When the Obama administration in November 2013 decided to allow states to decide if individuals could keep noncompliant insurance plans, speculation began about what effect that decision would have on premiums and enrollment for plans that did comply with provisions of the Patient Protection and Affordable Care Act
. Subsequently, the administration this March gave states the option of a maximum two-year extension into 2016.
Early indications of how many individuals opted to keep those plans have begun to emerge as have signs of the effect on premiums. As with so much else related to the ACA, the results depend on what state is being discussed.
Twenty-five states are allowing noncompliant plans to continue through 2015, which creates a continuing impact for insurers attempting to formulate premium levels in 2014, according to data compiled by America's Health Insurance Plans
, an insurer trade group. Twenty-one states are taking the full extension option, through 2016, according to AHIP.
North Dakota has seen 61% of individual policyholders of noncompliant plans from insurers Sanford Health Plan and Medica opt to retain their plans, while 92% of group policyholders chose to stay on their noncompliant plans, said Rebecca Ternes, the state Insurance Department's deputy commissioner.
Wisconsin reportedly featured an extremely high proportion retaining noncompliant plans, above 80%, said Sabrina Corlette, a project director with Georgetown University's Center on Health Insurance Reforms. Florida Blue was able to retain a similarly high proportion of its individual policyholders, she said.
“We're not talking a tiny number here. It's a lot of people who are still on these policies,” she said. The effect they are having on rates is still being debated but again seems to vary by state.
Researchers at the RAND Corp. estimated
in the spring issue of RAND Health Quarterly estimated that premiums will increase by 1% in 2015 because of the noncompliant plans.
In a March blog post
, Sara Collins, Commonwealth Fund vice president of healthcare coverage and access, concurred with RAND's assessment, based on a meeting the think tank held with several actuaries, some of whom “expected the decision to have a limited effect,” she wrote.
One co-op insurer, CoOportunity Health, which operates in Iowa and Nebraska, said that the fix's impact on rates varied substantially in each state.
“Iowa ranks last in the country in the take-up rate by subsidy-eligible people as a result of this policy,” spokeswoman Leigh McGivern wrote in an e-mail. As a result, she said, “Forty-six percent of our Iowa rate increase this year is due to the continuation of these noncompliant plans.”
CoOportunity Health is seeking a 14.3% rate increase, according to local reports
But, she said, the rate impact in Nebraska was less, due to local factors. For one, she said, Nebraska's insurance commissioner made the decision on offering noncompliant plans so late in the sign-up process that consumers went to the exchanges to shop. For another, the dominant insurer in the state, Blue Cross and Blue Shield Nebraska, has much less market share than Iowa market leader Wellmark Blue Cross and Blue Shield, and is also on its state exchange.
“In Iowa, one carrier so dominated the market that it almost guaranteed that the new pool would be adversely selected once it was allowed to continue its transitional plans into 2014,” said CoOportunity Health Chief Operating Officer Cliff Gold. That's not the case in Nebraska, where the Blues have a chance at capturing that population as it migrates off of those plans.
A spokesman for Blue Cross and Blue Shield of North Carolina said that while the fix prompted an undisclosed rate increase there, he expects there to only be a one-year impact on rates. Normal attrition factors, such as people changing, gaining or losing jobs or going on Medicare or Medicaid, should winnow down the noncompliant population over the next two years, experts say. Such turnover should mitigate rate impact overall.
A Robert Wood Johnson Foundation report
found that the Enroll America outreach helped boost insurance sign-ups in the states in which it operated. The group staffed 11 states: Arizona, Florida, Georgia, Illinois, Michigan, New Jersey, North Carolina, Ohio, Pennsylvania, Tennessee and Texas. The 11 states that Enroll America operated in signed up 150% of their enrollment targets, as opposed to 120% in the states that it didn't operate in.
Using in-person assistance counselors to help consumers when they start their applications boosts enrollment, the report finds.
Enroll America's president told
Inside Health Policy yesterday that the group plans to continue operating in the same number of states in 2014 as 2013.
An Avalere Health analysis argues (PDF)
that a new metal category of healthcare plan, a copper plan with a 50% actuarial value, could save consumers and the government money. But many experts question
whether consumers are interested, because only 20% of consumers opted for the slightly more-generous bronze plans. The analysis, however, notes that 80% of enrollees in the individual market pre-ACA had plans with actuarial value at or below a bronze plan.Follow Darius Tahir on Twitter: @dariustahir