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

Eight insurers offering 2019 coverage; Average rate hike was just over 2%, and Oscar expanded its coverage area to include Dallas/Fort Worth and El Paso

Highlights and updates

Texas exchange overview

State legislative efforts to preserve or strengthen provisions of the Affordable Care Act

Texas is among the states that have done the least to preserve the Affordable Care Act’s gains.

Texas uses the federally run exchange at HealthCare.gov, and the state has taken a very hands-off approach with regards to implementing the ACA. Texas has not expanded Medicaid, and is one of just three states that leaves the rate review process for ACA-compliant plans to CMS. (The state does also review filings to make sure they’re compliant with Texas law.)

Texas is also leading a 20-state lawsuit that challenges the legality of the ACA now that the individual mandate penalty will be repealed in 2019. A hearing in that case is scheduled for July 9 in the Fifth Circuit Court of Appeals in New Orleans.

But Texas also has one of the highest exchange enrollments in the country, with 1,087,240 people enrolling in private plans through the Texas exchange during the open enrollment period for 2019 coverage. The state has a very large population, many of whom were uninsured pre-ACA. Only two states — Florida and California — have higher enrollment in their exchanges (not counting Medicaid) than Texas.

Rates increased sharply in 2018, and insurers started adding the cost of cost-sharing reductions to silver plan rates, resulting in particularly large premium subsidies (which are based on the cost of silver plans) in 2018. For 2019, however, the average rate increase was much more modest, at just over 2 percent.

According to US Census Bureau data, Texas had the highest uninsured rate in the country in 2013, at 22.1 percent. And although the state’s 17.3 percent uninsured rate in 2017 was still the highest in the country, a substantial number of Texas residents had obtained health coverage since the ACA was implemented. However, the number of people gaining coverage would be far higher if Texas were to accept federal funding to expand Medicaid under the ACA.

Texas enacts legislation to protect consumers from surprise balance bills

Surprise balance billing is an issue that the federal regulations have not yet adequately addressed, so states have begun tackling it themselves. The situation occurs when a patient uses an out-of-network provider, but not by choice. It can be an emergency situation in which the closest hospital is out-of-network, or it can be a situation in which the patient goes to an in-network facility but is treated by out-of-network providers. This might be an assistant surgeon, anesthesiologist, radiologist, laboratory, durable medical equipment supplier, etc. And while the patient did their due diligence in terms of finding an in-network facility, it can be challenging — or next to impossible — to ensure that every provider who works with the patient will also be in the patient’s insurance network.

With the enactment of SB1264, Texas joins a growing list of states that are addressing the issue of surprise balance billing. And the new Texas legislation, which applies to medical services provided on or after January 1, 2020, is among the most comprehensive in the country, providing solid consumer protections.

The legislation, which passed in the Texas Senate by a vote of 29 to 2 and unanimously in the House, applies to residents with state-regulated plans. It prohibits the out-of-network provider from billing the patient for amounts in excess of the patient’s regular cost-sharing responsibilities (ie, copays, deductible, coinsurance), and instead requires the provider and the patient’s insurance to enter into mediation or arbitration, overseen by state regulations, to come to a payment agreement, without the patient being stuck in the middle of the financial dispute.

The Texas Department of Insurance is tasked with developing the rules related to the mediation and arbitration process. The Department will host a stakeholder meeting in July 2019 to gather input related to this rule-making process.

Texas also enacted SB1037 in 2019, ensures that when surprise balance bills are sent to collections it won’t show up on the person’s credit report. As long as the person had health insurance at the time of the treatment and the bill is for out-of-network emergency care or out-of-network providers who treated the patient at an in-network facility, the unpaid bill won’t affect the person’s credit report.

SB1742, also enacted in 2019, requires health plan provider directories to make it clear whether specialists practicing at in-network facilities are also in-network. In addition, the legislation imposes new rules related to prior authorization, including a readily available list of services that are subject to prior authorization requirements, and information about the insurer’s total volume of prior authorization requirements and denials.

Enrollment in the Texas exchange: 2014 through 2019

2014: Open enrollment for 2014 coverage lasted six months (October 2013 through March 2014), plus an extension at the end that continued into April. Enrollment in the Texas exchange reached 733,757 by April 19, 2014.  As of March 1, private plan enrollment in the Texas exchange had been at just 295,000.  The increase during March and the extension period in the first half of April was the largest of any state in the country.

Total enrollment in Texas was the second-highest of the states where HHS is running the exchange, trailing only Florida. California, which runs its own exchange, also had higher enrollment than Texas. Although enrollment numbers have changed significantly over the years, Texas has consistently had the third-highest enrollment total in the country.

2015: During the open enrollment period for 2015 coverage, 1,205,174 people enrolled in private plans through the Texas exchange.

2016: As was the case in most states that use HealthCare.gov, enrollment peaked in Texas in 2016, with 1,306,208 people enrolling in private plans for 2016 during open enrollment. The Texas Hospital Association mounted a significant marketing campaign to get people enrolled in health insurance through the exchange, and their efforts seemed to pay off. Across all 38 states that used Healthcare.gov, in the final week the 2016 open enrollment period, eight of the ten local areas with the fastest-growing enrollment numbers were in Texas: Corpus Christi, Harlingen, Laredo, El Paso, Odessa-Midland, San Antonio, Abilene-Sweetwater, and Lubbock.

2017: Enrollment began to decline in 2017, with 1,227,290 people buying plans in the Texas exchange during open enrollment. The Trump Administration’s decision to suspend HealthCare.gov’s marketing campaign in the final days of open enrollment likely played a role in the enrollment declines, as did uncertainty about the future of the ACA combined with fairly substantial rate increases (offset by subsidies for those who were subsidy-eligible, but not for those who had to pay full-price for their plans).

2018: Enrollment declined again — by about 8 percent — for 2018, with 1,126,838 people obtaining coverage through the Texas exchange during open enrollment for 2018 coverage. The enrollment drop was similar to the national trend across states that use HealthCare.gov, where average enrollment declined by 5 percent in 2018. The Trump Administration reduced funding for HealthCare.gov’s marketing and enrollment assistance, and premiums in the individual market increased significantly again.

2019: Enrollment dropped for the third year in a row, with 1,087,240 people signing up for private plans through the Texas exchange during open enrollment for 2019 plans. The Trump Administration had again reduced funding for HealthCare.gov’s marketing and enrollment assistance, and had also finalized regulations that expand access to longer short-term health plans (which some healthy individuals use in place of ACA-compliant coverage). In addition, the GOP tax bill that was enacted at the end of 2017 repealed the ACA’s individual mandate penalty as of the start of 2019. All of these factors likely combined to drive enrollment slightly lower than it had been the year before, despite a very small average rate increase for 2019.

Average rate increases for 2019 were small, on the heels of much larger increases in 2017 and 2018

Texas does not have an effective rate review program, so CMS (specifically, CCIIO) conducts the rate review for plans that are sold in the Texas exchange.

For 2019, there are eight insurers offering coverage in the Texas exchange, although most of them have very localized coverage areas and most counties only have one or two insurers offering plans. All of the plans offered in the exchange are EPOs or HMOs. The following average rate changes were approved for 2019:

  • Celtic/Ambetter: 2.32 percent increase.
  • Blue Cross Blue Shield of Texas: 6.22 percent decrease.
  • CHRISTUS: 4.36 percent increase (23,000 members).
  • Molina: 5.43 percent increase (236,564 members).
  • Oscar: 14.28 percent increase. Oscar expanded its coverage area in Texas in 2019. The insurer offered plans in San Antonio and Austin in 2018, plus off-exchange plans in Dallas. But they expanded into El Paso and the Dallas/Fort Worth area for 2019.
  • Sendero: 17 percent increase (24,000 members)
  • SHA/FirstCare: 0.14 percent increase (17,000 members)
  • Community Health Choice: 8.46 percent increase

At ACA Signups, Charles Gaba calculated an average rate increase of 2.25 percent for 2019, including a few insurers that only offer plans outside the exchange. As was the case for 2018, the Texas Department of Insurance did not instruct insurers on how to add the cost of cost-sharing reductions (CSR) to premiums for 2019. The CSR approach was instead left to each insurer’s discretion. Adding the cost of CSR only to silver plan premiums (in many cases, only to on-exchange silver plan premiums) is the most popular approach across the country, but insurers also have the option to add the cost of CSR to all plans.

For perspective, here’s a look at how rates have changed in the Texas exchange over the years:

2015: Twelve carriers offered a total of 95 different health plans in the Texas exchange in 2014. This increased to 15 in 2015, and a Commonwealth Fund analysis found an average rate increase of 5 percent in the Texas exchange for 2015.  For silver plans, it was just 2 percent.  Rate increases tended to be lower in urban areas of Texas.

2016: Average premiums in the individual market in Texas increased by 15.8 percent for 2016, although there was considerable variation from one insurer to another. Rates decreased for five carriers, and increased by between 5 percent and 34 percent for the remaining carriers. Statewide, the average benchmark plan was 5.1 percent more expensive in 2016, which means subsidies were higher, but only modestly so.

2017: For 2017, average premiums in the individual market in Texas rose by about 34 percent. Although premium subsidies grow to keep pace with premiums, they’re based on the cost of the benchmark plan (second-lowest-cost silver plan) in each area. HHS reported that for a 27-year-old enrollee, the average second-lowest-cost silver plan in the Texas exchange was 18 percent more expensive in 2017 than it had been in 2016 (that’s a little lower than the 2017 national average increase of 22 percent for second-lowest-cost silver plans). So although subsidies did increase in 2017 in Texas, the increase may have been smaller than the premium increase that some enrollees experienced, leaving them with higher net premiums.

2018: In most cases, Texas insurers filed rates in the spring/early summer 2017 that assumed federal funding for cost-sharing reductions (CSR) would continue in 2018. But by the time CSR funding was officially eliminated by the Trump Administration in October 2017, all of the Texas insurers had filed rates that were based on the assumption that CSR funding would not continue. Texas did not instruct insurers on how to add the extra cost to their premiums, so they had to option of spreading it across the premiums for all plans, adding it to all silver plan rates, or adding it to only on-exchange silver plan rates. In some cases, the Texas filings make it clear that the cost of CSR was only being added to silver plans, and at least one insurer (CHRISTUS) filed an additional revised rate structure to ensure that the cost of CSR would only be added to on-exchange silver plans. Sendero’s rate filing indicated that they would market an off-exchange-only silver plan in addition to their exchange plans (off-exchange-only plans do not have to include the cost of CSR in their rates).

There was some uncertainty in terms of exactly how large the approved rate increase was for 2018. But the average premium (before any subsidies were applied) in the Texas exchange was $404/month in 2017, and it grew sharply, to $543/month, in 2018.

Insurer participation in the Texas exchange: 2014 to 2019

Insurer participation has varied from one year to the next in Texas, as has been the case in most states. The exchange in Texas had 15 carriers offering plans in Texas for 2015, up from 12 in 2014.  Only Michigan and Ohio had more carriers in their exchanges, with 16 each.

But by 2017, only ten insurers were offering plans in the Texas exchange, and most of them only offered coverage in a fraction of the state’s 254 counties. In the majority of the counties, there were one, two, or three carriers offering plans. And there were no PPO plans available in the exchange by 2017; insurers had opted to switch to more economical HMOs and EPOs as a cost-saving measure.

Several insurers exited at the end of 2016

UnitedHealthcare exited the individual market in Texas (both on- and off-exchange) at the end of 2016, as was the case in most of the states where United offered exchange plans in 2016.

According to a Kaiser Family Foundation analysis, United only offered plans in 30 of the 254 counties in Texas in 2016. But they were the counties with the most enrollees: 80 percent of Texas exchange enrollees had UnitedHealthcare as an option in 2016. But the total number of enrollees in United’s plans (including All Savers and UnitedHealthcare Life Insurance Company) was under 157,000, including on- and off-exchange members.

In August 2016, Aetna announced that they would exit the exchanges in 11 of the 15 states where they had been offering exchange plans. Texas was one of the states where Aetna’s exchange enrollees had to secure new coverage for 2017.

Scott & White Health Plan also announced in August that they would exit the exchange in Texas at the end of 2016. They continued to offer bronze plans outside the exchange in 61 counties in 2017, but they discontinued all of their silver and gold plans. Scott & White previously offered plans in the Texas exchange in 58 counties. A subsidiary, the Insurance Company of Scott & White, also indicated in their rate filing that their plans would only be available outside the exchange in 2017.

Cigna’s plans were also only available off-exchange in Texas for 2017. For Cigna’s HMOs, they had initially filed an average rate increase proposal of about 23 percent for 2017, but later filed a new average rate increase of 48.9 percent, which the federal government found to be “not unreasonable.” For EPOs, the average rate increase was about 35 percent. All of these rates applied to off-exchange plans only, so subsidies were not available to offset the premiums.

Allegian Health Plan announced their exit from the exchange just as open enrollment for 2017 began. They continued to offer HMO plans outside the exchange in just seven of the 254 counties in Texas.

Oscar reduced coverage area in 2017, but expanded it in 2018 and again in 2019

Oscar remained in the Texas exchange in 2017, but only in one county (Bexar) in San Antonio. They stopped offering exchange plans in the Dallas area. They offered plans in a total of four counties in Texas for 2017, but in three of them — all but Bexar — the plans were only available off-exchange.

But Oscar expanded to two additional San Antonio-area counties (Comal and Guadalupe, according to their plan filing) for 2018. They also expanded into the Austin area, with both on and off-exchange plans. Oscar continued to offer off-exchange coverage in the Dallas area in 2018. And they expanded again for 2019, with on-exchange plans becoming available in the Dallas/Fort Worth and El Paso areas.

Humana and Prominence left at the end of 2017; impact was minimal due to small market area

The spate of insurer exits at the end of 2016 was followed by two more exits at the end of 2017. Humana exited the individual market (on and off-exchange) at the end of 2017, and so did Prominence.

Humana only offered plans in ten of the 254 counties in Texas in 2017, however, so their exit did not impact most of the state. The counties where Humana plans were available in 2017 — on and off-exchange — were clustered in the Corpus Christi, San Antonio, and Waco areas. In each of those counties, there were two other insurers offering exchange plans (Christus and Blue Cross Blue Shield of Texas).

Prominence offered plans in 11 Texas counties in 2017, so as was the case for Humana, their exit did not impact most of the state. Most of the counties where Prominence offered exchange plans had fairly low populations, although Prominence plans were available in McAllen and Amarillo

Sendero remained in the exchange

In September 2018, the Central Health Board of Managers (which oversees Sendero/IdealCare) voted to cap funding for Sendero and cease offering Sendero plans at the end of 2018. Under the terms of the funding cap, only the Sendero/IdealCare Bronze plan was going to be available for 2019. The vote came after years of losses for the plan, and an uncertain financial future, although it still had to be approved by the Travis County Commissioner’s Court.

But ten days later, the Central Health Board of Managers reversed their decision, voting to allocate $26 million to keep Sendero afloat for at least another year. Central Health planned to move some of their Medical Access Program members and patients with chronic health conditions over to Sendero plans, if the members choose that option, with Central Health providing premium assistance to eligible members.

Central Health reported that 223 members opted to switch to Sendero. Moving to Sendero gave members access to a broader network of providers in Travis County, and Sendero also benefits as a result of the way the ACA’s risk adjustment program is structured. In 2018, Sendero owed $47 million into the risk adjustment program. Insurers that have healthier members end up having to pay into the risk adjustment program, while those with less healthy members receive risk adjustment funding. By enrolling sicker members, Sendero may end up with less of a risk adjustment loss in future years.

Sendero’s future is still uncertain, and its financial picture had to show improvement by mid-2019 in order to avoid having to wind down to program. But for the time being, Sendero plans continued to be available in the eight Austin-area counties in the Travis service area. Bronze, silver, and gold plans are available from Sendero for 2019, as opposed to the single bronze plan that would have been available if Central Health hadn’t voted to reverse their earlier funding cap. As of April 2019, Central Health reported that Sendero was “not out of the woods” and that a decision had not yet been reached in terms of ongoing funding. About 14,000 people enrolled in Sendero coverage for 2019.

A self-employed married couple can still purchase small group coverage in Texas

As a result of the Affordable Care Act, federal law only allows a self-employed married couple to purchase small group health insurance if there is at least one additional employee. Even if both spouses are work for their business, they aren’t considered to be two separate employees (and thus eligible for group health coverage, which requires at least two employees) under federal law. But Texas law is different, and takes precedence in this case. In Texas, a small group insurer must issue coverage to any group of two or more employees, even if the group only has two employees who are married to each other.

Exchange enrollees identified on ID cards

At the end of May 2015, the Texas state senate passed House Bill 1514, and Governor Abbott signed it into law the following month.  The law became effective in September 2015, and requires insurance carriers to label policy ID cards with “QHP” (qualified health plan) if the plan was purchased through the exchange.

The initial version of the House bill called for two different designations for exchange-purchased policy ID cards:  “QHP” for plans purchased without a subsidy, and “QHP-S” for plans purchased with a subsidy (86 percent of the exchange enrollees in Texas are receiving subsidies).  But the version that was ultimately signed into law dropped the “S” and simply calls for identifying all exchange enrollees with the “QHP” designation.

Many provider organizations were in support of HB 1514, because there’s a 90 day grace period for subsidized exchange enrollees who fall behind on their premiums, as opposed to the 30 day grace period for plans purchased outside the exchange and for non-subsidized exchange plans. During that time, carriers have to pay claims from the first 30 days, but can retroactively deny claims from the following 60 days (assuming the patient doesn’t pay the past due premiums) and can require the provider to refund payments made during that time.

Supporters of the bill claim that the QHP designation simply serves to keep providers aware of the need to remind their patients to remain current with their premiums.  But the QHP label lets providers know that chances are, the patient is receiving a subsidy and thus has a 90 day grace period to remain current on premiums.  It’s not unreasonable to assume that some providers would then choose to not work with those patients.  The bill generated considerably controversy between provider organizations and consumer advocates.

Grandmothered plans may renew

In November 2013, the federal government announced that states could allow non-grandfathered, pre-2014 health plans (dubbed “grandmothered” plans) to renew again and remain in force in 2014.  In March 2014, they issued another extension for these transitional policies, allowing states to let them continue to renew as late as September 2016. The majority of the states have accepted that proposition, but in 2014, Texas regulators simply didn’t issue any guidance whatsoever on the matter (in interviews with insurance officials in each state, Texas was alone in this regard – every other state took a position either for or against renewal of grandmothered plans).

Because Texas didn’t issue any guidelines for renewal of grandmothered plans, regulators initially said that grandmothered plans would not be allowed to renew in Texas in 2014. But they eventually reversed course on this, with the Department of Insurance simply noting that they do not object to carriers renewing grandmothered plans in accordance with federal guidelines. HHS has since issued additional extensions (at states’ discretion) for transitional plans, allowing them to renew as late as October 2020, and remain in force until the end of December 2020. Texas has confirmed that they will allow insurers to go along with the latest federal extension, with grandmothered plans allowed to remain in force until the end of 2020.

Exchange history and legislation

Former Texas Gov. Rick Perry formally notified the Department of Health & Human Services (HHS) in July 2012 that Texas would not implement a state-run health insurance exchange. In his notification letter, Perry — a long-standing opponent of the Affordable Care Act — called the ACA provisions “brazen intrusions into the sovereignty of our state.”

Texas State Representative Eric Johnson, a Democrat from Dallas, did introduce bills in early 2013 that would have created a state-run exchange and expanded Medicaid, but neither was successful.  HHS is running the exchange in Texas, and the state is not expanding Medicaid.

The Texas High Risk Pool (a health plan for people with pre-existing conditions that pre-dates the ACA) remained open for the first three months of 2014, after originally being scheduled to cease operations at the end of 2013. This was the case in several states, as HealthCare.gov had some significant glitches in the first open enrollment period, which hampered enrollment efforts.

In January 2014, the Perry Administration’s efforts to make it more difficult to be a navigator in Texas drew criticism from ACA supporters and Democratic lawmakers, who claim that Perry is simply trying to impede enrollment in the Texas exchange.

According to a Kaiser Health News article, Blue Cross Blue Shield of Texas played a major role in educating state consumers about the federal health insurance marketplace in its early days. The Blues plan used many strategies to reach consumers: creating a website, launching a texting campaign, and engaging churches, community clinics, nonprofits, and other community organizations.

Texas health insurance exchange links

HealthCare.gov
800-318-2596

Be Covered Texas

Federal Health Care Reform Resource Page
From the Texas Department of Insurance

Texas Health Options

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


Louise Norris is an individual health insurance broker who has been writing about health insurance and health reform since 2006. She has written dozens of opinions and educational pieces about the Affordable Care Act for healthinsurance.org. Her state health exchange updates are regularly cited by media who cover health reform and by other health insurance experts.