Changes for Open Enrollment 2017: What You've Heard and What it Means

This post was written by Stacey Pogue and Melissa McChesney and it’s the first post of several in CPPP's Countdown to Coverage series. 

We’re kicking off our annual blog series leading into the fourth open enrollment, the period when people can up for health insurance through the Affordable Care Act Marketplace. It’s important to first identify the challenges consumers face this year finding meaningful coverage that they can afford. Most notably, there will be fewer insurers offering coverage, and premiums for people who don’t qualify for subsidies will rise. There are some good changes on the horizon, too, and we’ll get to those in future posts.

Update: “Window shopping” is now available at www.HealthCare.gov.  You can see the plans and prices available in your area for 2017.

Premiums will go up for some consumers. Health insurance premiums are likely to increase in 2017 for many or all of the Marketplace insurance plans in Texas. There is a wide range in the average rate requests filed by insurers for their 2017 Marketplace plans—from seven percent to 60 percent. Here’s what consumers should keep in mind:

Subsidies protect most consumers from premium increases. Most Texans with Marketplace insurance get help with premiums and will largely be shielded from the impact of increases. That’s because consumers who get subsidies have a cap or maximum premium payment, based on a percentage of their income. In 2016, 84 percent of people who signed up received subsidies.

Consumers need to shop around. People may be able to get a much better deal from another company. That is true every year, but is especially true when you see large rate increases in some plans, and others that are more moderate. Last year in Texas, those who re-enrolled and chose to switch plans from 2015 to 2016 saved an average of $41/month on their premiums.

The U.S. Department of Health and Human Services recently released a report that used a hypothetical scenario of an across-the-board 50 percent increase in premiums in the Marketplace. Based on their analysis of this hypothetical, 80 percent of Texas consumers could still find a plan that costs $75 a month or less in 2017 if they shop around.

Some people will have to pay more. It’s important to acknowledge that families that earn over 400 percent of the federal poverty level ($97,200/year for a family of four), do not qualify for subsidies and must pay the full cost of coverage. For these families, premium increases will impact their family finances, and higher premiums may price them out of the ability to pay for coverage. Also “shopping around” won’t be possible for Texans who live in an area where only one insurer, Blue Cross Blue Shield, is selling Marketplace plans.

Fewer insurers offering coverage. In 2016, 16 different insurers are participating in the Texas Marketplace. Several insurance companies have made high-profile announcements that they won’t participate in the Marketplace in 2017. We’ve been trying to track and compile those announcements, so consumers and enrollment assisters know what to expect on Nov. 1.

Here are the insurer exits/changes we expect, to the best of our knowledge:

• Insurers that will NOT be in the Marketplace: Aetna, UnitedHealthcare, Cigna, Scott & White, Community First
• Insurers reducing their service area: Oscar (leaving DFW, staying in San Antonio), FirstCare, and Humana.
• Insurer increasing its service area: Ambetter has expanded into DFW for 2017.

Blue Cross Blue Shield of Texas announced it will continue to sell coverage through the Marketplace in every county in Texas. In 2016, Blue Cross was the only insurer offering Marketplace coverage in 23 percent of Texas counties. The share served only by Blue Cross Blue Shield will increase in 2017.

Texas’ largest cities will continue to have at least two and up to four choices of insurers in the Marketplace including: Houston, San Antonio, Dallas, Austin, Fort Worth, El Paso, Corpus Christi, Brownsville, McAllen, Lubbock, Amarillo, Laredo, Midland, and Waco.

Note that most of the insurers exiting the Marketplace will continue to sell individual coverage outside of the Marketplace. That won’t help low-income shoppers, because subsidies are only available through the Marketplace. But, it provides flexibility for insurers to jump back into the Marketplace in future years.  If an insurer withdrew entirely from the individual market (both inside and outside of the Marketplace), it would be prohibited from re-entering the market for 5 years.

Insurers exiting the Marketplace commonly cite losses as the reason – driven by the inability to accurately predict the risk and price accordingly in a brand new market and inadequate compensation through the ACA’s risk mitigation mechanisms. Other insurers are doing well in the Marketplace.

Consumers whose plans have been discontinued will have to actively go pick a new plan for 2017. The Marketplace will send them many (maybe too many) notices letting them know that they will not be re-enrolled in coverage unless they choose a plan.

Bottom Line. Clearly, the Health Insurance Marketplaces are still evolving and facing several challenges in 2017. Periods of instability in insurance markets aren’t new. Policymakers need to start talking about pragmatic fixes that can help stabilize these nascent insurance markets. In the meantime, consumers and enrollment assisters need to prepare for changes coming on November 1.