Arizona health insurance exchange / marketplace
Meritus CO-OP folds; 3 carriers dropping PPOs in favor of HMOs
By Louise Norris, healthinsurance.org contributor
October 31, 2015 - healthinsurance.org
CO-OP becomes 11th to fold
Arizona is among the 23 states where CO-OP
health plans were established under the ACA. Meritus has been offering
plans in Arizona since the first open enrollment began in the fall of 2013, but
they fell far short of their enrollment target in 2014. Total membership
stood at 869
people by the end of 2014 (Meritus says the number was closer to 3,500, but
thatfs still only a small fraction of the projected 24,000 people they had hoped
to enroll).
But for 2015, Meritus lowered their rates and membership skyrocketed.
By August, they were covering 56,000
people in Arizona. And itfs noteworthy that Meritus was not among the
carriers that proposed double digit rate hikes for 2016.
Meritus was also unique – nationwide – in that they initially allowed
applicants to purchase coverage year-round, outside the exchange. In the
exchange, regular open enrollment periods applied, but outside the
exchange, the CO-OP would enroll applicants at any time, albeit without access
to premium tax credits and cost-sharing reductions (those are only available
through the exchange).
In late summer 2015, they ended that policy and adjusted their enrollment
guidelines to match Healthcare.gov and the rest of the off-exchange market,
making Meritus covrage only available outside open enrollment for people who
had a qualifying
event, both on and off the exchange. Incidentally, Nevada
Health CO-OPfs demise in August 2015 was partially blamed on the fact that
they allowed year-round enrollment with no waiting period (and later, with just
a 30 day waiting period, as opposed to the 90 days used by other Nevada
carriers).
But on October 30 – just two days before the start of the 2016 open
enrollment period – the Arizona Department of Insurance announced
that Meritus had been placed under supervision and would wind down their
activities by the end of 2015. The carrier cannot sell or renew coverage at this
point, and Healthcare.gov has pulled them off the statefs exchange. The press
release details that two carriers were being placed under supervision, but
Meritus Mutual Health Partners is the PPO version, and Meritus Health Partners
is the HMO.
The CO-OP did
not agree with the Arizona Department of Insurance decision, but they
were gunable to convince Arizona Department of Insurancefs
director that the co-op was on solid financial footing.h Meritus CEO Tom
Zumtobel said that the DOIfs ruling greally caught [Meritus] by surprisec
We couldnft get feedback from DOI on what specifically we needed to do.h
Although Meritus is the 11th CO-OP to fold, most have gone willingly. Colorado
Health OP is the only other one that has publicly rejected the statefs decision
to shut them down.
The 56,000 people who have coverage with Meritus will all need to switch
to coverage offered by another carrier for 2016.
Meritus is the 11th CO-OP to fold, and the seventh
since October 1 when HHS announced that carriers would get just 12.6 percent
of what they were owed under the ACAfs risk corridor program.
Fewer PPOs in 2016
PPO plans are becoming much more rare in Arizona in 2016. Aetna, Cigna,
and Blue Cross Blue Shield of Arizona are all switching
to HMO-only plans in the Arizona exchange in 2016 (Meritus had also planned
to do so prior to being shut down by regulators). Current PPO enrollees
with those carriers will be mapped to the most similar HMO available, but
will also have an opportunity to shop around and enroll in any available plan
during the open enrollment period that begins November 1. Health Net and
All Savers will still offer PPO options for consumers who prefer a broader
network.
The trend towards more narrow networks (HMOs and EPOs) is common across the
country as insurers look for ways to constrain costs while complying with the
ACAfs regulations. Nationwide, there will be 40
percent fewer PPOs available in 2016 than there were in 2015.
Proposed 2016 rates
Only
three individual-market carriers in Arizonafs exchange – out of a total of
13 – requested 2016 rate increases of ten percent or more. Proposed rate
increases under that threshold donft show up on Healthcare.govfs rate review
tool. One of the three carriers, Time Insurance Co, had proposed rate
increases in excess of 70 percent for next year, but in early June the carrierfs
parent company, Assurant, announced
that theyfre exiting the individual market nationwide, and will not participate
in the 2016 open enrollment period.
Blue Cross Blue Shield of Arizona proposed an average rate increase of 21.4
percent for their individual plans. Health Net also proposed double digit rate
hikes for their individual plans (11
percent for PPO plans, and 26
percent for HMO plans). Cigna appeared on the list of carriers with rate
increase proposals of at least ten percent, but itfs for a plan sold outside the
exchange.
At ACAsignups, Charles Gaba has calculated a proposed weighted average
rate increase of 12
to 14 percent for the entire ACA-compliant individual market in Arizona, but
with several assumptions and caveats included.
In October, HHS released data
on benchmark premium changes across the country. The benchmark plan is the
second-lowest-cost Silver plan in a given region, and the benchmark plan is not
necessarily offered by the same carrier from one year to another. Across the 37
states that used Healthcare.gov in 2015, the average benchmark premium increase
is 7.5 percent for 2016. But in Arizona, it averages a much higher 17.5 percent
increase. In Phoenix, the benchmark plan will be 19 percent more expensive in
2016 than it was in 2015 (Kaiser
Family Foundationfs data indicates a 16.9 percent increase in the
benchmark premium in Phoenix). The good news is that subsidy amounts are tied
to the benchmark premium, so subsidies in Arizona will be increasing to
keep up with the rising cost of coverage.
Exchange carriers
- Aetna
- Blue Cross Blue Shield of Arizona
- Cigna
- CoventryOne
- Health Choice
- Health Net Life Insurance
- Health Net of Arizona
- Humana
- Phoenix Health Plans
- UnitedHealthcare (All Savers)
- University of Arizona Health Plans
2015 enrollment numbers
By the end of the 2015 open enrollment period, 205,666
people had selected private plans through the Arizona exchange. 48 percent
of them were new to the exchange for 2015.
But as expected, some enrollees didnft pay their initial premiums, and some
opted to cancel their coverage early in the year. By March 31, effectuated
enrollment in the Arizona exchange stood at 165,026
people, and it had dropped to 154,121 by
June 30 (Healthcare.gov stepped up enforcement of documentation requirements for
immigration and financial status during the second quarter, resulting in a
number of policy and/or premium terminations nationwide).
About 76 percent of the current enrollees are receiving premium
tax credits, and about 54 percent are receiving cost-sharing
subsidies. The average premium tax credit in Arizona is $159 per month
in 2015 – well below the national average of $270/month.
In addition to private plan enrollments, 49,814 people had enrolled in
Arizonafs expanded Medicaid program through the exchange between November 15,
2014 and February 15, 2015.
Nationwide, the uninsured rate among children reached a new low of 6 percent
in 2014. But in Arizona it remained significantly higher, at 10
percent. According to Gallup
data, the uninsured rate among adults in Arizona was 20.4 percent in
2013, and had fallen to 14.5 percent by the first half of 2015.
Arizona law prohibits creation of state-run exchange
In April 2015, Governor Doug Ducey signed House
Bill 2643 into law, effectively banning the state from creating a state-run
exchange. Gov. Ducey told
reporters that he signed the bill because hefs gno fan of [Obamacare]h and
gnot in favor of a state exchange.h
The law was enacted prior to the Supreme Courtfs ruling in King v. Burwell,
and at ACAsignups, Charles Gaba estimates that 133,000
people in Arizona would have lost their subsidies – and most likely their
insurance – if the Court had ruled that subsidies could only be provided by
state-run exchanges.
But subsidies are safe
Luckily for the people of Arizona, the Supreme Court issued a ruling on June
25, upholding the legality of subsidies in every state, regardless of whether
the exchange is run by the state or the federal government. Had that not
been the case, not only would subsidies have evaporated for 133,000 people in
Arizona, but rates for people who donft currently get subsidies could have
climbed by 60
– 90 percent. Instead, subsidies will remain available, and the health
insurance industry in Arizona is stabilized
by the Courtfs ruling.
Still not insured?
The 2015 open enrollment period, when anyone could sign up for insurance,
ended February 22 (this included a one-week extension for people who had been
unable to finish the process by February 15). There was an additional
special enrollment period (March 1 and April 30) that aligned with the tax
filing season and provided an enrollment opportunity for people who werenft
previously aware of the tax penalty for not having health insurance.
Now that the general open enrollment period and the special enrollment period
are over, enrollment individual plans is closed for the year, both on and
off-exchange. But depending on your circumstances, you may still be able
to enroll in 2015 coverage:
- If you have a qualifying life event, you get a 60-day special
enrollment period to select a health plan.
- If you qualify for Medicaid, you can sign up at any time.
- If youfre Native American, enrollment continues year-round.
The 2016 open enrollment period runs from November 1, 2015 to January 31,
2016. The uninsured rate in Arizona is still relatively high, at 14.5
percent (down from 20.4 percent in 2013), so therefs plenty of room for more
enrollments during the 2016 open enrollment period.
Donft delay – penalty is increasing
For people who remain uninsured in 2016 and are not eligible for an exemption
from the individual mandate, the penalty
will be significantly higher than it was in 2014 and 2015. For 2016, the penalty
will be $695 per uninsured adult (half that amount for a child), up to $2,085
per household, OR 2.5 percent of taxable income, whichever is greater.
2015 plans and premiums
Three
new insurers joined the Arizona marketplace for 2015:
UnitedHealthcare, Assurant Health, and Phoenix Health Plans (Assurant will not
participate in 2016, as they are exiting the individual market nationwide). In
total, 13 insurers participated in the second year of enrollment in the
Arizona exchange, up from 10 in 2014. Nationally, the number of participating
insurers increased about 25 percent in 2015.
A Kaiser Family Foundation analysis shows premiums down 10 percent in the Phoenix area in
2015, but flat or up in many other parts of the state. While rates
increased in 2015 for some Arizona residents, the baseline is better than in
many other areas. In 2014, Arizonafs premiums were among the lowest of states using the federal exchange in
2014.
What happened during 2014 open enrollment?
Arizona saw positive effects during the first year with the Obamacare
marketplace in operation. The statefs uninsured rate dropped by 2.9 percentage points, state hospitals
saw uncompensated care costs drop by nearly one-third, and the state added health care-related jobs.
Just more than 120,000 Arizona residents signed up for qualified
health plans (QHPs) during open enrollment for 2014. An additional 101,282 people qualified for Medicaid or the
Childrenfs Health Insurance Program (CHIP).
Among Arizona residents selecting a QHP, 77 percent qualified for
financial assistance, compared to 85 percent nationally. A report released in June 2014 by the U.S. Department
of Health and Human Services showed the average monthly premium, after tax
credits, for Arizona consumers was $113. Among states using the federal
marketplace, the average was $82. Twenty-six percent of Arizona enrollees pay
$50 or less per month after subsidies.
Twelve percent of Arizona residents selected a bronze plan (20 percent
nationally), 60 percent selected a silver plan (65 percent nationally), 14
percent selected a gold plan (9 percent nationally), 13 percent selected a
platinum plan (5 percent nationally) and 1 percent selected a catastrophic plan
(2 percent nationally). Twenty-one percent of Arizona enrollees were between the
ages of 18 and 34.
Arizona and Medicaid expansion
Medicaid expansion was passed by the Arizona Legislature with some Republican
support and was approved by then-Governor Jan Brewer. The Medicaid decision
allowed people earning less than 138 percent of the federal poverty level —
about $15,000 for an individual — to gain health coverage. About 300,000 are
eligible under the expanded criteria.
Some Republican legislators and conservatives challenged Medicaid expansion.
They first launched a petition to put Medicaid expansion on the November 2014
ballot. The referendum push failed, prompting a legal challenge. The suit
claimed that because the tax plan to fund the statefs portion of expansion costs
was passed with less than a two-thirds majority, it was unconstitutional. Oral
arguments were made in mid-December 2013, and a judge dismissed the case in
early February 2014.
A group of conservative Republican representatives appealed the decision, and
the Arizona Court of Appeals ruled that the case could proceed. The Arizona
Supreme Court heard the case in November 2014 and later ruled that the case could proceed. Governor Doug
Ducey began reviewing the decision and consulting with legal experts on how
to proceed.
In February 2015, the Arizona legislature passed Senate
Bill 1092, which requires the state to seek an annual waiver from CMS to
allow additional restrictions on Medicaid eligibility. The waiver request
would include requirements that enrollees be working or involved in job training
or school, and it would also limit an able-bodied personfs eligibility for
Medicaid to no more than five years. The bill excludes pregnant women,
those caring for young children, and people with disabilities. Governor
Ducey signed the bill into law in March. The bill is largely symbolic, as
CMS is unlikely to approve such a waiver. But under state law, Arizona
must now request one each year.
Gov. Ducey unveiled the provisions of
the 2015 waiver in August, and the waiver proposal was under
review by CMS as of October 2015.
Arizona health insurance exchange links
HealthCare.gov
800-318-2596
Cover Arizona
Arizona
Department of Insurance: Health Insurance Exchange
Office of Health Insurance
Exchange