2017 rates and the changing carrier landscape
UnitedHealthcare caused a media stir last fall when they announced that they might exit the exchanges nationwide at the end of 2016. Ultimately, they’ve announced that they will exit the individual markets in the majority of the states where they currently offer plans. But in Virginia, United will continue to offer plans in the exchange in 2017. They’ll be discontinuing their PPOs, but will continue to offer HMOs both on and off-exchange in Virginia.
Humana will exit the individual market in Virginia in 2017 (they’re currently only off-exchange), but Cigna will join the individual market in Virginia, both on and off-exchange. Coventry will be leaving the individual market, but it appears that they’re actually just being rebranded as Aetna (Aetna purchased Coventry in 2013).
The Virginia Bureau of Insurance has a page that details the proposed rate changes carriers have filed for 2017. The following carriers will offer plans in the Virginia exchange in 2017:
- CareFirst Blue Choice
- Group Hospitalization and Medical Services
- Health Keepers
- Innovation Health Insurance Company
- Kaiser Foundation Health Plan of the Mid-Atlantic
- Optima Health Plan
- Piedmont Community Healthcare (and Piedmont HMO)
- UnitedHealthcare of the Mid-Atlantic
For more analysis of the changes, ACAsignups has a comprehensive review of the rate filings in Virginia for 2017, and an updated version that provides additional clarity.
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 vetoes direct primary care exemption
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, Virgina 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.
Virginia has a robust health insurance market, with ten carriers offering plans in the exchange – including UnitedHealthcare of the Mid-Atlantic, which is new to the Virginia exchange for 2016. A Kaiser Family Foundation analysis found that there are more insurers offering coverage on a per-county basis in Virginia in 2016 than they were in 2015, despite the fact that nationwide, the average county in the US has fewer available insurers in 2016.
Ten carriers are offering individual plans in Virginia’s exchange for 2016:
- Innovation Health Insurance
- Optima Health Plan
- Kaiser Foundation Health Plan of the Mid-Atlantic
- UnitedHealthcare of the Mid-Atlantic
- Group Hospitalization and Medical Services
- Care First Blue Choice
- Health Keepers (Anthem)
- Piedmont Community Healthcare (and Piedmont HMO)
In addition, several carriers offer ACA-compliant plans only outside the exchange:
- Humana (exiting individual market in Virginia at the end of 2016)
- UnitedHealthcare Life Insurance
- Golden Rule
- Optima Health Insurance
- Freedom Life
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 see 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.
Virginia worked to protect premium subsidies
Two very important legal challenges to the ACA’s premium tax credits were undertaken in 2014/2015, and a ruling against the tax credits would have had far-reaching consequences, not only for the millions of Americans who are relying on those subsidies to make their coverage affordable, but also for anyone who purchases health insurance in the individual market at all, since the loss of billions of dollars in subsidies would have crippled the markets in some states.
Halbig v. Burwell and King v. Burwell both argued that subsidies were not allowed in states (including Virginia) where HHS is running the exchange. King v. Burwell ultimately ended up at the Supreme Court, and the Justices ruled in favor of the government in June 2015, maintaining the subsidies.
Virginia’s Attorney General, Mark Herring, led a group of 18 states that filed an amicus brief in the Halbig v. Burwell case in November 2014, urging the court to rule in favor of keeping the subsidies in the federally facilitated marketplace(FFM). Of the 18 states represented in the amicus brief, five – including Virginia – have a federally-facilitated marketplace, six have partnerships with HHS to operate their exchanges, and seven have fully state-run exchanges but were concerned that insurance market collapse in states with federally-run exchanges could impact the markets in their states as well, given how many health insurance carriers operate regionally or nationally.
Virginia led the amicus brief, and attorney general Mark Herring has been outspoken in the past about the importance of keeping the premium subsidies available in states like Virginia where HHS is operating the exchange. Virginia Governor Terry McAuliffe was also a proponent of keeping subsidies available in all states.
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 to receive this additional grant. 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 will be 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 is to improve public health while also holding down costs. It’s 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.
In October 2014, the state contracted with Big River Advertising – based in Richmond – to run a marketing campaign that includes radio, TV, and online advertising designed to boost awareness of the exchange. The advertising is designed to make people aware of the assistance that’s available through the exchange, and to reiterate the fact that exchange-based coverage is affordable.
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, March 2014, and again in February 2016, the Obama Administration announced transitional fixes that allowed existing health plans to continue to renew until as late as October 2017, with coverage continuing until the end of December 2017.
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 opted to offer transitional plans for renewal at the end of 2014.
Virginia is allowing insurers to continue grandmothered plans until the end of 2017, and Golden Rule still has active transitional plans in the state. It will be up to the carrier to determine whether or not to renew the transitional plans again at the end of 2016.
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.
No Medicaid expansion
Virginia has not expanded Medicaid (meaning that there are 131,000 people currently in the coverage gap), but has considered the “Virginia way” that political leaders have offered as an alternative to Medicaid expansion.
Governor Terry McAuliffe, who took office in early 2014, has said that Medicaid expansion is one of his main priorities, and considering pushing it through without the support of the state legislature. The GOP legislature in Virginia has strongly rejected Medicaid expansion, utilizing every legal – and possibly not-so-legal – measure they can to block it.
In April 2014, the Virginia Senate finance committee approved a state budget that included funding to create a private marketplace (Marketplace Virginia) that would use federal funds to help provide private health insurance to people who would otherwise be covered by Medicaid if the state were to expand the program.
But when it came time to vote on the budget, Republicans in the Senate rejected it because of the Marketplace Virginia inclusion, and a stale-mate ensued. A government shut-down was looming if an agreement wasn’t reached before the July 1 start of the new fiscal year. But in early June, Democratic Senator Phillip Puckett resigned, giving the GOP control of the state Senate; the budget quickly passed.
Gov. McAuliffe approved the budget on June 20, and the shut-down was averted. But he used his line-item veto powers to remove several Republican additions to the budget that would have blocked Medicaid expansion. Republicans pushed back against what they considered an over-reach of executive powers, although McAuliffe vowed to expand Medicaid with or without their support.
In September 2014 however, McAuliffe pulled back from his push for Medicaid expansion, proposing instead a ten step plan that will gradually get health insurance to about 200,000 Virginia residents – roughly half as many as would gain coverage under Medicaid expansion.
McAuliffe’s plan involves enrolling people who already qualify for health coverage but are not yet receiving benefits, as well as expanding coverage for 20,000 people with severe mental illness and for 5,000 children of low-income state employees.
In December 2014, McAuliffe unveiled his 2015 budget, and it included Medicaid expansion – and an associated $105 million in savings for the state in fiscal year 2016. But lawmakers did not vote for Medicaid expansion during the 2015 session.
A private exchange
The Virginia Chamber of Commerce announced in June 2014 that it was working with ChamberSolutions to create a new small business private health insurance marketplace called Virginia Benefits Market.
The private exchange for employer-based coverage became available for use in 2015, and offers health coverage as well as dental, vision, life, disability, and critical illness plans.
The private exchange should not be confused with the SHOP exchange run by HealthCare.gov, but all of the health plans that are sold through the Virginia Benefits Market are ACA-compliant (ancillary products are not regulated by the ACA).
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.