Highlights and updates
- Open enrollment for 2020 coverage in Virginia runs from November 1 to December 15, 2019; outside of that window, enrollment is only possible for Virginians with qualifying events.
- Oscar is joining Virginia’s exchange in the Richmond area for 2020; Five insurers have filed rate decreases for 2020
- Short-term health plans can be sold in Virginia with initial plan terms up to 364 days.
- Medicaid expansion took effect in January 2019; more than 300,000 people have gained coverage as a result.
- Eight insurers offering plans for 2019, including Virginia Premier in Richmond; Anthem & Piedmont expansions
- Governor vetoed expansion of short-term plans, AHPs, catastrophic plans
- New legislation allows sole proprietors without employees to buy group plans
- More than 400,000 enrolled in plans for 2018
Virginia exchange overview
The exchange in Virginia is more robust than in most states. Virginia Premier joined the exchange for 2019, bringing the total number of insurers to eight. For 2020, Oscar Health is also joining the exchange, so there will be nine insurers offering plans through Virginia’s exchange in various areas of the state. Of the eight existing insurers, five have proposed rate decreases for 2020.
Virginia uses the federally run exchange, so applicants enroll via HealthCare.gov. But Virginia is one of seven federally run exchange states that conducts its own plan management, so the state takes an active role in overseeing the plans that are sold in the exchange.
The Virginia Bureau of Insurance made headlines in 2018 when they pushed back against Optima’s attempt to lower their proposed rates after the deadline (and only after Optima found out that Anthem would be returning to those markets with lower cost plans).
Oscar is joining Virginia’s exchange in the Richmond area for 2020
Open enrollment for 2020 individual market health plans will run from November 1, through December 15, 2019, with coverage effective January 1, 2020.
Oscar Health is entering the markets in six states for 2020, including Virginia (Oscar is also expanding their existing coverage area in nine other states). Oscar’s plans will be available in the Richmond area for 2020 — the same area where Virginia Premier entered the market in 2019.
As of August 21, 2019, insurers in Virginia’s marketplace had filed the following average rate changes for 2020:
- Virginia Premier: 5.7% increase
- CareFirst: 16.5% decrease
- Cigna: 1.3% increase
- Group Hospitalization and Medical Services: 10.2% increase
- Health Keepers (Anthem): 5.6% decrease
- Kaiser Foundation Health Plan of the Mid-Atlantic: 5.5% decrease
- Optima: 20.5% decrease (Optima had already reduced their proposed rates earlier in the summer, but the filings as of mid-August are even lower)
- Piedmont Community Healthcare (and Piedmont HMO): 14.65% decrease
- Oscar Health: New to Virginia’s market, so no applicable rate change
Optima Health Insurance Company is a separate entity that only offers plans outside the exchange in Virginia. They have proposed an average rate decrease of 19.6% for 2020.
Medicaid expansion took effect in January 2019; more than 300,000 have gained coverage
After years of debate on the issue, and more than a hundred thousand low-income Virginia residents having no realistic access to health coverage, Virginia lawmakers passed a budget in 2018 that called for Medicaid expansion, and Governor Northam signed it into law in June 2018. Roughly 400,000 Virginia residents were expected to be eligible for Medicaid under the new rules; enrollment began in November 2018, with coverage effective as of January 2019. By August 2019, more than 300,000 people were covered under Virginia’s expanded Medicaid.
As is the case in other states that have expanded Medicaid, the federal government will always pay the majority of the cost of covering the newly eligible population, but Virginia will eventually have to pay 10 percent of the cost. In 2019, Virginia is paying 7 percent, and that will increase to 10 percent in 2020 and beyond.
The legislation also calls for the state to seek federal approval to implement a work requirement for able-bodied Medicaid expansion enrollees, and to charge premiums of up to 2 percent of income for enrollees with income above the poverty level (under Medicaid expansion, people with income up to 138 percent of the poverty level are eligible for coverage). But there is likely to be a considerable delay between the implementation of Medicaid expansion and the eventual implementation of the work requirement and premiums.
An estimated 89,000 people who had subsidized individual market coverage through Virginia’s exchange in 2018 were expected to become eligible for Medicaid instead, as of January 2019. Since lower incomes are correlated with poorer health, this is expected to improve the overall health of the private market risk pool, and insurers in Virginia filed revised rates after the Medicaid expansion legislation was signed (the initial rates had been due in May, and the legislation to expand Medicaid wasn’t final until June).
At ACA Signups, Charles Gaba calculated that the revised average rate increase was 11.34 percent, as opposed to 13.4 percent in the initial filings. And once rates were approved, the average increase ended up even lower, at 9.6 percent.
As expected, enrollment in private plans in Virginia’s exchange was much lower for 2019 than it was for 2018, with about 72,000 fewer people enrolled for 2019. Enrollment dropped nationwide in states that use HealthCare.gov (due in large part to the elimination of the individual mandate penalty and the reduced federal funding for marketing and enrollment assistance). But Virginia’s enrollment reduction was much larger than most states’ and is due in large part to the expansion of Medicaid.
Carriers and rates for 2019
Open enrollment for 2019 health plans began on November 1, 2018 and ended on December 15, 2018. (Residents may still be able to enroll in ACA-compliant coverage if they have a qualifying event.)
In most states, insurers had until late June to submit form filings for 2019 plan, and until late July to submit rate filings. But states can set their own deadlines, and Virginia tends to have the earliest rate and form filing deadlines in the country. For 2019 coverage, form filings were due in Virginia by April 20, 2018, and rate filings were due by May 4, although revisions were allowed until August 10.
The Virginia Bureau of Insurance confirmed that all seven of the 2018 exchange insurers planned to continue to offer coverage in 2019. (Rate filing details are available in SERFF, and the BOI put together a very informative overview of the projected 2019 market and how it compared with previous years.)
In addition, another insurer, Virginia Premier, has joined the exchange in the Richmond area (rating area 7) for 2019. Virginia Premier’s filing indicated that they expect about 4,000 people to purchase their plans for 2019 (almost entirely via the exchange). Virginia Premier already offered Medicaid managed care coverage, and Medicare Advantage coverage for people who are eligible for both Medicare and Medicaid.
They have expanded into the individual market for 2019 in the Richmond area with their new ACA-compliant plans. In general, insurers with a history of offering Medicaid managed care coverage have tended to do well in the ACA-compliant markets across the country, even as more traditional insurers (without a background in Medicaid managed care) have struggled to be profitable in the ACA-compliant markets.
Average 2019 rate increases:
The Virginia Bureau of Insurance posted a summary of average rate increases for 2019, with data as of August 22, 2018)
- Virginia Premier (new insurer, so no applicable rate increase).
- CareFirst: 14.5 percent increase. (CareFirst had initially proposed a rate increase of 26.6 to 33.9 percent. CareFirst is the Blue Cross Blue Shield affiliate that covers Northern Virginia, in Rating area 10; Anthem Health Keepers is the Blue Cross Blue Shield affiliate for the rest of the state) CSR added to on-exchange silver. (actuarial memo says 4,584 members, but a separate document in the rate filing indicates that there are “approximately 8,400” members who would be affected by the rate increase). The 33.9 percent average rate increase was filed in July 2018, and was larger than the initial rate hike CareFirst had filed (despite the fact that Medicaid expansion was approved in the interim, CareFirst indicated in a later filing that the expansion of Medicaid was unlikely to have a significant impact on their enrollment, given that average household incomes are over $100,000 in the area of Virginia that CareFirst covers). In August 2018, however, CareFirst filed yet another revision, this time proposing an average rate increase of 14.5 percent.
- Cigna: 11 percent increase. (Cigna had initially filed a rate increase of 15 percent; Cigna offers plans in rating areas 7 and 10, 103,264 members).
- Group Hospitalization and Medical Services: 45.1 percent increase. GHMSI had initially proposed rate hikes of 64.3 percent and 78.8 percent. CSR cost has been added to on-exchange silver plan rates. Plans are offered in rating area 10 (2,920 members, but a separate document in the rate filing indicates that there are “approximately 4,500” members who would be affected by the rate increase). Another filing was submitted on August 17 calling for an average rate increase of 45.1 percent.
- Health Keepers (Anthem): 2.5 percent increase. 63,868 members. Anthem’s revised filing, submitted in August, includes an expansion into several of the areas that they exited at the end of 2017, including Charlottesville, which has the highest premiums in the country in 2018 (Optima has a monopoly there in 2018). Anthem’s coverage area expansion for 2019 means that far fewer areas have just a single insuer offering coveage. Anthem’s initial rate filings had called for average increases of 4.9 percent and 3.6 percent, but the updated rate filing, dated August 21, called for an average rate increase of just 2.5 percent.
- Kaiser Foundation Health Plan of the Mid-Atlantic: 33.8 percent increase. This was a little lower than the 32.1 percent increase Kaiser had initially proposed. Kaiser had 53,210 members as of 2017.
- Optima: 7.2 percent decrease (67,923 members in 2018). Note that Optima’s initial rate filing, submitted in May 2018, called for an average rate decrease of 1.9 percent. They filed revised rates on August 9 (SERFF filing number OPHL-131486283) that called for an average rate decrease of 7.2 percent. The deadline to revise rate filings was August 10, and Anthem’s revised filing on that date included plans to expand back into some of the areas where they had exited the year before, ending Optima’s monopoly in some areas. In response, Optima filed yet another set of revised rates on August 16, proposing an average rate decrease of 16.6 percent (see the revised filings under the same SERFF tracking number that applied to the first revised filings). But the Virginia BOI rejected this additional filing, as it came after the August 10 deadline. Optima submitted a petition to the State Corporation Commission, asking that their post-deadline rate revision be considered. But a few days later, BOI responded, clarifying that Optima’s most recent filing (submitted after the August 10 deadline) was not a response to any objections BOI had to their earlier filings, but was instead a revised filing based on a smaller projected profit margin for 2019, and filed only after Optima realized that they would no longer have a monopoly in 2019 (due to Anthem’s last-minute coverage area expansion). BOI’s response makes it clear that they had offered Optima an opportunity to lower their projected profit margin earlier in August, but the insurer chose not to do so when they believed that they would still have a monopoly in the Charlottesville area. Optima’s petition indicated that they were aware that without a monopoly, their proposed rates (a 7.2 percent average decrease, as opposed to the 16.6 percent decrease) will result in a significant reduction in enrollment and a loss of revenue. But BOI’s response essentially indicates that Optima must lie in the bed they made. In mid-September, the State Corporation Commission agreed with BOI, stating that “the decision not to submit its most competitive rates by the August 10th filing date was Optima’s, and Optima’s alone. Only after seeing a more competitive (and timely submitted) rate filing did Optima attempt to submit lower or more competitive rates after the filing date.”
- Piedmont Community Healthcare (and Piedmont HMO): 11.94 percent The BOI’s page summarizing rate changes for 2019 shows an average increase of 11.94 percent for Piedmont, and BOI has confirmed that this is the average rate change that they’ve approved for Piedmont. The insurer did submit a revised filing on August 17, but it was outside the scope of prior objections raised by BOI, so it was rejected. The 11.94 percent average rate increase, which was reflected in the rate filing Piedmont submitted in July, was ultimately approved. Piedmont is expanding into Augusta County and the cities of Waynesboro and Staunton in 2019. They have 21,258 members in 2018, but that’s projected to increase to 41,000 due to expansion of the coverage area. Piedmont’s rate filing does note that the new coverage area is expected to have a “higher relative cost” than Piedmont’s current coverage area.
The Virginia Bureau of Insurance has posted a summary page, showing current rate filing data as of August 22, 2018. The rate changes for CareFirst, Health Keepers, and GHMSI all reflect the most recent rate filings. The average rate change for Kaiser (32.1 percent) is smaller than Kaiser’s most recent proposal (33.8 percent). And for Piedmont, the average rate change on the BOI chart is just 11.94 percent, while the most recent filings show average proposed rate increases of 28.4 percent and 13.3 percent. Optima’s rate change on the BOI chart is listed as a 7.2 percent decrease, and that’s in keeping with the BOI’s response to Optima’s petition, indicating that they are not willing to consider Optima’s proposed 16.6 percent average decrease.
The filings for 2019 indicated that the Virginia Bureau of Insurance once again did not specifically instruct insurers in terms of how to add the cost of CSR (cost-sharing reductions) to premiums, but recommended that the cost be added to the premiums for on-exchange silver plans (the BOI took the same approach for 2018). The carriers that described their CSR strategy in their rate filings are all implementing this approach, adding the cost of CSR only to on-exchange silver plan premiums.
The insurers attributed a significant portion of the proposed rate increases to continued federal uncertainty and regulations that will destabilize the individual markets, including expansion of short-term plans and association health plans, and the elimination of the individual mandate penalty after the end of 2018.
The Virginia Bureau of Insurance is reviewing the rates to determine whether they’re actuarially justified. The Bureau has had to re-review Optima’s 2018 rates in the Charlottesville area, following complaints from residents who faced premiums that were three times a much they had paid in 2017 (for people who don’t qualify for subsidies; those who do receive subsidies were insulated from the rate hikes by larger premium subsidies). Ultimately, the Bureau determined that Optima’s 2018 rates were justified, but it’s notable that Optima has proposed a rate decrease for 2019 (and tried to impose an even more significant rate decrease once it became apparent that Anthem would re-enter some of the areas they left at the end of 2017), while all of the other insurers have proposed significant rate increases.
Governor vetos bills that would expand access to short-term plans, association health plans, and catastrophic plans
Virginia lawmakers passed legislation in 2018 to allow short-term plans to have durations up to 364 days (S.B.844), to expand access to association health plans (S.B.934 and S.B.935) and to direct the state to seek permission from the federal government to allow anyone to purchase a catastrophic plan in the individual market (S.B.964).
On May 18, Governor Northam vetoed all four bills, based on concerns that they would “put Virginians at risk of being underinsured, result in rapidly increasing Marketplace premiums, and undermine key protections in the Affordable Care Act.”
Virginia currently limits short-term plans to six months in duration. Federal regulations currently impose a shorter limit of three months, but that’s will change as of October 2018, under regulations finalized by the Trump Administration in August 2018. In Virginia, however, short-term plans will continue to be limited to six months, even after the federal standards are relaxed.
Under ACA rules, catastrophic plans are only available to people who are under the age of 30 or eligible for a hardship exemption from the ACA’s individual mandate. If S.B.964 had been enacted, Virginia would have sought permission to relax these rules and allow anyone to purchase a catastrophic plan.
Catastrophic plans are compliant with the ACA, in that they cover all of the essential health benefits, have the same out-of-pocket maximums as other plans, cover pre-existing conditions, and cannot impose lifetime or annual benefit limits. But they are in separate risk adjustment pools, which means that premiums collected from people on catastrophic plans (who tend to be healthier than average) are not being used to provide risk adjustment funding for metal level plans (particularly on the higher end of the metal scale, these plans tend to have enrollees who are sicker than average).
Colorado had enacted legislation that directs the state to conduct an actuarial study to determine whether the expansion of catastrophic plans would increase average premiums or decrease total premium subsidies in the state (catastrophic plans aren’t subsidy-eligible). If not, Colorado will seek permission to expand access to catastrophic plans.
Group coverage for the self-employed
The Charlottesville, Virginia area made headlines in the fall of 2017, when it became apparent that 2018 individual market rate hikes in that area would be roughly triple what they had been in 2017 for people who don’t qualify for premium subsidies (for those who do qualify for premium subsidies, the subsidies grew substantially in 2018 to keep the after-subsidy premiums affordable).
The small group market, however, is much more stable than the individual market, as is the case in virtually every state. In an effort to address the situation and provide access to affordable coverage for some people impacted by the subsidy cliff, Governor Northam signed S.B.672 into law in April 2018. The legislation, sponsored by Senator Creigh Deeds (D, 25th District), will allow self-employed people, including a sole member of an LLC or a sole shareholder of a corporation, to be considered “small employers” and thus purchase coverage in the small group market, as of July 2018. From the text of the legislation:
“Small employer” means in connection with a group health plan or health insurance coverage with respect to a calendar year and a plan year, an employer who employed an average of at least one but not more than 50 employees on business days during the preceding calendar year and who employs at least one employee on the first day of the plan year. In determining whether a corporation or limited liability company employed an average of at least one individual during the preceding calendar year and employed at least one employee on the first day of the plan year, an individual who performed any service for remuneration under a contract of hire, written or oral, express or implied, for a (i) corporation of which the individual is its sole shareholder or an immediate family member of such sole shareholder or (ii) a limited liability company of which the individual is its sole member or an immediate family member of such sole member, shall be deemed to be an employee of the corporation or the limited liability company, respectively. “Small employer” includes a self-employed individual. (emphasis added).
Self-employed individual” means an individual who derives a substantial portion of his income from a trade or business (i) operated by the individual as a sole proprietor, (ii) through which the individual has attempted to earn taxable income, and (iii) for which he has filed the appropriate Internal Revenue Service Form 1040, Schedule C or F, for the previous taxable year. (all emphasis added to clarify the requirements of the bill).
That appears to conflict with the ACA, which requires a small business to have at least one employee in addition to the owner (and not a spouse of the owner) in order to enroll in a plan in the small group market. Indeed, the impact statement for S.B.672 notes that the legislation “may conflict with the federal Patient Protection and Affordable Care Act.”
The Virginia Bureau of Insurance confirmed that the statute “is interpreted as meaning a small group plan will be an option for an entity with 1-50 employees,” and clarified that self-employed people — without any additional employees — will be able to purchase coverage in the small group market, year-round, after the legislation takes effect in July.
The Virginia Bureau of Insurance clarifies several questions about the new law in an administrative letter published in early June. The BOI noted that “federal law shall not be construed to preempt any state law that does not “prevent the application” of the ACA. This provision grants states the flexibility to enact laws and regulations that broaden the protections in the ACA, but that do not inhibit them. SB 672 does not prevent the application of the ACA in the sense that it broadens the definition of “small employer,” and does not limit it further than contemplated by the ACA.”
In other words, because the state is making ACA-compliant coverage more available (ie, allowing sole proprietors to buy ACA-compliant coverage in the small group market) rather than less available, the state is taking the position that the new law is not in conflict with federal rules. The federal government hasn’t commented on Virginia’s new law.
Allowing a self-employed person without any employees to purchase a small group plans is very different from the concept of allowing self-employed people to join associations and thus gain access to large group plans (which is what the Trump Administration has proposed). Although the BOI believes that the new Virginia law will not run afoul of federal rules, it’s unclear whether the Trump Administration will step in and require modifications. [It’s noteworthy that a similar law was vetoed in Iowa in 2018, with the governor ostensibly basing the veto on concerns about destabilizing the insurance market and on the fact that the law would conflict with federal rules. But Iowa’s governor had previously signed legislation to allow non-ACA-compliant Farm Bureau plans to be sold in the state, which will have the obvious result of destabilizing the ACA-compliant market.]
The small group market and individual market are subject to nearly identical regulations under the ACA. Age rating restrictions (no more than three times as much for older people versus a 21-year-old), guaranteed-issue coverage, coverage for the essential health benefits, plans that fit into the metal level categories — all of these regulations apply to both the individual and small group markets.
But one key difference is the availability of coverage. Small group plans are available year-round, as long as the employer meets the insurer’s minimum participation requirements (for employers that don’t meet the minimum participation requirements, coverage is available for purchase between November 15 and December 15 each year, but a self-employed person without any employees would have 100 percent participation, since he or she would be the only eligible employee). In the individual market, however, coverage is only available during open enrollment (November 1 to December 15) or during limited special enrollment periods, many of which require that the person already had coverage before the qualifying event that triggered the special enrollment period.
Virginia regulators are interpreting S.B.672 as allowing a self-employed person (without employees) unrestricted access to the small group market as an alternative to the individual market. It’s easy to see how that might incentivize people who are self-employed to skip coverage in the individual market, and then enroll in a small-group plan mid-year, if and when they end up needing health care.
Anthem/Health Keepers clarified that as of May, they continue to require at least two non-married enrollees in order to qualify for a small group plan, and couldn’t say at that point what their future plans were.
It’s worth noting, however, that the language of the bill (in bold and underlined above) will prevent a person from becoming “self-employed” in order to immediately obtain health insurance. The legislation requires that the person had already filed a self-employment tax return for the previous year. So although the law takes effect in July 2018, the only self-employed people who would be able to take advantage of it in 2018 are those who filed a 2017 tax return indicating that they were self-employed. And people who wish to enroll in one-person group plans in Virginia for 2019 won’t be able to do so until after they’ve filed their 2018 tax returns (showing that they were self-employed in 2018).
The advocacy group Charlottesville for Reasonable Health Insurance has created a tool that self-employed Virginia residents can use to see how much a small group plan would cost. Healthcare.gov has a rate browsing tool that people can use to see how much individual market coverage would be, but small group coverage generally isn’t available for instant online quoting. So the new tool makes it easy for people to see how much they could potentially save by purchasing a small group plan instead of an individual market plan.
Open enrollment for 2018 coverage was only half as long as previous open enrollment windows, running from November 1, 2017 to December 15, 2017. This is the same schedule that will be used in future years, but it was a sharp departure from the previous enrollment windows, which had all been three months or longer.
400,015 people enrolled in coverage through the Virginia exchange during open enrollment for 2018 coverage. That was a decline of about 2.6 percent from 2017, when 410,726 people enrolled, and a drop of almost 5.2 percent from peak enrollment in 2016, when 421,897 people bought coverage in the Virginia exchange.
The enrollment decline is not surprising, however, and it fits with the overall trend we’ve seen across states that use the federally-run exchange, where total enrollment declined in 2017 and again in 2018. The Trump Administration’s funding cuts for HealthCare.gov’s marketing, outreach, and enrollment assistance played a role, as did the perception that the individual mandate wouldn’t be strongly enforced (the mandate penalty remains in effect in 2018; it will be repealed as of 2019, but there is considerable public confusion about this). And of course, the shorter enrollment period for 2018 coverage meant that people had less time to pick a plan.
Although open enrollment ended on December 15, people whose plans were terminated on December 31, 2017 were eligible for a special enrollment period through March 1, 2018. This applies regardless of whether they had on- or off-exchange coverage, including those with on-exchange coverage who were auto-enrolled into a replacement plan by the exchange.
As described below, Anthem significantly reduced their coverage area in Virginia for 2018, remaining in only 68 counties, with a projected membership of 61,000, down from more than 200,000 in 2017. In addition, Aetna (including Innovation Health Insurance Company) and UnitedHealthcare of the Mid-Atlantic exited the individual market in Virginia at the end of 2017. And although Optima remained in the market, they exited some of the counties where they had offered coverage in 2017. Members affected by all of these changes were eligible for the special enrollment period through March 1, 2018.
Optima reversed their plans to expand in 2018, which initially left 63 counties with no insurer lined up to offer coverage
Aetna and UnitedHealthcare exited the Virginia exchange at the end of 2017 (details below), and Anthem had announced in August 2017 that they would also exit the exchange. That initially would have resulted in 50 counties and independent cities in Virginia (out of 133 total) without any insurers lined up to offer exchange coverage for 2018. That problem was initially averted when Optima filed plans to expand their coverage area for 2018, but Optima filed revised rates in September 2017 and sharply reduced their proposed coverage area for 2018, leaving 63 counties without an insurer lined up for 2018.
Optima’s initial rate filing noted that they were planning to re-enter five rating areas that they had previously exited at the end of 2016. Optima offered coverage in 35 counties/cities in the exchange in 2017, and planned to offer coverage in 128 counties/cities in 2018. So as of mid-August, Optima’s expansion meant that every area in Virginia would have at least one exchange insurer offering plans.
But on September 5, Optima submitted a revised filing that included a coverage area of just 28 counties/cities (details available in Virginia SERFF’s plan binder filing section). The revised filing indicated that they would leave some of the counties where they offered coverage in 2017, and they also drastically scaled back their expansion plans to include only Halifax and Mecklenburg counties, and the Charlottesville area.
The new Optima rate filing included an assumption that cost-sharing reductions (CSRs) wouldn’t be funded for 2018 (their earlier filing had assumed that CSR funding would continue), and an overall average rate increase of 72.9 percent. Optima’s announcement on September 6 noted that for the 70 percent of their members who receive premium subsidies, net premiums would be just 1.5 percent higher in 2018. But for the other 30 percent of their members, premiums would be an average of 81.8 percent higher (Optima’s filing was revised again in mid-September, with the average rate increase climbing to 81.1 percent overall).
Optima had filed a 19.3 percent average rate increase as of July; they noted in their September announcement that roughly 20 percent of their newly-proposed rate increase was their originally planned increase, 23 percent was due to the anticipated loss of CSR funding, and the remainder was due to the impending withdrawal of Anthem, United, and Aetna. It’s notable that both the uncertainty over the CSR funding (which turned into certainty in mid-October when the Trump Administration announced that CSR funding would end immediately) and the withdrawal of insurers from the exchanges nationwide is due in large part to the actions the Trump Administration has taken in 2017, and Republican lawmakers’ focus on repealing the ACA rather than stabilizing the insurance markets (lawmakers briefly considered — but did not pass — legislation to stabilize the insurance markets in September 2017; if they had enacted such legislation in the spring instead, we’d have be looking at a much more stable insurance landscape for 2018, and much smaller overall average rate increases).
Optima’s newly-filed coverage area meant that there were 63 counties — home to about 70,000 exchange enrollees — where no insurers had filed plans for 2018. The Virginia Bureau of Insurance confirmed on September 7 that they were actively working with the state’s insurers to get coverage statewide (insurers had until September 27 to sign contracts with HealthCare.gov to participate in the exchange for 2018).
Anthem, the largest insurer in Virginia exchange, planned to exit but opted to stay in order to fill bare counties
Anthem (Health Keepers) had by far the largest market share in Virginia’s individual market. But in mid-August, Anthem announced that they would withdraw from the Virginia exchange at the end of 2017, and would not offer exchange plans for sale during the open enrollment period that begins November 1, 2017. [Virginia was not the only state where there was some upheaval with Anthem plans at the end of 2017. Anthem offered coverage in 14 exchanges in 2017, but they exited the exchanges in Ohio, Indiana, Wisconsin, and Nevada at the end of 2017, and scaled back their exchange coverage area in California, Georgia, and Missouri.]
Anthem planned to continue to offer an off-exchange plan in Virginia, but in a limited area (in the city of Bristol, and in Washington and Scott counties). That would have avoided a full market exit, which would prevent Anthem from returning to the individual market for five years.
Anthem’s exit from the exchange and most of the off-exchange market would have had a significant impact on the Virginia market. According to the Virginia Bureau of Insurance, Anthem had 206,000 members (on and off-exchange) in the individual market in 2017. Anthem’s exit from virtually the entire market would have required nearly all of those enrollees to secure new coverage for 2018.
The Virginia Bureau of Insurance noted at the time that they had tried to convince Anthem to remain in the Virginia exchange, but to no avail.
Anthem’s statement about their exit from the Virginia exchange explained that “today, planning and pricing for ACA-compliant health plans has become increasingly difficult due to a shrinking and deteriorating Individual market, as well as continual changes and uncertainty in federal operations, rules and guidance, including cost sharing reduction subsidies and the restoration of taxes on fully insured coverage. As a result, the continued uncertainty makes it difficult for us to offer Individual health plans statewide in Virginia.” This “continued uncertainty” is something market watchers have been warning about all year, noting that insurers cannot accurately price plans or predict risk in the environment that the Trump Administration and GOP legislative process have created
But Anthem changed course in mid-September, with their announcement that they would remain in the Virginia exchange and would offer coverage in 68 counties and cities — including the 63 that would have otherwise had no exchange insurers (a few of those counties were no longer bare at that point, thanks to a newly-revised filing from Optima).
Anthem’s new rate filing had a higher overall average rate increase (56.4 percent) than they had filed earlier in the summer, due in part to the new rate being based on the assumption that cost-sharing reductions (CSRs) would not be funded by the federal government in 2018. As a result, they added the cost of CSRs to their silver plan rates for 2018. For most enrollees, the higher premiums for 2018 have been offset by larger premium subsidies. But enrollees who don’t get premium subsidies had to bear the full brunt of the rate increases. Bronze and gold plans may have become more attractive to former silver plan enrollees without subsidies, since the additional load to compensate for unfunded CSRs was only added to Anthem’s silver plans.
The new filing also indicated that the 2018 rates would apply to roughly 61,000 members, which was much smaller than Anthem’s 2017 membership in Virginia. So although Anthem remained in the exchange in order to prevent parts of the state from having no insurers, most of Anthem’s 2017 enrollees still had to pick a plan from a different insurer in 2018. Anthem’s plans were available statewide in 2017, but are available in just 68 counties/cities in 2018.
United, Aetna exited exchange at the end of 2017
For insurers that planned to offer coverage in 2018, Virginia had a very early form filing deadline in 2017 (April 19), and among the earliest rate filing deadlines in the nation (May 3). When the forms were filed on April 19, nine of Virginia’s ten exchange insurers had signed up to offer individual market exchange coverage again next year. Three of the companies — CareFirst, GHMSI, and Kaiser — filed plans to also offer small group coverage in the exchange. All of this was very preliminary, however.
UnitedHealthcare of the Mid-Atlantic was the only carrier that did not intend to remain in the exchange at that point. Virginia was one of only three states where UnitedHealthcare still offered coverage in the exchange in 2017. In 2016, UnitedHealthcare offered exchange plans in 37 of Virginia’s 134 counties.
Aetna did file forms in April for 2018 individual market coverage in the Virginia exchange, but they indicated in early May 2017 that they were considering “significantly reducing [their] exposure” to individual market coverage in 2018. Aetna only offered individual exchange plans in four states in 2017 (Virginia, Delaware, Nebraska, and Iowa).
On May 3, Aetna announced that they would not participate in the Virginia exchange in 2018, nor would they offer individual market plans outside the exchange (this means that Innovation Health Insurance Company, which is part of Aetna, also exited the Virginia market at the end of 2017). Aetna had already committed in early April to fully exiting Iowa at the end of 2017, and subsequently announced that they would also exit Nebraska and Delaware. They also withdrew their proposal to join the Nevada exchange, and do not have an exchange presence in any state in 2018.
Approved rate increases for 2018: Revised average rate increases ranged from 35% to 81%
Open enrollment for 2018 coverage began on November 1, 2017, and ended on December 15, 2017 (but as noted above, people whose plans terminated at the end of 2017 have until March 1, 2018 to select a replacement plan, even if they were auto-enrolled into a new plan by the exchange).
When rates for 2018 were being set in the spring of 2017, insurers in Virginia initially assumed, for the most part, that funding for cost-sharing reductions (CSR) would continue in 2018. But they revised the rate filings later in the summer to reflect the new assumption that CSR funding would not continue (at that point, Congress had not allocated funding, and the Trump Administration continued to threaten to cut off the funding). Ultimately, the Trump Administration announced in mid-October that CSR funding would end immediately, so it was wise planning on the part of insurers to have added the cost of CSR to their premiums for 2018 (insurers are still required to provide CSR benefits to all eligible enrollees, regardless of whether the insurer is being reimbursed for the costs).
Virginia is one of the states where the cost of CSR has been added to silver plans (Optima’s rate filing indicated that the Virginia Bureau of Insurance recommended this approach, but did not require it). This means that premium subsidies are much larger than they would otherwise have been, which offsets the higher rates for silver plan enrollees and provides enrollees at other metal levels with plans that might even be less expensive than they were in 2017. More than eight out of ten Virginia exchange enrollees were receiving premium subsidies in 2017, and these people were largely protected from the rate increases for 2018. Unfortunately, the other 17 percent of exchange enrollees, plus everyone who has off-exchange coverage, are having to bear the full brunt of the rate hikes, although they may have been able to obtain a better value by comparison shopping during open enrollment.
The seven insurers that offer coverage in the Virginia exchange in 2018 implemented the following average rate increases, most of which were revised twice, most recently in August or early September 2017 (all of the most recently-filed rates were deemed reasonable by state regulators and were implemented for 2018, but they’re averages — actual rate increases vary considerably within a single insurer’s plans, and silver plans generally had the largest percentage rate increases for 2018):
- CareFirst Blue Choice:
16.1 percent49.1 percent, includes the assumption that individual mandate will not be enforced in 2018. Filing indicates there were 10,600 members in 2017. CareFirst, along with their subsidiary, Group Hospitalization and Medical Services, no longer offers bronze plans in Virginia, after mapping bronze plan members to silver plans at the start of 2017.
44.7 percent, revised to 46.7 percent, and later revised to 51.1 percent, based on the assumption that CSR funding would be eliminated. 20,209 members were expected to be impacted by the rate increase.
- Group Hospitalization and Medical Services, Inc.:
48.2 percent61.3 percent. As of 2017, there were 4,376 members on these plans. GMHS stopped offering bronze plans at the end of 2016, and is continuing to offer only silver and gold plans for 2018, plus a catastrophic plan for those eligible to purchase it.
- Health Keepers (Anthem):
37.7 percentrevised to 56.4 percent in September, including additional premiums added to silver plans based on the assumption that CSR funding will be eliminated (exchange filings for 2018 were withdrawn in August, but Anthem reversed that decision in mid-September, and is offering coverage in 68 of Virginia’s counties/cities for 2018). The Health Keepers rate hike was expected to impact approximately 61,000 members.
- Kaiser Foundation Health Plan of the Mid-Atlantic:
15.3 percent 24.2 percent (new filing dated May 30)34.5 percent; assumes CSR funding will be eliminated, and the cost of CSR has been added to silver plan premiums instead.
- Optima Health Plan (HMO):
9.8 percent 19.3 percent (revised filing, as of mid-July) 72.9 percent,revised again in mid-September to 81.1 percent (the two more recent filings were based on the assumption that CSR funding would end, with the cost of CSR added to silver premiums instead). Plans are available in rating areas 2, 4, 7, 9, and 12 for 2018.
- Piedmont Community Healthcare (and Piedmont HMO):
9.95 percent, revised to 42.19 percent, revised again in mid-September to 53.4 percent. The revised rates were based on the assumption that CSR funding would be eliminated, but that individual mandate enforcement would continue (the individual mandate is still in place for 2018, but the penalty will be eliminated in 2019 as a result of the GOP tax bill that was enacted in December 2017). The rate increase was expected to apply to 15,381 members.
CareFirst Blue Choice and Group Hospitalization & Medical Services Inc. share a parent company. Health Keepers had the majority of the market share in Virginia in 2017 (56 percent), with Kaiser in second place at about 21 percent.
There has been significant concern among insurers about the stability of the individual health insurance markets, and we saw that in the ever-increasing premiums that insurers filed in Virginia. In particular, insurers wanted the Trump Administration to vigorously enforce the ACA’s individual mandate, and to ensure ongoing funding for cost-sharing subsidies. Instead, President Trump’s first executive order, signed just hours after he took office, called for federal agencies to be as lenient as possible (within the letter of the law) when enforcing the ACA’s taxes and penalties, and the Trump Administration confirmed in mid-October (well after insurers had finalized their premiums for 2018 in most states) that CSR funding would end immediately. In some states, insurers then had to scramble to add the cost of CSR to premiums, but Virginia insurers had already done that in the revised filings they submitted in August and September.
As noted above, the latest filings assumed that CSR funding would not continue in 2018, but they took differing stances in terms of whether the individual mandate would be enforced (for what it’s worth, the individual mandate is still in place in 2018, but will be eliminated altogether as of 2019, as a result of the GOP tax bill that was enacted in December 2017, after open enrollment for 2018 coverage ended).
The average rate increases in Virginia for 2018 were shockingly high, ranging from about 35 percent to 81 percent. Any portion of the rate hikes that is due to the assumption that CSRs wouldn’t be funded can be pinned on the Trump Administration’s efforts to sabotage the ACA, and Congressional leadership’s failure to appropriate funding for CSRs earlier in 2017. The expected worsening of the health of the overall risk pool is also partly caused by the Trump Administration’s lax (real or perceived) enforcement of the individual mandate.
It’s important for consumers to understand that the majority of enrollees have been protected from these rate increases, as premium subsidies grew to keep pace with the higher rates. 83 percent of Virginia exchange enrollees were receiving premium subsidies in 2017. The IRS actually reduced the percentage of income that subsidy-eligible enrollees have to pay for the second-lowest-cost silver plan in 2018, which means that people who are eligible for subsidies could be paying lower net premiums in 2018, although they may have had to switch plans to take advantage of the lower prices.
For 2018, Charlottesville area had the highest percentage increase in premiums in the US
According to a Kaiser Family Foundation analysis of premium changes from 2017 to 2018 for a 40-year-old, the Charlottesville, Virginia area had the highest percentage increase in pre-subsidy premiums in the whole country, at all metal levels. For a 40-year-old, the lowest-priced bronze plan in the Charlottesville area is 247 percent more expensive than it was in 2017. For silver, it’s 234 percent more, and for gold, it’s 195 percent more. (All of these increases are based on a person whose income is above 400 percent of the federal poverty level, making them ineligible for premium subsidies.)
It’s noteworthy that the Charlottesville area only had plans available from Optima in 2018, whereas plans were available from Aetna and Health Keepers in 2017. Optima had the largest percentage increase of any of the insurers in Virginia for 2018, and in areas where they offered coverage along with one or more other insurers for 2017, Optima’s rates tended to be on the higher end of the spectrum in 2017 as well.
But although Optima’s average percentage rate increase was the largest in the state, their 2018 rates vary from one area of the state to another. By and large, their rates are lower in the areas where they already offered coverage in 2017, mid-range in Halifax and Mecklenburg counties (where they expanded for 2018), and highest in the Charlottesville area (where they also expanded for 2018, and where they are the only insurer offering plans for 2018).
In the Charlottesville area and Halifax and Mecklenburg counties, Optima had no claims experience, whereas they did have claims experience in the rest of the areas where they’re offering coverage for 2018. In the Halifax and Mecklenburg, Piedmont is also offering coverage for 2018, and their rates are considerably lower than Optima’s (although even Optima’s rates in those counties are lower than Optima’s rates in the Charlottesville area).
So in Halifax and Piedmont counties, the percentage increase for the lowest-cost plan is based on a Health Keepers plan in 2017 versus a Piedmont plan in 2018. But in the Charlottesville area, the percentage increase is based on a Health Keepers plan in 2017 versus an Optima plan in 2018. And it appears that Optima implemented their highest 2018 rates in that area, where they knew that they would be taking on all of the risk, with no other insurers in the market (note that if rates end up being too high for 2018, enrollees will eventually receive MLR rebates).
For people who get premium subsidies, the subsidies are much larger for 2018 than they were in 2017, to offset the enormous rate increase (the unsubsidized cost of the lowest-priced silver plan for a 40-year-old is going from $303/month to $1012/month in the Charlottesville area), keeping the after-subsidy cost of the benchmark plan roughly equivalent to what it was in 2017 (slightly lower, actually, but roughly equivalent). But for people who don’t get premium subsidies, the rate increase in the Charlottesville area is the most substantial in the country. For people in this situation, it was worth talking with a tax preparer to see if there’s any realistic way of getting MAGI down to a level that’s subsidy-eligible, since the subsidy cliff results in thousands of dollars in additional premiums that enrollees have to pay for coverage in 2018.
Direct primary care arrangements exempt from insurance oversight
In a direct primary care agreement, a patient pays a doctor a set fee each month, in return for unlimited access to a predetermined range of primary care treatments. Such arrangements are not considered minimum essential coverage under the ACA, so a person who relies on them without additional health insurance in place would be subject to the individual mandate penalty (unless otherwise exempt).
But questions remain at the state level in terms of whether direct primary care arrangements should be subject to insurance regulations and oversight from the state insurance department. Virginia has decided that the answer is no. During the 2017 legislative session, lawmakers passed H.B.2053 (and the companion senate bill, S.B.800) and Governor Terry McAuliffe signed the legislation into law on April 26.
Virginia’s law specifies that direct primary care arrangements are not insurance, which means they are not subject to Virginia’s insurance laws and regulatory oversight. The legislation includes specific details that must be communicated to direct primary care enrollees, including the fact that the arrangement is not insurance, provides only limited benefits, and does not meet the ACA’s coverage requirements.
410,726 people enrolled in private plans through the Virginia exchange during the 2017 open enrollment period. 421,897 people enrolled during the 2016 open enrollment period, so enrollment was 2.6 percent lower in 2017. Across all states that use HealthCare.gov, enrollment was about 5 percent lower than it had been the year before.
The decline is due to a variety of factors, including higher premiums, insurer exits from the exchanges, uncertainty about the future of the ACA, and the Trump Administration’s decision to pull advertising for HealthCare.gov in the final week of open enrollment.
The average pre-subsidy premium in the Virginia exchange is $405/month in 2017. But 81.5 percent of enrollees are receiving premium subsidies, and their average after-subsidy premium is $146/month.
Open enrollment for 2017 ended on January 31. To obtain 2017 coverage later in the year, most applicants needed a qualifying event (and would have to provide proof of the qualifying event in order to complete the enrollment). Native Americans can enroll year-round, as can anyone eligible for Medicaid or CHIP (keeping in mind that Virginia has not expanded Medicaid under the ACA, so Medicaid eligibility is very limited for able-bodied adults).
2017 carrier shifts, CareFirst eliminated bronze plans
UnitedHealthcare has exited the individual markets in the majority of the states where they offered exchange plans in 2016. But in Virginia, United has continued to offer plans in the exchange in 2017. They discontinued their PPOs, but are still offering HMOs both on and off-exchange in Virginia (they will not remain in the Virginia market after the end of 2017, however).
Humana exited the individual market in Virginia as the end of 2016, but they were only offering plans outside the exchange, so their exit didn’t impact the exchange offerings. And Cigna joined the individual market in Virginia for 2017, both on and off-exchange. Cigna’s plans are available in Northern Virginia and the Richmond area. Cigna scaled back their plans to expand into more exchanges for 2017, but a search on Healthcare.gov confirms that their plans are available in some areas of Virginia for 2017.
Coventry left the individual market, but they were actually just rebranded as Aetna (Aetna purchased Coventry in 2013).
CareFirst (including CareFirst Blue Choice along with Group Hospitalization and Medical Services, Inc.) is continuing to offer plans in the exchange, but they terminated all of their bronze plans and replaced them with silver. The result is higher overall average rate increases, since people who were on bronze plans were shifted to more expensive silver plans. CareFirst’s service area in Virginia is very small, however. They only offer plans in a small area of the state around Washington DC (east of Route 123, in Fairfax and Prince William Counties).
The average benchmark plan (second-lowest-cost silver plan) premium in Virginia was 10 percent more expensive in 2017 than it was in 2016 (that’s less than half the 22 percent average increase nationwide). Subsidies are based on the cost of the benchmark plan, so they were larger for 2017 than they were in 2016. But exchange enrollees still needed to compare the various options that were available during open enrollment, as some plans had rate increases well in excess of 10 percent (details below).
The Virginia Bureau of Insurance has a page that details the proposed rate changes carriers have filed for 2017. Ten carriers offered plans in the Virginia exchange in 2017, and their final approved average rate increases are as follows:
- Aetna (new plans, replacing Coventry for 2017; Aetna will exit the Virginia market at the end of 2017 and will not offer 2018 coverage)
- CareFirst Blue Choice: 31.2 percent (revised rate filing submitted in August, and subsequently deemed reasonable by regulators). CareFirst Blue Choice also dropped all of their bronze plans at the end of 2016, and mapped policy-holders to silver plans instead (people had the option of switching to a different CFBC plan or a plan from another carrier if they didn’t like the mapped option). CFBC also consolidated their three Gold plans into one Gold plan for 2017.
- Cigna (new plans)
- Group Hospitalization and Medical Services, Inc.: 20.2 percent (revised rate filing, submitted in August, and subsequently deemed reasonable by regulators). GHMSI is a CareFirst BlueCross BlueShield company, and followed the same strategy described above: Bronze plans were terminated, and bronze enrollees were mapped to silver plans instead. For people who already had silver and gold plans, the average rate increase was just 5.5 percent. But since everyone on the less expensive bronze plans was switched to more expensive silver plans, the overall average rate increase was 20.2 percent.
- Health Keepers (Anthem): 14.35 percent
- Innovation Health Insurance Company (An Aetna company): 12.1 percent (exiting at the end of 2017)
- Kaiser Foundation Health Plan of the Mid-Atlantic: 10 percent
- Optima Health Plan (HMO): 24.3 percent
- Piedmont Community Healthcare (and Piedmont HMO): 17.4 percent
- UnitedHealthcare of the Mid-Atlantic: 11.9 percent (exiting at the end of 2017)
For more analysis of the rate review process that took place in Virginia during the summer of 2016, ACAsignups has a comprehensive review of the initial rate filings in Virginia for 2017, an updated version that provides additional clarity, and a revised version with revisions as of August 2016.
Note that the “final rate increase” numbers on Healthcare.gov’s rate review tool do not always match the detailed descriptions further down the page, or the information in the associated rate filing document.
421,897 people enrolled in private plans through the Virginia exchange during the 2016 open enrollment period. That’s an increase of 9.5 percent over the 385,154 people who enrolled during the 2015 open enrollment period. And the 2016 total already accounted for attrition as of February 1, whereas the 2015 total didn’t include any early attrition.
37 percent of Virginia exchange enrollees were new to the exchange for 2016, while the rest already had coverage through the exchange in 2015.
After accounting for attrition in February and March, the effectuated enrollment tally as of March 31 was 378,838. Of those enrollees, 84.2 percent are receiving premium subsidies that average $276 per month (for perspective, the average pre-subsidy premium for those who enrolled during open enrollment was $366/month; the subsidies offset the majority of that cost for those who are subsidy-eligible).
Open enrollment ended on January 31, for both on and off-exchange plans. The next open enrollment period will begin on November 1, for coverage effective in 2017. Between now and then, enrollment—including off-exchange—is only possible in most cases for people who experience a qualifying event. But Native Americans can enroll year-round, as can anyone who’s eligible for Medicaid or CHIP.
The penalty for being uninsured in 2016 (which will be assessed when tax returns are filed in early 2017) is much higher than it was in 2014 and 2015: $695 per uninsured adult, or 2.5 percent of household income above the tax filing threshold, whichever is higher.
Governor vetoed direct primary care exemption in 2016
In March 2016, lawmakers in Virginia passed HB685, in an effort to protect the direct primary care model. Direct primary care is an arrangement between physicians and patients that allows the patient to pay the doctor a flat monthly fee in return for access to primary care.
Under HB685, direct primary care arrangements would not be subject to Virginia’s insurance laws and regulations, or the jurisdiction of the State Corporation Commission. Governor McAuliffe recommended that the bill include a provision that the legislation be reenacted during the 2017 legislative session, and he ultimately vetoed HB685 in May 2016.
Direct primary care arrangements are still legal in Virginia, but since HB685 was vetoed, there isn’t a legal exemption from insurance regulatory laws for direct primary care models.
HB685 stated that a direct primary care arrangement is not health insurance, which is why it wouldn’t be subject to oversight from the Bureau of Insurance. As such, a direct primary care arrangement does not fulfill the ACA’s requirement that people maintain health insurance coverage or pay a penalty (described above) for being uninsured. People are free to enroll in a direct primary care arrangement in addition to a health insurance plan, but if they use a direct primary care arrangement in lieu of a health insurance policy, they’ll be subject to the ACA penalty when they file their tax return, unless they’re otherwise exempt.
After reviewing proposed rates for several months, regulators in Virginia announced approved rate changes for 2016 in early October 2015. For carriers that offer individual plans in the Virginia exchange, rate changes for 2016 ranged from a 3.34 percent decrease (Innovation Health Insurance Co.) to a 19.1 percent increase (Group Hospitalization and Medical Services). For the entire individual market—which includes five carriers that only offer plans off-exchange (two of which had increases in excess of 14 percent)—the overall weighted average rate increase in Virginia was 8.5 percent for 2016.
In the small group market, the news was even better, with a weighted average rate increase of just 2.9 percent.
For the individual market, Kaiser Family Foundation analyzed rate data for 14 metropolitan areas, comparing benchmark (second-lowest-cost silver) plan premiums in 2015 and 2016. In the Richmond, Virginia area, the benchmark premium is 6.2 percent higher in 2016. Statewide, the average benchmark premium is 4 percent higher in 2016 than it was in 2015, according to HHS.
Subsidy amounts are tied to benchmark plan premiums, so average subsidies are higher in Virginia in 2016 than they were in 2015. The average premium subsidy in Virginia in 2016 is $273/month, while the average premium subsidy in 2015 was $260/month. But the increase isn’t enough to offset all of the premium increases; it was important for enrollees to shop around during open enrollment and actively select from among the available plans for 2016.
Lawmaker introduces Anti-ACA legislation
On January 5, 2016, Republican State Representative Brenda L. Pogge introduced HB338. The legislation would have prohibited Virginia from implementing a state-run exchange, and would also ban state resources (personnel or financial resources) from enforcing, administering, or cooperating with the Affordable Care Act.
Virginia already uses the federally-run exchange (Healthcare.gov), although it’s a marketplace plan management system, which means the state oversees the health plans that are available through the exchange. If HB338 had passed, it would have prohibited a future governor from establishing a state-run exchange, and would presumably force the Virginia Bureau of Insurance to cease plan management oversight for plans sold through the exchange.
In early February, the House Appropriations subcommittee on Health and Human Resources recommended striking HB338 from the docket, and the legislation died in committee.
Opponents of the ACA saw HS338 as an effort to rid Virginia of Obamacare, but the individual mandate is administered by the IRS – no state agency is responsible for enforcing the rule that says nearly everyone must have insurance coverage in place. And while Virginia does currently oversee the plans available on the exchange, there are five states where even rate regulation for exchange plans is entirely up to HHS. Thus it’s doubtful that the legislation would have had a significant impact.
By the end of the 2015 open enrollment period, including the extension through February 22, the Virginia exchange had enrolled 385,154 people in private plans, including 2014 enrollees whose plans were renewed. 84 percent qualified for premium subsidies, and 54 percent were new to the exchange for 2015. Of the 176,642 enrollees who renewed coverage from 2014, nearly 99 thousand actively renewed their plans, while the rest were auto-renewed. Of those who actively renewed, nearly half (43,555) picked a new plan for 2015.
But as expected, some enrollees didn’t pay their initial premiums, and some cancelled their exchange plans because they obtained coverage elsewhere. By the end of March, 335,033 people in Virginia had effectuated private plan coverage through the exchange. That total had declined slightly by the end of June, to 327,026. Of the effectuated enrollments, 83.8 percent of them were receiving premium subsidies, and nearly 55 percent were receiving cost-sharing subsidies.
Fortunately for the 274,044 people who are receiving premium subsidies through the Virginia exchange, the Supreme Court ruled in June 2015 that subsidies are legal in every state, regardless of whether the exchange is run by the state or federal government. If the Court had ruled that subsidies were not allowed in states that use the federally-facilitated marketplace (ie, Healthcare.gov), their premiums would have become entirely unaffordable. And rates in the individual market – even for people who don’t have subsidies – would have increased by an average of 35 percent (or even 55 percent), in addition to the regular annual rate increases due to medical cost growth.
An additional 36,569 exchange enrollees in Virginia had enrolled in Medicaid or CHIP during the second open enrollment period. That enrollment is year-round, but volume usually increases during the open enrollment period for private plans because of the increased outreach from navigators and exchanges. Medicaid enrollment in Virginia continues under the pre-2014 eligibility guidelines, as the state has not yet accepted federal funding to expand Medicaid.
Carriers and rates for 2015
In the Richmond area, the average price for a 40 year old non-smoker selecting the second-lowest-cost Silver plan (benchmark plan) increased by only 2.7 percent in 2015, from $253 per month to $260 per month (for people who qualify for premium tax credits, the difference was mostly absorbed by slightly higher subsidies).
The Commonwealth Fund conducted an analysis of rate changes across all plans and metal levels in the exchange, and found a breathtaking average rate decrease of 56 percent. But their report explained that this was because Optima Health, which had previously offered a silver plan that cost $2,000 a month (seven times the average rate), stopped offering that plan for 2015, which brought the average cost way down even though the change would have been much more muted without taking into consideration the very high-priced Optima plan (which probably wasn’t purchased by many shoppers in 2014).
For all 14 carriers in the individual market in Virginia (including off-exchange plans), PricewaterhouseCooper data indicated a weighted average finalized premium increase of 10.2 percent for 2015.
But for people who had the benchmark Silver plan, price increases were more muted, mostly averaging 3 percent to 6 percent in much of the state, especially for enrollees willing to shop around in order to make sure they still had the second-lowest-cost Silver plan in 2015. The Virginia Association of Health Plans called the price increases “relatively modest” for people who were enrolled in an exchange plan in 2014 and then renewed their coverage or switched to another exchange plan for 2015. In Fairfax county, both the lowest and second-lowest cost silver plan are offered by different carriers in 2015 than they were in 2014.
In the Richmond area, a 40 year old non-smoker purchasing the lowest-cost Silver plan from Anthem would have paid $258/month in 2014, and that increased just slightly to $264/month in 2015. The lowest cost Silver plan from Coventry for the same enrollee increased in price from $230/month in 2014 to $241/month in 2015. Compared with rate increases in the individual market before the ACA, these were minimal changes. And for people who qualify for subsidies, they were offset by higher subsidies in 2015.
More money for enrollment assistance
Two navigator organizations in Virginia received a little over $2 million in navigator grants in September 2015. The bulk of the funding went to Virginia Poverty Law Center, although Boat People SOS received $205,000 in navigator funding.
The Virginia Poverty Law Center – along with Advanced Patient Advocacy LLC – also received $1.9 million in federal grant money in 2014 (out of a total of $60 million awarded nationwide) in order to operate and expand the enrollment assistance they provide as ACA navigators.
And in October 2014, it was announced that Virginia was receiving another $9.3 million federal grant to hire 100 enrollment assisters for the state. Virginia is one of just four states that received this additional grant. Then-Governor Terry McCauliffe used this money together with $4.3 million that the state had in remaining federal funds that were allocated towards establishing a state-run exchange – which Virginia did not do. The money was used to boost enrollment efforts in the state during the 2015 open enrollment period.
One of the enrollment challenges facing Virginia is the relatively high percentage of the population living in rural areas (13 percent), and also a high rural poverty rate (18 percent). In-person assistance can be harder to come by in rural areas, and internet connection can often be unreliable or slow in those areas. Navigator organizations have worked to develop strategies to reach out to the “high pockets of uninsured folks” in the state’s rural areas, and get them enrolled in the exchange during open enrollment.
In addition to exchange enrollment assistance, in December 2014 Virginia received a $2.6 million grant from CMS that was used by the state to develop innovative new public health care models to address a wide range of issues, including tobacco use and mental health care. The aim was to improve public health while also holding down costs. It was a joint project between the Virginia Center for Health Innovation and hundreds of public and private organizations and individuals.
Although Virginia’s exchange is run by HHS, the state has a website — Cover Virginia — that provides information about Medicaid and FAMIS, along with eligibility for premium and cost-sharing subsidies in the exchange. And in late 2014, Virginia received $2 million in federal funding to provide outreach and education to residents about the exchange and the Cover Virginia website.
Grandmothered plans allowed to remain in force, but only Golden Rule kept them active
Grandmothered plans are pre-2014 health insurance that was purchased after the ACA was signed into law (ie, they’re not grandfathered under the ACA). In the fall of 2013, and then in subsequent years through 2018, the Obama Administration and then the Trump Administration have announced transitional fixes to allow existing health plans to continue to renew until as late as October 2019, with coverage continuing until the end of December 2019.
Virginia was initially one of 15 that did not accept the HHS proposal to allow grandmothered (transitional) health plans to remain in force past the end of 2014, and some reports indicated that as many as 250,000 people were going to need to transition to new coverage at the end of 2014.
But in November 2014, Virginia lawmakers passed House Bill 5011 and Senate Bill 5014, which allowed policies slated for cancellation to renew again under the terms allowed by HHS. Carriers were not required to renew plans at the end of 2014, but were given the option to do so. Ultimately, most of the carriers in the Virginia market determined that they were already too far along in the process of switching to ACA-compliant plans, and only Golden Rule and Freedom Life opted to offer transitional plans for renewal at the end of 2014. Virginia is allowing insurers to continue grandmothered plans until the end of 2019, leaving renewal decisions up to Golden Rule and Freedom Life.
By April 19, 216,356 people had selected a private plan in the Virginia exchange. An additional 48,660 exchange enrollees had been found to be eligible for Medicaid or CHIP by mid-April, under the state’s existing guidelines.
Uninsured rate slightly higher in 2014
In 2013, the uninsured rate in Virginia was 13.3 percent. According to a Gallup poll, that rate had climbed slightly, to 13.4 percent, by mid-2014. Virginia was one of only three states where the uninsured rate increased during the first half of 2014. The state’s failure to expand Medicaid is no doubt a significant factor in the lack of progress on insuring the uninsured.
By the first half of 2015, the Gallup survey found that the uninsured rate had declined slightly, to 12.5 percent.
History of the Virginia exchange
Former Virginia Gov. Bob McDonnell, a Republican, opposed the Affordable Care Act. But along with the Republican-controlled General Assembly, he was conflicted as how best to resist the law’s implementation in the state.
In a 2011 letter to state legislative leaders, McDonnell wrote of extreme difficulty in determining whether “ceding control of an exchange to the federal government or creating our own is in the Commonwealth’s best interest.” The governor’s and General Assembly’s actions over the next few years reflected their shared reluctance to implement either option.
In August 2010, McDonnell appointed the Health Reform Initiative Advisory Council. The council issued a report in December 2010 and recommended that Virginia implement a state-based exchange.
The Virginia General Assembly passed legislation in 2010 to invalidate the individual mandate of the Affordable Care Act, and the state attorney general filed a lawsuit against Kathleen Sebelius, the secretary of the U.S. Department of Health and Human Services, based on the new law. After a series of legal actions, the state law was ultimately ruled invalid.
In 2011, the General Assembly passed legislation that was supportive of a state-based exchange, and McDonnell signed the bill into law. However, throughout the 2012 session the General Assembly failed to pass additional legislation necessary to move ahead with exchange implementation.
In January 2014, Governor Terry McAuliffe was inaugurated in Virginia, and unlike McDonnell, McAuliffe is very supportive of the ACA and of Medicaid expansion in Virginia.
HHS-run exchange, but some state oversight
Finally, after President Obama’s re-election in 2012, McDonnell notified HHS that Virginia would not proceed with a state-based exchange nor Medicaid expansion. While the norm for the federally operated exchange leaves no role for the state, McDonnell did lobby for oversight of the health plans that operate on the exchange within the state; Virginia is one of seven states with a marketplace plan management exchange.
HHS approved McDonnell’s request in March 2013, and the federally-run exchange opened for business in October 2013, with health plans overseen by the state Division of Insurance.
Virginia health insurance exchange links
Virginia 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.
(877) 310-6560 / firstname.lastname@example.org
State Exchange Profile: Virginia
The Henry J. Kaiser Family Foundation overview of Virginia’s 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.