54 percent) in HealthSource RI in 2017. According to Neighborhood’s President and CEO, Peter Marino, Neighborhood’s proposed rates would mean that “every [Neighborhood] option is the most affordable one in its category,” in 2018.

For both insurers, however, the proposed and approved rates were based on an assumption that cost-sharing reduction (CSR) funding would continue. And the Trump Administration announced on October 12 that CSR funding would end immediately. About 16,000 people in Rhode Island — a little more than half of the total exchange enrollees — received CSR in 2017. Eligible enrollees still receive CSR benefits in 2018, but the cost has been added to silver plan premiums, rather than being reimbursed by the federal government. The majority of the extra cost is still actually being paid by the federal government in the form of larger premium subsidies, but silver plan enrollees who don’t get premium subsidies needed to carefully comparison shop during open enrollment to make sure they picked the plan that would provide the best value for 2018.

Rhode Island insurance regulators had asked both insurers to file back-up rates that could be used if CSR funding was eliminated. The Pittsburg Post-Gazette reports that BCBSRI opted to increase their silver plan premiums by about 30 percent, instead of 12 percent, after funding for CSR was eliminated. And the Rhode Island Office of the Health Insurance Commissioner explained that adding the cost of CSR would end up increasing Neighborhood’s silver plan premiums by an additional 18 percent (they noted, however, that this was net of some other changes that Neighborhood made simultaneously, including claims experience based on updated data, and a revised risk adjustment payout assumption which reduced the rates).

Health Source RI confirmed that there would be a separate set of off-exchange-only silver plans that wouldn’t have the cost of CSR added to their premiums, and the cost of CSR was not added to other metal levels.

The RI Office of the Insurance Commissioner noted that the new off-exchange-only silver plans were added specifically to protect anyone who wanted to buy a silver plan but who doesn’t receive premium subsidies. For silver plan enrollees who receive premium subsidies, the subsidies are larger in 2018 to offset the cost of CSR. But silver plan enrollees who don’t get premium subsidies might be better served by a plan at another metal level in 2018, or by an off-exchange-only silver plan.

The higher premiums on silver plans will have to cover the amount that it costs the insurers to provide plans that include CSRs — and that amounted to $18 million in 2016 in Rhode Island (even though CSR funding has been cut, insurers still have to provide CSR coverage to eligible enrollees, so the cost has to be passed along in the form of higher premiums). Rhode Island’s Attorney General is one of nearly 20 across the country who sued the Trump Administration over the decision to cut off CSR funding.

Benchmark rates in Providence would have been lower in 2018 than they were in 2014, but CSR defunding likely changed that

Since 2014, Kaiser Family Foundation has been tracking average benchmark premiums for a 40-year-old non-smoker in various metropolitan areas around the country (the benchmark plan is the second-lowest-cost silver plan in each area; it can be a different plan from one year to the next, and premium subsidies are based on keeping the cost of the benchmark plan at an affordable level). A Compilation of the data from 2014 through 2018 (based on proposed rates for 2018) is available here, in Table 2.

The Providence, Rhode Island area is striking: it’s one of only two places where the average benchmark premium was proposed to be lower in 2018 than it was in 2014 (the other is Indianapolis, where the average proposed benchmark premium in 2018 was slightly lower than 2014’s rate). And while Providence’s average benchmark premiums were roughly in the middle of the range in 2014, they were among the lowest of all the measured cities by 2018.

As noted above, however, silver plan rates increased sharply for 2018, due to the Trump Administration’s decision to cut off CSR funding. The benchmark plan is the second-lowest-cost silver plan, so the larger-than-expected rate hike could end up pushing the benchmark premium much higher for 2018 than insurers had initially proposed. But without the elimination of CSR funding, Rhode Island’s market was showing significant stability in terms of premiums.

A large enrollment pool is generally considered one of the cornerstones of a stable market, yet despite having only about 29,000 enrollees (the seventh-lowest enrollment in the country), Rhode Island’s exchange has been remarkably stable. Not only are the benchmark premiums lower than they were in 2014, the overall rate increase has been in the single digits each year, and there was actually an overall rate decrease for 2017.

There are a variety of reasons for this. Health Source RI’s Kyrie Perry explains that Rhode Island fully embraced the ACA, but also had previously implemented some of the same reforms that were part of the ACA. Perry noted that the state’s insurers are local, and have a long history in Rhode Island and strong connections with the health care providers

HealthSource RI is an active purchaser exchange, so the exchange takes an active role in determining which plans will be made available to consumers. And state regulators have a robust rate review process, working closely with insurers to set rates that are adequate but also competitive.

It’s noteworthy that the Providence area didn’t start out with the lowest benchmark premiums; rates were fairly average, but quite a bit higher than some states in 2014. This might also play a role in the stability of the state’s rates over the last five years. Setting 2014 rates was admittedly a shot in the dark, as insurers didn’t have any claims history for the new population they were going to be covering. In hindsight, we know that a lot of insurers set rates in 2014 that were too low to cover claims expenses, and they had to spend the next few years raising premiums to get to “right size” rates. That hasn’t been the case in Rhode Island though.

Legislation to make pregnancy a qualifying event did not get a vote in 2017

In 2016, New York became the first state to make pregnancy a qualifying event that allows a woman to enroll in a health plan outside of open enrollment. HHS declined to do the same on a federal level, and none of the other state-run exchanges have done so either.

But in 2017, five Democratic state senators in Rhode Island introduced S.201, which would allow a pregnant woman to enroll in a plan through Health Source RI at any time after the commencement of her pregnancy, with coverage effective immediately. However, S.201 did not advance to a vote during the 2017 session, which ended in June —the bill was still in committee at that point. Legislation in Rhode Island does carry over to the next session, so S.201 could be taken up again in 2018.

Rhode Island is one of only six states in 2017 with a Democratic state government trifecta. Legislation to expand access to special enrollment periods for pregnant women would almost certainly die in a state with Republican leadership, but Rhode Island has a Democratic majority in the House and Senate, and a Democratic Governor. Despite that, the legislation did not advance in 2017.

The Trump Administration and the Rhode Island exchange

HHS reported that 68,000 people gained health insurance coverage from 2010 to 2015 in Rhode Island, as a result of the ACA. And that number has continued to grow since 2015.

As of January 2017, about 70,000 people had gained coverage as a result of Rhode Island’s Medicaid expansion, which is funded almost entirely by the federal government under the ACA. And also as of January 2017, there were 23,400 people receiving premium subsidies through the exchange (the majority of those folks were also receiving cost-sharing subsidies). The majority of the people covered under expanded Medicaid would become uninsured if the expansion were to be eliminated, and many of the people with subsidized private insurance would find their premiums unaffordable if the ACA’s subsidies were to be eliminated (note that either of those would require legislative action, and the GOP’s efforts to repeal the ACA stalled in July when the Senate failed to pass any of the measures they had proposed).

GOP lawmakers have expressed an interest in returning to high-risk pools, increasing emphasis on HSAs, eliminating the ACA’s various mandates, penalties, and benefit requirements, and selling health insurance across state lines. Those are all ideas that have been floating around for years, and some of them (most notably, high-risk pools) were tried in the past. In order to sell health insurance across state lines, states would have to surrender their right to regulate their own markets. A former Rhode Island Insurance Commissioner explains why selling insurance across state lines didn’t work out when the state tried it in the past.

In January 2017, Sherman said that Health Source RI “look[s] forward to working with the feds around maintaining levels of coverage” in Rhode Island if the ACA is repealed on the federal level. House Republicans passed their repeal bill, the American Health Care Act (AHCA) in early May, but Senate Republicans have not passed their version of the bill, which means that the ACA remains unchanged for now.

2017 enrollment: 15 percent lower than 2016

By the end of December, 29,892 people had enrolled in private plans through Health Source RI, including 3,322 who were new to the exchange for 2017. More than three-quarters of the enrollees were receiving premium subsidies (tax-credits) to offset the cost of their coverage.

Health Source RI removes enrollees from the tally if they don’t pay their initial premium by the due date (and their plans thus do not take effect). In early February 2017, they reported that the total number of plan selections made during open enrollment was 29,420. The decline since December (despite an additional month of open enrollment) reflected the fact that the total had already been adjusted downwards to account for people who hadn’t paid their initial premiums by the due date.

For perspective, there were 34,670 people enrolled in coverage through Health Source RI at the end of the 2016 open enrollment period. Although state-run exchanges saw an overall average increase in enrollment for 2017 (while HealthCare.gov saw an overall average decrease), Rhode Island’s enrollment is 15 percent lower in 2017, which is by far the largest drop-off among the state-run exchanges where enrollment declined year-over-year.

Health Source RI explained the reasons for the decline, including ongoing technical difficulties and the fact that UnitedHealthcare exited the exchange (that was the case in 31 states, although most of them use HealthCare.gov, where enrollees were automatically re-enrolled in a plan from another carrier for 2017 if their old carrier was exiting the market and the member didn’t return to the exchange to pick a new plan; Health Source RI didn’t have that automatic re-enrollment feature in place for people whose carriers exited the exchange).

The exchange also reported that they had 625 small businesses enrolled in coverage as of December 2016, with a total of 4,971 people (employees and family members) covered under those small business plans. Small businesses can enroll in plans throughout the year.

Average rate decrease of 0.6 percent for 2017

There were three carriers that offered plans through HealthSource RI in 2016, but UnitedHealthcare exited the state’s individual market at the end of 2016 (as was the case in most of the states where United offered plans in 2016).

The two remaining carriers—Blue Cross Blue Shield of Rhode Island and Neighborhood Health Plan of Rhode Island—are both offering plans in 2017. They had the bulk of the market share in 2016, as United only garnered four percent of the exchange’s 2016 enrollments. BCBS of RI had 47 percent of the exchange’s enrollees, and Neighborhood Health Plan had 49 percent.

For 2017, Blue Cross Blue Shield of RI requested an average rate increase of 9 percent (ranging from 3.6 to 11.7 percent), and Neighborhood Health Plan of RI requested an average rate decrease of 5 percent (ranging from a decrease of 8.5 percent to a decrease of 0.4 percent). Proposals to decrease rates for 2017 were very few and far between across the country, so Rhode Island stood out in that regard.

In the small group (SHOP) market, BCBS of RI proposed an average rate increase of 8 percent, while Neighborhood Health Plan proposed a rate decrease of 2.2 percent.

In August 2016, the Rhode Island Office of the Health Insurance Commissioner announced final approved rate changes for 2017. State regulators ultimately approved rates that were lower than the carriers had proposed. In the individual market, the approved weighted average rate changes for 2017 were:

  • Blue Cross Blue Shield of Rhode Island: 5.9 percent increase
  • Neighborhood Health Plan of Rhode Island: 5.9 percent decrease

For the entire individual market, Rhode Island’s final weighted average rate increase for 2017 was just 1.3 percent, which is dramatically lower than the rest of the country. In the small group market, regulators also approved lower rates than the carriers had proposed.

But if we only focus on the exchange (ie, not including the off-exchange market), Health Source RI officials announced in late October that average premiums would be 0.6 percent lower in 2017 than they were in 2016 — a dramatically different story than the rest of the country was facing for 2017.

Average rates could have been even lower, if Health Source RI had approved two additional plans proposed by Neighborhood Health Plan. The plans were approved by the state insurance commissioner, but not by the exchange. The exchange was concerned that the additional low-cost plans would have reduced the subsidies available to all exchange enrollees, making coverage less affordable if people chose plans other than the new low-cost options.

This tactic was heralded by some as the exchange taking active steps to keep coverage as affordable as possible for everyone, but was also castigated as limiting competition and preventing anyone from having access to the lowest-cost plans.

2016 effectuated enrollment grew in 1st quarter

Open enrollment for 2016 ended on January 31. At that point, HealthSource RI had 34,670 people enrolled in private plans. Starting February 1, enrollment was limited to people who experience a qualifying event (although Native Americans can enroll year-round, and Medicaid enrollment is also year-round). But by February 20, enrollment had grown to 36,004. 94 percent of them had paid their initial premium by February 23, and HealthSource RI expected that percentage to rise as more people paid up by the end of the day on February 23 (the deadline to pay for coverage with a March 1 effective date).

For comparison, 31,513 people signed up for coverage in Rhode Island during the 2015 open enrollment period, so enrollment grew by about 10 percent from 2015 to 2016.

By March 31, effectuated enrollment through HealthSource RI stood at 35,583. This is a deviation from the norm in most states, where the effectuated enrollment tally as of March 31 tends to be at least 10 percent lower than the enrollment total at the end of open enrollment (due to the fact that some enrollees never pay their initial premiums, and others opt to cancel their coverage during the plan year). 84.4 percent of the enrollees are receiving premium subsidies, which average $250 per month in Rhode Island.

HealthSource RI’s enrollment success comes despite the fact that their advertising budget was slashed by 80 percent compared with last year.

Of the people who had enrolled in plans for 2016 by February 20, About 76 percent already had coverage through the exchange in 2015, but 7,358 were new enrollees (some had coverage through the exchange previously but it was no longer in-force as of the end of 2015). 70 percent of the people who had enrolled by February 20 picked silver plans; 19 percent picked bronze, plans, and 11 percent picked gold.

As of February 20, there were 564 small businesses with coverage through the Health Source RI SHOP exchange. A total of 4,111 employees had coverage under the plans. This was up from 503 small businesses enrolled through the SHOP exchange in June 2015, and 479 in February 2015. Small businesses can enroll in coverage year-round.

Open enrollment for 2017 coverage will begin on November 1, 2016, and will continue until January 31, 2017.

Auto-renewal became available for 2016

HealthSource RI allowed enrollees the option to have their coverage automatically renewed for 2016, which was a change from their protocol the year before. Exchange officials determined that the benefits of auto-renewal (ie, policies aren’t terminated when insureds don’t return to the exchange during open enrollment) outweighed the benefits of requiring active renewals (ie, enrollees are more likely to be enrolled in the plan that best suits them from one year to the next, as active renewal is more likely to result in a new plan selection).

For 2015 coverage, Health Source RI enrollees who had a 2014 plan needed to renew it or switch to a new plan by December 31, 2014 in order to have coverage in place on January 1, 2015. Plans that were not actively renewed were terminated on December 31. By February 23, 2015, 83 percent of HealthSource RI’s 2014 enrollees had returned to the exchange to renew their coverage for 2015. Of those, 62 percent had switched to a new plan. But the people who didn’t return to the exchange to renew their coverage for 2015 found themselves uninsured as of January 2015.

Other than Rhode Island, the only other states that didn’t allow auto-renewal for 2015 were the ones where the enrollment technology was changing so significantly that auto-renewal simply wasn’t possible (for example, Oregon and Nevada, where the state-run enrollment software was scrapped in favor of Healthcare.gov).

In states using Healthcare.gov, between 35 and 40 percent of 2014 enrollees returned to the exchange to actively select their coverage for 2015, while the rest were auto-renewed (for 2016, more consumers nationwide actively renewed their coverage rather than relying on auto-renewal). Getting consumers to return to the exchange and shop around each year is an integral part of keeping competition in the exchanges strong, so Rhode Island was obviously much more successful in that aspect than most exchanges in 2015. But ultimately, the state determined that it would be in consumers’ best interest to make sure that coverage didn’t lapse for people who didn’t return to the exchange to shop around for 2016.

Abortion controversy

Rhode Island’s exchange is one of only five in the country that did not offer any plans in 2014 that specifically excluded abortion coverage. This caused some controversy with a local Catholic Bishop, and in neighboring Connecticut, the exchange subsequently started offering four plans without abortion coverage. HealthSource RI’s former director Christine Ferguson said in November 2014 that the exchange was working with the federal government to provide a multi-state plan without abortion coverage.

In January 2015, a lawsuit was brought against HealthSource RI to resolve the issue, because by law, exchanges must have at least one plan available without elective abortion coverage. A bronze plan without abortion coverage did become available through HealthSource RI in January 2015, but plans without abortion coverage were not available for the other three metal levels.

However, the FY 2016 budget took effect July 1, 2015, and it required carriers in HealthSource RI to offer at least one plan at every metal level that doesn’t include abortion coverage starting in 2016. The new RI provision went further than the ACA’s requirement, and has come under fire from abortion rights advocates who say that it reduces women’s access to abortion.

As a result of the new requirement, health insurers had to design new plans or alter benefits on existing plans to comply with the new regulations in 2016. More than a quarter of HealthSource RI’s private plan enrollees were slated to be automatically renewed onto plans that didn’t include abortion coverage in 2016, unless they took action to switch to a new plan by December 23, 2015.

The abortion coverage controversy continues to be a point of contention in 2018, with Governor Gina Raimondo facing criticism from Democratic primary challenger, Matt Brown, over the fact that Rhode Island’s abortion coverage restrictions are more conservative than required under federal law. But it’s worth noting that two-thirds of the plans available in 2018 in the individual market through Health Source RI do include abortion coverage. In contrast, there are 31 states where none of the exchange plans include abortion coverage at all — in many cases, because the state has prohibited abortion coverage altogether.

Additional federal funding for computer system

Rhode Island has been working to overhaul its quarter-century-old InRhodes eligibility system used by the state’s Executive Office of Health and Human Services. The system verifies eligibility for Medicaid, premium subsidies through HealthSource RI, and other public assistance programs. In October 2015, Rhode Island officials announced that the state received an additional $112.8 million in federal funds to continue upgrading the system, bringing the total cost of the update to $380 million.

The overhaul began in 2013 and was supposed to be completed in 2015, but it’s now scheduled to continue into 2016. The new grant stipulates that Rhode Island contribute $11.9 million to the project, in addition to the $112.8 million that the federal government is paying. As a result, the state legislature will have to modify the current 2016 fiscal year budget as well as the spending plan for the coming year.

Of the $380 million being spent on the new computer system, about $80 million is being paid the state; the other $300 million is federal funding. But state officials estimate that by 2018, the new computer system will have paid for itself; it will be more efficient in terms of distributing benefits, and is also expected to curb fraud and misuse. The first phase of the system was rolled out in 2013 in time for the first ACA open enrollment period; the system was used to determine tax credit eligibility through HealthSource RI as well as Medicaid eligibility. But it has continued to be enhanced and upgraded over the last two years.

Budget cuts hamper customer service

Leftover federal funding for HealthSource RI is being used up in the current fiscal year, and the budget next year is expected to be less than half as much as the already-trimmed budget in the 2016 fiscal year ($12.3 million for the 2017 fiscal year that begins in July 2016, as opposed to $30.9 million for the 2016 fiscal year). As a result, the exchange is struggling to provide the level of customer service they were able to offer during the first two open enrollment periods.

The exchange’s call center had 150 employees during the 2015 open enrollment period, and maintained about 125 call center reps after open enrollment ended. But in August 2015, call center staffing was reduced to 42 people, call center hours were cut back, and weekend hours at the call center were eliminated. The exchange has also had to to cut its advertising budget from $2 million to $400,000.

During the 2015 open enrollment period, HealthSource RI operated two walk-in enrollment centers – one in Warwick and one in Providence. Residents were able to get in-person enrollment help at either one. But as a result of budget cuts and declining foot traffic, the HealthSource RI walk-in center at 70 Royal Little Drive in Providence stopped offering in-person enrollment assistance in August 2015, and the Warwick walk-in center was not operational during the 2016 open enrollment (note that the contact center moved to 401 Wampanoag Trail in East Providence as of April 2016).

About 80 enrollment assisters who had been working at the Providence walk-in center were reassigned to other non-exchange positions in the state, and the walk-in center began functioning as a place where people can pay their premiums or drop off documentation. Rhode Island residents needing help with enrollment are instead being referred to navigators and brokers around the state. As a result of the reduced call center staffing, Rhode Island residents encountered longer hold times at HealthSource RI in the fall of 2015.

But things were somewhat improved for open enrollment. HealthSource RI added 80 additional call center staffers to work during open enrollment, and also began receiving phone assistance from the state’s Health and Human Services Office, since the majority of the calls that HealthSource RI fields are from Medicaid-eligible residents. The exchange has also been working to enhance the self-service features on their website in order to reduce call volume.

2016 rates: weighted average increase less than 6.5 percent

Three carriers offer individual plans in HealthSource RI. Rates were finalized by the insurance commissioner in late August, although there was some uncertainty for the next month due to a lawsuit filed by Rhode Island’s Attorney General in an effort to lower the rates that were approved for Blue Cross Blue Shield of Rhode Island.

United Healthcare of New England requested an average rate increase of about 11 percent for their Compass individual plans. The state approved a base rate increase of 4.1 percent (weighted average increase of 2.7 percent).

Neighborhood Health Plan of RI proposed increasing premiums by an average of 8.6 percent for 2015. They were approved for a base rate increase of 8 percent (weighted average increase of 5.8 percent).

Blue Cross and Blue Shield of Rhode Island initially proposed an 18 percent increase (weighted average of 11 percent) for their individual market plans in RI, but in early July, they revised their request to a 14 percent rate hike (weighted average rate increase of just 7 percent). The lower rate proposal was partially due to the fact that in the FY 2016 budget (see below), the HealthSource RI premium fee is lower than initially proposed.

Rhode Island Insurance Commissioner Kathleen Hittner reduced BCBS’ proposed rate hike from 14 percent down to 10 percent, which her office deemed a good compromise between keeping coverage affordable and maintaining insurer solvency. But Attorney General Peter Kilmartin announced on August 31 that he was taking Hittner to court over the rates, alleging that her office didn’t do enough to further reduce the rates before approving them. The BCBSRI rates approved by Hittner were upheld at the end of September, when a Superior Court Judge ruled in favor of Hittner.

At ACAsignups, Charles Gaba calculated a weighted average rate hike of just under 6.5 percent in Rhode Island (that’s including off-exchange enrollments – it’s about 6.28 percent if we only include exchange enrollments), assuming that BCBS ends up with the 7 percent weighted average increase they proposed in July. But their approved weighted average rate hike is likely lower than 7 percent (despite the fact that the AG’s lawsuit was unsuccessful), since their approved base rate hike was smaller than proposed (10 percent versus 14 percent).

Kaiser Family Foundation analyzed benchmark (second lowest-cost Silver) plan premiums in major metropolitan areas across the US to see how much they were changing for 2016. The benchmark plan is important because it’s what premium subsidies are based upon. It can be a different plan from one year to the next, so the change in the benchmark premium doesn’t really tell current policy-holders how much their own premium will change in the coming year. But in Providence RI, the benchmark plan only increased in price by 1.2 percent for 2016, as opposed to a 10.1 percent increase for benchmark plans in metropolitan areas nationwide (the average across states that use Healthcare.gov is 7.5 percent).

Competition drives changes in market share

In 2014, Blue Cross Blue Shield garnered 97 percent of the exchange enrollments, while Neighborhood Health Plan of RI picked up just 3 percent (United joined the exchange in 2015). But Neighborhood Health Plan decreased their rates for 2015, and their market share increased considerably; during the 2015 open enrollment period, Blue Cross Blue Shield and Neighborhood Health Plans each got just under half of the exchange enrollees, while United snagged about 3 percent of the enrollees.

The dramatic shift in market share was no doubt aided by the fact that Rhode Island required active renewals (as opposed to passive auto-renewals) for all policies during the 2015 open enrollment period.

Exchange director appointed to run RI Medicaid

At the end of October, 2015, Governor Raimondo appointed HealthSource RI director, Anya Rader Wallack, to lead the state’s Medicaid program. Rader Wallack began her new role at Medicaid in November, and Zach Sherman, her HealthSource RI chief of staff, served as acting director until he was named permanent director in March 2016.

Rader Wallack joined HealthSource RI at the end of 2014. Raimondo, who was the Governor-elect at that time, appointed Anya Rader Wallack to take over the leadership role at HealthSource RI, replacing Christine Ferguson who headed the exchange for two years. Rader Wallack came from Vermont, where she was very instrumental in the push for single payer healthcare in Vermont (that effort was abandoned in December 2014).

uninsured rate drops by nearly 80%

According to Gallup, 13.3 percent of Rhode Island residents were uninsured in 2013. By June 2015, that number had fallen nearly 80 percent, to just 2.7 percent – the lowest in the nation. A study conducted by HealthSource RI also indicated a sharp drop in the uninsured rate, but not as significant ans the Gallup survey. HealthSource RI data indicates that the uninsured rate was 11 percent in 2012, and fell to 5 percent by 2015.

According to Kaiser Family Foundation data, there are still 55,000 uninsured residents in Rhode Island. Nearly half of them are eligible for Medicaid, and 23 percent are eligible for premium subsidies through the exchange. HealthSource RI is working to target as many of the remaining uninsured as possible during the 2016 open enrollment period.

2016 fees assessed market-wide

On June 30, 2015, RI Governor Gina Raimondo signed the state’s FY 2016 budget (beginning July 1), which included a provision to fund HealthSource RI. Lawmakers had considered the possibility of switching to Healthcare.gov instead, due to the costs involved with running a state-based exchange and the relatively small population in RI (more details below). But for now, the Rhode Island will continue to have a state-run exchange.

The new budget calls for a 3.5 percent assessment on plans sold through HealthSource RI, the same as the fee assessed by Healthcare.gov in states that use the federally-run marketplace. But in Rhode Island, the fee is then spread across all individual and small group plans sold in RI, including those sold outside the exchange. That results in an average actual assessment of 2.86 percent for individuals, and 0.59 percent for small groups. Raimondo had initially proposed a higher fee schedule, but the final version of the budget sets the assessment at 3.5 percent.

The state is also providing HealthSource RI with $2.6 million in funding as the exchange transitions away from federal funds to a purely state-based funding approach (federal funds are no longer available to support state-based exchanges).

Enrollment numbers for 2015

As of February 23, 2015, 31,513 people had selected private plans through HealthSource RI. Of that total, 10,301 were new to the exchange for 2015, and 21,212 had coverage in 2014. The 2015 enrollment put the exchange at about 85 percent of the target enrollment projected by HHS.

Of the people who had enrolled by February 23, 30,001 had already paid for their coverage. Although the rest had not yet paid, their payments were not past due. HealthSource RI is the only exchange where enrollees who do not pay their first premium by the due date are quickly purged from the total enrollee count. By the end of March, 30,416 people had in-force private coverage through HealthSource RI. This attrition is to be expected, and it takes into account people who enrolled in February but didn’t pay their first premium, as well as people who simply opted to cancel their coverage before the end of March.

Although nationwide, there was a further decline in effectuated enrollments during the second quarter of 2015, that was not the case in Rhode Island. By the end of June, effectuated enrollments through HealthSource RI had climbed to 32,451.

Because HealthSource RI quickly removes enrollees who don’t effectuate their coverage (pay the first premium by the due date), their reported enrollment total is always as close as possible to the actual number of people who have in-force coverage through the exchange. The ACA allows for a 90 day payment grace period for exchange enrollees who are receiving premium subsidies, but only if they’ve already paid at least one monthly premium; there’s no grace period for the first premium, and when the first premium isn’t paid by the due date, the policy never goes into effect.

Of the 30,416 people who had in-force private coverage through HealthSource RI at the end of March, 85 percent were receiving premium subsidies, and 56 percent were receiving cost-sharing subsidies. In addition to the private plan enrollments, 65,396 people had enrolled in Medicaid through the exchange by February 21.

By June 2015, there were 503 small businesses enrolled through the SHOP exchange at HealthSource RI (up from 479 on February 23). Those plans cover more than 3,500 employees and dependents. SHOP enrollment continues year-round, as does Medicaid enrollment.

Funding issues

RI lawmakers have long debated how to fund HealthSource RI’s annual budget, starting in fiscal year 2016 when federal funds are used up. In some states, a per-member fee is being assessed, but RI’s small population (and correspondingly small enrollment total) would result in very high per-member fees if the exchanged were to rely solely on that method of funding.

In December 2015, Rhode Island was one of five states to receive additional exchange funding from the federal government; HealthSource RI got $3 million as a final establishment grant. But the exchange will not be able to rely on further federal funding, as all of the exchanges had to be financially self-sustaining by January 1, 2015.

The total HealthSource RI budget for the 2016 fiscal year that began July 1, 2015 was projected to be $27.68 million. And while the federal government funded the exchange in the first two fiscal years, remaining federal funding was expected to account for only a little over $9 million in the 2016 fiscal year. That left the exchange asking the state to help with $14.5 million in funding, and there was much debate in early 2015 over whether that funding request should be fulfilled.

In a letter to outgoing Governor Chafee that was sent with the exchange’s funding request, HealthSource RI’s then-director Christine Ferguson pointed out that the exchange used up considerable amounts of its initial federal funding helping the state to fix enrollment systems that are used not just for Medicaid, but also for other state-run assistance programs.

Rhode Island Governor Raimondo has said she wants to keep HealthSource RI as a state-run exchange, although she acknowledges that funding is an issue. Anya Rader Wallack, who headed the exchange for most of 2015, wanted to continue the state-run exchange model, but noted that in a small state, the exchange has to be “right-sized” to fit the state and its budget. The issue was debated by the largely Democratic legislature in the 2015 session, and while lawmakers ultimately decided to keep the exchange in the 2016 budget, some lawmakers favored turning the exchange over to the federal government instead.

Future switch to Healthcare.gov?

As a result of the funding issues facing HealthSource RI, lawmakers have considered other options, including the possibility of switching to the federally facilitated marketplace (FFM). A bipartisan bill (H7817) introduced in the Rhode Island House of Representatives in March 2014 would have eliminated the state-run exchange at the end of 2014 and switched operations over to Healthcare.gov instead.

That bill was held for further study by the legislative committee in May 2014, and was not taken up again in 2015. But at the start of the 2015 legislative session, a similar bill (H5329) was introduced. It was sent to the House Finance committee on February 5, and called for turning the exchange operations over to Healthcare.gov as of the end of December 2015. Ultimately, it did not advance beyond the Finance Committee.

If it had passed, H5329 would have made RI the first state to give up a successful exchange and switch to an FFM (other states – Oregon, Nevada, and Hawaii – have made the switch, but they had floundering state-run exchanges; Kentucky is giving up a successful state-run exchange to switch to Healthcare.gov for 2017, but that’s due largely to political opposition to Obamacare on the part of the state’s new governor). The economies of scale that go along with relying on the FFM are significant: during the 2014 open enrollment period, the average cost-per-enrollee in the FFM was $647, while in RI it was $1,615 (and by the end of June, 2016, total spending for HealthSource RI—including mostly federal funds—had reached $156 million. Enrollment stood at about 35,400 people, for a total cost of about $4,400 per enrollee).

Governor Lincoln Chafee (who was first a Republican, then an Independent, then a Democrat), did not run for re-election in 2014, and was replaced in January 2015 by Governor Gina Raimondo, also a Democrat. Prior to the election, Raimondo had said that her plan would be to keep the exchange but with a lowered budget (this is in opposition to the other candidates who had said they would either support switching to HealthCare.gov or working with Massachusetts to form a regional exchange).

Although the legislation calling for a switch to Healthcare.gov has not been successful, the issue remains somewhat contentious in Rhode Island. Betsy Stubblefield Loucks, director of Health RIght, made a good case in early 2015 for why the exchange should remain state-run, including one very important point that transcended the budget concerns: at that point, we didn’t yet know how the Supreme Court would rule on the King v. Burwell case. If they had ruled that subsidies are not allowed in the federally-run exchanges, states like Rhode Island that established their own exchanges would have been the only ones where subsidies remained available. But now that the Court has upheld the legality of subsidies in the FFM, that particular hurdle is no longer an obstacle if the state ultimately decides to switch to Healthcare.gov.

Or create a new state regulatory agency?

Another 2014 bill, known as the HealthRIght Bill (H7819) would have created a Rhode Island Healthcare Authority that would consolidate all of the insurance regulatory function that is currently spread across several agencies. The bill would have also required that all insurance in Rhode Island be purchased via HealthSource RI (currently, Vermont and DC have similar regulations, but every other state allows for off-exchange plans). H7819 was considered by a House Committee in June 2014, and was held for further study.

H7819 was heralded by some as a progressive step, and by others as a government boondoggle. Either way, it would put much more control in the hands of state government than H7817, which would have eliminated HealthSource RI and turned the exchange over to HHS.

New plans, benchmark prices lower in 2015

The high-performing HealthSource RI exchange offered 20 plans from three carriers in 2015, up from two in 2014. And there wasn’t be much in the way of rate shock for existing exchange enrollees: Blue Cross Blue Shield of Rhode Island (which garnered 97 percent of the the exchange’s enrollees during the 2014 open enrollment period) raised its base rate for individual plans by just 4.5 percent (although BCBS of RI had requested a rate hike of 8.9 percent, the final approved rate increase was just 4.5 percent).

Neighborhood Health Plan of Rhode Island (which enrolled the remaining 3 percent of the people who signed up during the first open enrollment) decreased its base rate by 7.3 percent. Between the two carriers, the weighted average rate increase was about 4.3 percent.

United Healthcare joined the exchange in 2015, which further helped to increase competition and hold down rates (United participated in the RI SHOP exchange in 2014, offering small business plans, but began offering both small business and individual plans for 2015; they will exit the state’s individual market at the end of 2016).

And for people who had the benchmark plan (second lowest-cost silver plan) in 2014 and were willing to switch to the new benchmark plan in 2015, premiums were an average of nearly 11 percent lower in 2015, according to an analysis by the NY Times and confirmed by another analysis done by the Kaiser Family Foundation.

Of the 2014 enrollees in HealthSource RI who returned to the exchange to shop for coverage for 2015, 60 percent opted to switch to a new plan, indicating that competition is alive and well in the exchange.

The modest overall rate increases were especially good news given that 2014 rates in Rhode Island were a little higher than the national average. In RI, the lowest cost bronze plan averages $264/month in 2014, versus a national average of $249.

Health Source RI 2014 enrollment

As of August 2014, Health Source RI had a total of 26,686 enrollments in private plans, and premiums had been paid for 25,892 of those plans – a 97 percent payment rate. Another 70,243 people had enrolled in the expanded Medicaid program through Health Source RI by mid-April, but Medicaid enrollment continues year-round, so it’s likely that number has continued to climb.

By October 4, the total number of people enrolled in private plans was 26,245. Based on the August numbers, it’s likely that this later figure was for paid-up policies, but ACAsignups explains that it’s not entirely clear. Total enrollment remained steady in the fall, and was at about 26,300 as of November 1. This is more than twice as many people as the federal government had projected for RI.

The total private plan enrollment in Rhode Island during the first open enrollment period represented 40.6 percent of the eligible population, which was the third highest percentage in the country (trailing only Vermont and California).

Also as of August 2014, the Rhode Island SHOP exchange had 258 enrolled small businesses with paid-up plans. Those plans were covering a total of 1,821 people (1,091 employees plus their dependents). By November 1, total SHOP enrollment had grown to about 2,400 people (the highest per-capita SHOP enrollment in the nation). Small businesses can enroll in plans anytime during the year.

No grandmothered plans

RI joined several other states in rejecting President Obama’s November 2013 policy cancellation “fix” that would have allowed existing plans to extend into 2014. Insureds in RI who received cancellation notices last fall had to enroll in a new ACA-compliant plan to replace their old coverage.

Health Source RI history

Former Gov. Chafee established the Rhode Island Health Benefits Exchange through an executive order in 2011. The state submitted a blueprint for a state-run exchange to the U.S. Department of Health and Human Services (HHS) and received conditional approval in December 2012. The state exchange was re-branded as Health Source RI in July 2013.

Chafee’s executive order established the exchange with the executive branch of state government and set up a 13-member board of directors. The board receives input from the Expert Advisory Committee (which includes representatives of insurance brokers, insurers and medical providers) and the Rhode Island Healthcare Reform Commission (which includes more than 200 stakeholders).

The Commission was established by Chafee in early 2011 and charged with implementing health care reform in the state. The Commission includes multiple workgroups that study and provide recommendations on various aspects of exchange operations.

According to the state about 126,000 people in Rhode Island were uninsured prior to 2014 — approximately 12 percent of the population. Between policies available on the exchange and through increased Medicaid enrollment, RI hopes to achieve near universal coverage. However, the state has not set a target date for reaching that goal. By late 2015, the uninsured population had dropped to about 55,000 people.

Contact the Rhode Island exchange

Health Source RI
855-840-HSRI (855-840-4774)

More Rhode Island health insurance exchange links

State Exchange Profile: Rhode Island
The Henry J. Kaiser Family Foundation overview of Rhode Island’s
progress toward creating a state health insurance exchange.

Health Care Advocate, Office of the Attorney General
Serves all consumer and health care professionals with health-related problems.
(401) 274-4400

Rhode Island Consumer Assistance Program
Assists people insured by private health plans, Medicaid, or other plans in resolving problems pertaining to their health coverage; assists uninsured residents with access to care.
(401) 462-9520 / insinquiry@dbr.ri.gov

More Rhode Island coverage

Insurance Guide

A guide to health insurance in your state.

Medicaid

Your state’s Medicaid expansion, eligibilty, contacts

Medicare

Insurance for those over 64 (off-site)