Groups working to boost health insurance enrollment in Kansas are concerned their efforts could be undermined by the last-minute departure of one of the state’s largest insurers.
Coventry Health Care of Kansas Inc. and Coventry Health & Life Insurance Co. — both subsidiaries of Aetna — abruptly decided to stop offering policies to Kansas consumers in the federal marketplace. The decision, made two weeks before the start of the open enrollment period, surprised state insurance regulators.
“We’re so close to open enrollment, this is very last minute,” said Clark Shultz, director of government affairs for the Kansas Insurance Department.
The open enrollment period started Sunday and runs through Jan. 31, 2016.
Coventry covers approximately 45,000 of the nearly 85,000 Kansans who have obtained coverage through the federal marketplace at healthcare.gov established by the Affordable Care Act.
That means more than half of the state’s marketplace policyholders will have to select new policies by Dec. 15 to maintain their coverage in 2016. That urgency has created unanticipated challenges for the groups seeking to help Kansans explore their options and select a plan.
“My worry is that we’re going to lose a lot of them because of folks just dropping through the cracks. That is my biggest concern,” said Sheldon Weisgrau, director of the Health Reform Resource Project, an initiative funded by several health foundations.
Three of the four remaining marketplace insurers are members of the Blue Cross and Blue Shield family of companies. Blue Cross and Blue Shield of Kansas offers a variety of plans. BlueCross and BlueShield Kansas Solutions Inc. is a health maintenance organization (HMO), meaning its plans often are cheaper but have more restrictive provider networks.
Blue Cross and Blue Shield of Kansas City covers residents of 32 counties in and around the Kansas City metropolitan area, including only two counties — Johnson and Wyandotte — in Kansas.
United Healthcare of the Midwest Inc., another HMO, is a new entrant to the Kansas marketplace.
Coventry will continue to offer coverage to Kansas consumers outside of the ACA marketplace.
Federal officials also were surprised by Coventry’s exit but said competition among the remaining companies would provide Kansas marketplace consumers with price and coverage options.
“We’re not concerned that people aren’t going to be able to find plans,” said Stephene Moore, director of the regional office of the U.S. Department of Health and Human Services in Kansas City, Mo.
Premiums going up
The plans sold in the federal marketplace are given “metal” designations based on cost-sharing. Bronze plans are the cheapest but provide the least comprehensive coverage. Platinum plans are the most comprehensive and the most expensive. Gold and silver plans are somewhere in between.
The second-lowest-cost silver plan in each of the 38 states where the federal government operates the health marketplaces is known as the “benchmark plan.” On average it pays about 70 percent of a policyholder’s health care costs.
Nationally, premiums for benchmark plans are increasing by an average of 7.5 percent. In Kansas, they’re increasing by 16.1 percent.
Across all plans, premiums in Kansas are going up between 9.4 percent and 25.4 percent.
They could have been even higher. Marketplace insurers requested increases as high as 39 percent, but Kansas Insurance Commissioner Ken Selzer, a Republican serving his first term, reduced them in August.
“We worked to find the balance between company claims trends and the need to hold down consumer rates,” Selzer said at the time.
The number of insurers participating in Missouri’s federally facilitated exchange doubled from four in 2014 to eight in the upcoming enrollment period. Coventry remains an option for Missouri consumers, who will see rate increases of 12 percent to 15 percent.
Kevin Griffis, an assistant HHS secretary, said higher premiums won’t be a problem for most consumers in Kansas and Missouri because the federal tax credits they receive to help cover the cost of coverage also will increase.
“The average consumer is going to be largely insulated from that rate increase by the tax credit,” Griffis said during a recent call with reporters.
Approximately 80 percent of the Kansans who purchased coverage in the ACA marketplace for 2015 qualified for advanced premium tax credits. In Missouri, 89 percent of policyholders received tax credits.
Newly insured older and sicker
Insurance companies had no claims data on the marketplace population when they priced their first policies in 2013 and little more the following year. But they now know that the Kansans purchasing coverage through the marketplace are older and less healthy than the general population.
Linda Sheppard, a former director of health policy and analysis at the Kansas Insurance Department who is now a senior analyst for the Kansas Health Institute, said health insurers initially underestimated the cost of covering the marketplace population.
“Many were people with very serious health conditions who obviously had a pent-up demand for services,” Sheppard said.
The ACA established three programs to minimize the financial risk to insurers. Two of them — the reinsurance and risk adjustment programs — appear to be working. But the third, the risk corridors program, which covers a portion of the difference between premium revenues and the medical costs of policyholders, has paid companies only 12.6 of what they requested.
A gap between what Coventry hoped to receive in risk corridor payments and what it got factored into the company’s decision to pull out of the Kansas marketplace, according to Kansas insurance officials.
The rate reductions ordered by Selzer also may have been a factor.
Editor’s note: The Kansas Health Institute is the parent organization of the editorially independent KHI News Service.
Jim McLean is executive editor of KHI News Service in Topeka, a partner in the Heartland Health Monitor team.