Data Insights from the 2016 ACA Marketplace

 

ACA


Robert Wood Johnson offers the following observations about the Affordable Care Act Marketplace:

  • Carriers made adjustments in 2016 to reduce their exposure to high costs: In 2016, carriers attempted to minimize their exposure to high costs by reducing the number of plan offerings with out-of-network benefits, among other strategies. This change occurred at all metal levels and in all regions. The number of Silver plans that are HMOs or exclusive provider organizations (EPOs) increased from 61% in 2015 to 69% in 2016. The number of Gold plans declined compared to other metal levels. While the number of Silver plans increased 2.9%, the Gold plans declined by 8.7%. The number of Gold plans declined in most regions.
  • Regional price variation in narrowed: There was a geographic convergence in premium prices in 2016, as premiums rose far more in regions that had lower prices the prior year. Nationally, the distribution of average premium prices tightened in all rating areas. This pattern was less straightforward for deductibles, as many combinations of cost-sharing options are on the market.
  • Price variation increased within markets: Despite the reduced variation across markets, differences in premium prices increased within markets. The average premium price range increased from 2015 to 2016 in a rating area. This is true for all metal levels and all regions. The distribution has become more skewed, as maximum prices increased more than minimum prices. In 2016, a Blue or a national carrier offered the highest priced plan in a rating area about 75% of the time.
  • There are still large regional differences in plan design: Plans in the Northeast and West have a much broader range in premium prices and less variation in deductibles. Plans in the Midwest and South have a smaller range in premium prices and a far greater range in deductibles. There were some changes in these patterns from 2015 to 2016, but there are still important regional differences in plan design.
  • More regulated markets have higher premiums and lower deductibles:  Federally facilitated marketplaces with the most plan regulation—CA, CT, DC, MA, NY, RI, VT—had the highest premiums and lowest deductibles.

More product changes are likely in 2017. There is room for further reduction in broad network plans. Most entrants in 2016 primarily offer narrow network products. This will probably continue to vary regionally. We may also see further reduction in Gold plans, although carriers must sell Gold and Silver. There are indications that some carriers may reduce their Bronze offerings. The number of Bronze plans increased very little in 2016. There may be reductions in some markets in 2017. The actuarial value of Bronze and Silver plans seems to have grown closer in 2016, and average prices are quite close in many regions. While carriers have resisted government calls for standardization and simplification of plan offerings, the industry seems to be standardizing itself through potential reductions in product offerings.

Premium prices will converge further. While premium increases are expected, some regions are relatively under priced. A further reduction in regional differences will probably take place. Prices may converge at the levels seen in more regulated state-based marketplaces, which may be more appropriately priced.

The weaker markets are smaller, largely rural, have less carrier participation in 2016, fewer plans, and lower premiums. These markets may experience higher premium increases and continued low carrier participation, which will inhibit enrollment gains.

UnitedHealth Group announced that it will exit 26 markets and participate in three. The company has not announced a decision about five others. In states where UnitedHealth Group is exiting, the insurer was priced relatively lower than others, and there tended to be a higher-priced Blue plan in the marketplace. Exit states weak markets with fewer plans, less growth in the number of plans, a smaller range in premium prices, and below average premiums—despite average or above average premium increases from 2015 to 2016.

UnitedHealth Group may have concluded that, due to the small size and low level of activity in certain markets, there would not be enough additional enrollment to offset negative claims experiences, and that it would be hard to raise premiums enough to stop losing money with enrollees. If other carriers follow suit, weak markets may become weaker as they lose carriers and/or experience above average price increases. Humana seems to have positions in weak markets and is priced relatively low in many of them. Humana’s decisions about exiting markets suggests that it may be seeking to reduce its presence in weak markets.

The Drivers of Health Insurance Premium Changes for 2017

 

rising healthcare costs
The American Academy of Actuaries offers an early look at what’s driving changes in premium in the Affordable Care Act (ACA) individual and small group markets. Academy Senior Health Fellow Cori Uccello said, “Increased health care costs and the end of the ACA’s transitional reinsurance program are two of the biggest factors pressuring rates higher. The one-year moratorium of the health insurance provider fee will partially offset these increases.”

The issue brief identifies the following factors that will affect 2017 premiums:

  • The underlying growth of health care costs: Although increases in health care spending are still relatively low, prescription drug spending is expected to increase faster than other medical spending.
  • The sun-setting of the ACA’s transitional reinsurance program: Each year, the gradual reduction in the reinsurance program has increased premiums. The final impact will occur in 2017 when projected claims are expected to increase 4% to 7% due to the program ending in 2016.
  • The composition of the risk pool and any changes in the assumptions used in premium calculations: Insurers will revise their assumptions for underlying 2017 premiums if enrollment levels, risk profiles, or claims are different than expected when they developed 2016 premiums.
  • The one-year moratorium of the ACA health insurance provider fee: This will lower premiums by 1% to 3%.
  • The repeal of the ACA’s original expansion of the small group definition, and modifications to provider networks:Premium changes for individuals will reflect increases in age, and changes in geographic location, family status, or benefit design. If a consumer’s plan was discontinued, the premium change will reflect the increase or decrease resulting from being moved into a different plan. Average premium change information (released by insurers or states) could reflect consumers moving to different plans when their plan was discontinued.

Major Health Insurance Changes for the New Year

Covered CA 2016 ChangesCovered California is reminding consumers and small businesses about important changes in 2016. Starting January 1, Covered California increased access to plans and providers and offered more health plans, and increased the number of benefits that are not subject to a deductible. Here is a run-down of the changes:

Most California Consumers Get New Forms for the 2015 Tax Year
This year, consumers who are insured through their employer or a government program, like Medi-Cal, will get Form 1095-B or Form 1095-C. The forms show who maintained minimum essential coverage and is not liable for the tax penalty. Consumers under Covered California will continue to get a Form 1095-A. For more information, visithttps://www.irs.gov/Affordable-Care-Act/Questions-and-Answers-about-Health-Care-Information-Forms-for-Individuals.

The Penalty for Not Buying Affordable Insurance Is Going Up — A Lot
The IRS penalty applies to people who go without insurance when they can afford to buy it. It will increase for 2016 to at least $695 per adult and $347.50 per child under 18 or 2.5% of household income, whichever is greater. A recent study by the Henry J. Kaiser Family Foundation estimates that the average household penalty in 2016 will be $969, which is a 47% increase from 2015. For more information, visit www.taxpayeradvocate.irs.gov/estimator/isrp.

New Requirements and New Options for Many of California’s Small Businesses
Employers with more than 50 full-time-equivalent (FTE) employees must offer health insurance to employees or pay a penalty. Through 2015, this requirement applied only to businesses with more than 100 employees. Any of these employers with an employee who does not take their offer of coverage will have to pay a penalty if the employee goes on to get financial assistance to purchase coverage through Covered California. For more information, visit https://www.irs.gov/Affordable-Care-Act/Employers/ACA-Information-Center-for-Applicable-Large-Employers-ALEs.

Covered California for Small Business will expand beyond the ceiling of 50 employees to serve companies employing 100 or fewer FTE employees. For more information, visit www.CoveredCA.com/ForSmallBusiness.

Major Improvements in Choice, Access and Benefits
Covered California used its power as an active purchaser to hold down rate changes for a second year. Before the Affordable Care Act, consumers regularly experienced double-digit premium increases. For 2016, Covered California negotiated a weighted average change of 4%, which is lower than last year’s change of 4.2%. In addition, nearly 90% of Covered California enrollees get some financial assistance to help pay premiums. On average, those subsidies resulted in more than $5,200 for each household in 2014.

Benefit Changes for the 2016 coverage year:

  • The majority of Bronze plan consumers now get three office visits a year to a primary care provider or specialist with no deductible. Other needed services, such as lab tests and rehabilitation, will not be subject to a deductible.
  • Covered California’s Silver plan will combine copay and coinsurance into a single product. Every doctor visit, lab test, and prescription will not be subject to a deductible in this single product. Consumers with chronic conditions will be protected by a cap on specialty drugs. The vast majority of consumers will see their specialty drugs capped at $250 per month, per prescription. Plus, because of Covered California’s standard benefit design, the caps must be offered by every health insurance plan in the individual market and by all plans offered by the exchange. For more information, visit http://news.CoveredCA.com/2015/05/covered-california-board-protects.html.
  • Adult dental coverage is now offered as an add-on.
  • 6% of Covered California consumers will be able to choose from at least three health insurance companies thanks to the addition of two new health insurance companies — UnitedHealthcare Benefits Plan of California and Oscar Health Plan of California as well as the expansion of Blue Shield of California and Health Net.
  • More than 90% of hospitals (general acute centers as designated by the California Office of Statewide Health Planning and Development) in California will be available through at least one health insurance company, and 74% will be available through three or more companies.

 Medi-Cal Coverage for Undocumented Children

  • Medi-Cal will be expanded to all children regardless of their immigration status. The new law goes into effect in May 2016.

Health Care Improvements for All Californians
Starting July 1, health plans must publish and maintain printed and online provider directories. Health plans must maintain accurate provider directories, including routine updates. For more information, visithttp://leginfo.legislature.ca.gov/faces/billNavClient.xhtml?bill_id=201520160SB137.

A new state law will require health plans and insurers to implement formula-tier requirements and cost-sharing caps similar to products offered through Covered California. Assembly Bill 339 requires plans and insurers to have formularies that do not discourage the enrollment of people with certain health conditions. It also sets requirements regarding access to in-network retail pharmacies, standardized formularies, and coverage for certain single-tablet HIV and AIDS treatments. For more information, visithttp://leginfo.legislature.ca.gov/faces/billNavClient.xhtml?bill_id=201520160AB339.

Allowing Mid-Sized Employers to Delay a Move to the Small-Group Insurance Market

A provision in the Affordable Care Act that could have a strong impact on small and mid-sized employers, reports the Commonwealth Fund. Historically, states have defined their small-group markets as groups of two to 50 employees. But, beginning January 1, the Affordable Care Act expands the definition of small employer to have two to 100 employees. Experts say this change could drive up premiums for some mid-sized employers with 51 to 100 employees. They will become newly subject to several small-group market reforms, such as not charging people more for preexisting conditions and covering a minimum set of essential health benefits. Some policymakers have called for the delay or repeal of this provision.

While it is unlikely that the Obama Administration will unilaterally delay this requirement, there is a transitional policy for mid-sized employers. States can decide whether to allow mid-sized groups to remain part of the large-group market for up to two more years. Not all states will permit transitional relief for mid-sized employers including California, Colorado, Connecticut, Maryland, Minnesota, Nevada, New York, Vermont, and Washington.

Many states are concerned that expanding the small-group market could lead to significant disruption, including premium increases for employers with young or healthy groups. This could give some employers an incentive to self-insure or even drop employee coverage. If too many young, healthy groups leave the market, adverse selection could cause premiums to increase for the employers that remain.

California Insurers Are on the Brink of Change

changeCalifornia’s insurance market is set to undergo enormous changes as health reform takes full effect and millions become eligible for public insurance or private subsidies, according to a report by the California HealthCare Foundation. The report provides a snapshot of the insurance market in California at the end of 2013, just before the major provisions of the Affordable Care Act (ACA) took effect. It also includes some initial figures from 2014 that point to large shifts in Medi-Cal and individual coverage levels. Researchers looked at data from the Department of Managed Health Care (DMHC), the California Department of Insurance (CDI), and other sources to examine market share, enrollment, financial performance, premiums, public coverage, and consumer satisfaction. The following are Key findings:

  • Health insurance was a $123-billion business in California in 2013, with six carriers accounting for more than three-fourths of all revenues and most insurers operating in the black.
  • In 2013, enrollment shifts were small, except in the pre-ACA individual market.
  • State and federal policy actions brought significant growth to Medi-Cal managed care — about 2.8 million enrollees, a 58% increase in the 18 months ending in June 2014.
  • Covered California enrolled 1.4 million individuals in health insurance plans through 11 carriers in the first enrollment period ending March 31, 2014.
  • Product choice differed by market, with only 20% of individuals enrolled in HMOs and 79% of large group enrollees in HMOs in 2013. This could change in 2014 as the ACA implements sliding-scale premium subsidies and mandates freedom for individual enrollees to choose their product and insurer.

ACA Open Enrollment Tips

Steve Dorfman, CEO of Health Benefits Center, a nationwide insurance provider based in Hollywood, Fla. says that, compared to last year his office has noticed a strong, steady gain in consumers seeking ACA plans. One reason is that second-year enrollees are noticing premium jumps in their renewals and are looking for a better deal.  He said that the ACA website has vastly improved since the 2013 rollout, but it still suffers glitches and shutdowns from time to time. He ansers these FAQs:

  • What happens if I don’t enroll? – You face a higher penalty this year. It’s 2% of your income or $325 per adult and $162.50 per child – whichever is more. That’s more than triple the penalty for 2014. There is a penalty of 1% of your income or $95. Translation, if you are an individual or family of four making $50,000 a year, your penalty is $1,000. If you are making $100,000, your penalty is $2,000.
  • Do I pay a penalty if I am insured through my employer or through a plan off the exchange? – Not if it is a regular PPO or HMO.
  • If I am unhappy with my insurance plan, can I change it over the next year? – Not unless you can prove a life-changing event – such as loss of a job, a drastic pay cut, or a move to another state. Then, you can go back on the exchange. Otherwise, you are locked into your policy. To change it, you must wait until the next open enrollment period begins in November 2015. Also, you will  be re-enrolled in your policy automatically when the next open enrollment period comes. The premium could well change, too. Therefore, it is important to stay on top of your insurer and the healthcare.gov website.
  • What happens if an automatic deduction bounces and I lose my policy? – You can seek another insurance policy in the open market, but not through the exchange.
  • Other than avoiding penalties, what are the advantages for signing onto Obamacare? — One big advantage is that any pre-existing conditions are included in your coverage. Even people with routine medical issues have been denied insurance, and Obamacare helps that. You will pay higher premiums as you get older, or if you smoke. Aside from that, a healthy 45-year-old nonsmoker pays the same premium as an ailing 45-year-old nonsmoker, but a smoker pays more, whether healthy or sick. Perhaps the great advantage is that an Obamacare plan covers your annual exam and such vital preventive procedures as pap smears, breast exams, and colonoscopies.
  • I am a single man. Does my insurance policy still need to cover maternity costs? — Yes, maternity has to be included under the Affordable Care Act even if you have no reason to pay maternity costs. Hence, your insurance rate is higher than it might be otherwise.
  • My employer is charging me a very high rate. Should I try Obamacare? — You should certainly consider it. With your insurance plan, you can qualify for a subsidy if your annual health care premium is more than 9.5% of your household income. So, if you make $50,000 a year, your insurance rate needs to exceed $4,750 a year or about $396 a month.
  • What is my income limit to qualify for a subsidy? – A family of four making $95,400 or less can get a tax subsidy under the program. The lower the income, the bigger the subsidy. A family making $50,000 can get a rate break approaching 70%. The uninsured in particular stand to benefit, especially if they qualify for Medicaid.
  • My child is on a university insurance plan. Can I keep that plan and still have Obamacare for the family? – Not if you want a subsidy. For your children, it must be one policy or the other, as many college parents are discovering to their surprise. One option is to keep your children on their individual plans through their colleges or universities while insuring the parents as an individual or couple. The rates are structured to encourage full family participation.
  • Are costs higher this year? – Generally, premiums are averaging about 7% to 9% more than last year. Catastrophic policies are as much as 18% higher. However, there is wide variation. Certain policies have remained static or even dropped slightly in price. Check your premium if you have an existing policy that rolled over automatically on January 1.
  • Where can I go for more information? – Before you connect with a well-informed agent, it’s best to be armed with information. Two good places to start are the federal government’s healthcare website at www.healthcare.gov. To calculate your subsidy, the Kaiser Family Foundation offers an excellent interactive website at: http://kff.org/interactive/subsidy-calculator/. If not, call a trusted insurance broker, who can tailor a plan to your budget and your needs.

More changes coming to state insurance exchanges

Maryland, Massachusetts and Nevada scrapped their health insurance exchanges in favor of new technology for the 2015 plan year, and California and Minnesota added capacity and call center staff. Potential improvements in the future include better plan-comparison tools and a focus on small-business insurance exchanges, industry experts say. Employee Benefit News (12/30)

Covered California Launches Renewal Initiatives

RenewalCoveredCACovered California has begun the renewal process for 1.12 million people who enrolled in plans in the exchange last year. Open enrollment will begin Nov. 15 and continue through February 15. Open enrollment is the next opportunity for all Californians to benefit from new insurance rules, including the requirement that insurance be offered regardless of health status. In addition, Californians can buy subsidized coverage starting in 2015. Consumers who complete the renewal process will hear from their insurance plans in December. Their selected health plan will send a statement reflecting coverage starting January 1, 2015. Consumers who take no action will be renewed into their existing plan. More than 12,000 certified insurance agents, 10,000 county eligibility workers, and 6,400 certified enrollment counselors will help enroll consumers.

People who have health coverage through Medi-Cal can renew their coverage throughout the year, on a rolling monthly schedule. Medi-Cal will contact them directly if they need to take action. Unless they are contacted by Medi-Cal, these people don’t need to go to the Covered California website to renew or apply.

Covered California also provided updated enrollment numbers for 2014. Eighty-one percent of Californians who selected a plan during the initial open enrollment had their coverage take effect by paying their first month’s premium. A total of 1.12 million people have coverage and will be part of the renewal process. Covered California expects this number to increase with about 1.3 million Californians participating in the renewal process through the end of the year.

“This is our very first experience with renewal, and we will learn things during this process just as we learned a great deal about open enrollment during 2013 to 2014. We do believe many significant improvements have been made that will assist our consumers during renewal and open enrollment this year. We know this open-enrollment period will be more challenging in some ways. Consumers will only have three months to enroll, compared with the six months they had last time. This is complicated by our knowledge that many who are uninsured have adapted to a culture of coping and have become accustomed to living without health insurance,” said Covered California executive director Peter Lee.

Covered California will start open enrollment with more than double the number of service center representatives — state employed and contractors — to dramatically reduce wait times and help consumers enroll. More than 1,300 representatives will help consumers over the phone, by chat or by processing their paper applications or documents. This year, Covered California will have 254  reps who can serve consumers in languages other than English, compared to 55 in 2013. Covered California is working with health plans to make it possible for consumers to make their first premium payment online as soon as they have selected a plan. This will give consumers evidence that their payment has been received and that they will have coverage in place.

Covered California is redesigning its interactive voice response (IVR) system to handle more consumer calls while reducing wait times. With less than one month before open enrollment begins, consumers can begin the process of shopping for 2015 coverage. They can find out if they are eligible for financial assistance and find out how much a health plan will cost them, by using Covered California’s Shop and Compare Tool (on CoveredCA.com at www.CoveredCA.com/shopandcompare/#calculator). Covered California also offers a full listing of the plans and their rates at www.CoveredCA.com/PDFs/CC-health-plans-booklet-2015.pdf).

Covered California Update

CoveredCAAnnouncementCOBRA Recipients Get Another Chance to Sign Up for the Exchange
At a recent board meeting,Covered California’s executive director, Peter Lee outlined what to expect with the state’s exchange over the next couple of years. He announced a special enrollment period for COBRA enrollees. On May 15, Covered California launched a limited-time special-enrollment period for people who have COBRA health insurance and would like to switch to an exchange plan. They will be eligible to buy coverage through Covered California until July 15.  “Since the passage of the Affordable Care Act, plans in the individual market could be preferable to COBRA coverage because of premium assistance and cost-sharing reductions…For some people who have COBRA coverage, purchasing a plan in the Covered California marketplace…could save thousands of dollars a year,” he said in a press release. At the board meeting, Lee explained that many people missed the open enrollment deadline because they found it difficult to compare the two types of coverage. Lee said that Covered California is telling COBRA recipients, “Don’t try to do this alone.” They are encouraged to get help from navigators and agents, whom Covered California has been busy training to help with COBRA issues.

Don’t Expect Major Changes to Covered California Until 2016
Lee said that Covered California is not expecting to make major changes in 2015. “We will continue to make sure that networks are adequate and that networks are not shrunk or changed…We need product consistency so renewal can be as smooth as possible. We expect minimal changes to our contracts with plans.” Lee said that Covered California will revisit model contract issues for 2016. “We think that there will be significant issues, such as how to look at benefit design and consumer understanding of coinsurance and copayments as well as issues of contract terms.”

Networks to Expand
Lee said that carriers are greatly expanding their networks in Covered California. Blue Shield has expanded its network significantly over past 12 months. He said that 65% of doctors in the company’s global broad PPO network are now serving enrollees in Covered California as well as individual enrollees outside of Covered California. Health Net has expanded its doctor network by 58% since Jan. Brad Johnson of the California Medical Assn. said that, under Covered California, doctors are having problems finding specialists and specialty facilities for referrals. Julianne Broyles of California Health Underwriters said, “From our meetings with our members, over the past few days, the issue of network adequacy has certainly come up as one of their top concerns that they are hearing from their clients.”

Enrollment
Lee said that Covered California expecting to have the next open enrollment available from November 15 to February 15. “We will have three months to renew a million people and hopefully sign up 500,000 more. It is a lot of work,” he added. Sixty percent of the people who have enrolled agreed to let Covered California use their financial data to automatically check their eligibility.” Covered California expects to have 1.2 million enrollees who have paid their premium by May 2014, increasing to 1.7 million by April of 2015, and 2 million by April 2016.

Employees Likely to See Changes in Health Benefits

Employees can expect a number of changes to their health benefits due to  rising health costs and the Patient Protection and Affordable Care Act (ACA) according to Aon Hewitt. The following are some of the most notable changes employees may see include:

  • A higher price tag – Aon Hewitt’s research shows that most employers plan to subsidize employees’ health coverage at the same percentage rate as last year. However, as health care costs increase, the amount of money employees will need to contribute more. In addition, almost one in five employers has increased surcharges for adult dependents with access to coverage elsewhere.
  • More options for coverage – Some employees — particularly those who are not offered health coverage through their employer — may wish to purchase individual coverage through the new state and federal marketplaces.
  • A higher probability of being in a consumer-driven health plan – Consumer-driven health plans (CDHPs) have surpassed HMOs as the second most offered plans. In fact, a growing number of employers are offering CDHPs as the only plan option. While just 10% of companies do so today, another 44% are considering it in the next three to five years.
  • Programs that promote health awareness and education – With employers facing the rising health care costs and declining health of the population, employees can expect to see more programs that encourage them to take a more active role in managing their health.  For example, 75% of employers offer health risk questionnaires and 71% offer biometric screenings such as blood pressure and cholesterol.
  • More incentive opportunities for exhibiting healthy behavior  – Workers can also expect to see an more employers providing incentived through a reward or a penalty — related to completion of programs, such as HRQs and biometric screenings. Eighty-three percent of employers have such an incentive in place now.
  • New eligibility rules – Employers may be making changes to rules that determine which employees are eligible for health coverage, particularly as they evaluate requirements of the employer mandate provision of the ACA, which was delayed until 2015.  In addition, the recent Supreme Court decision that resulted in federal recognition of same-sex marriages may mean more dependents will now be eligible for benefits coverage.

For more information, visit www.aonhewitt.com.

Last Updated 12/01/2021

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