As Obamacare enrollment opens, insurers tweak plans
As open enrollment begins this weekend for the third year of Obamacare, insurance carriers in Arizona are “still trying to figure … out” which types of plans work best for them and for their customers.
An estimated 100,000 Arizonans who could have received discounts on marketplace health coverage did not enroll this year. They were among roughly 800,000 Arizonans who lacked health insurance at the beginning of 2015.
Insurers said they hope to appeal to those Arizonans in 2016 by offering revamped, cost-cutting plans. But experts said advocates and insurers will have to use “more targeted enrollment efforts” to charm the state’s uninsured, tax credit-qualified, and “harder-to-reach population.”
“We know that there are still lots of people out there that we need to help,” said Montserrat Caballero, the Arizona director for the health care advocacy group Enroll America. “The biggest area of confusion for people who are still uninsured … those folks are unaware that financial assistance is available.”
This year’s open enrollment period runs from Nov. 1 to Jan. 31 for people seeking insurance in 2016. Penalties for those who do not have coverage will jump in 2016 to at least $695 per person and $347.50 per child, or to 2.5 percent of household income, whichever is greater.
The Kaiser Family Foundation reported in October that 808,000 Arizonans lacked health coverage last year, even though one in eight of them were eligible for federal tax credits that offset the costs of coverage through the marketplace.
“As time goes on, more targeted enrollment efforts are needed,” said Rachel Garfield, lead of author of the Kaiser report. “The people that are left are the harder-to-reach population.”
Garfield said a “couple of main themes emerged” through her team’s use of Census Bureau data to determine “eligibility based on income, household type, citizenship,” and other information.
“People who are uninsured generally have been uninsured for a long time,” she said. “And a lot of people didn’t seek coverage, which is why outreach is really important.”
Garfield said another theme was that citizens eligible for tax credits “still believed coverage was too expensive.”
The Census Bureau reported in September that the number of Arizonans without health coverage had dropped by 3.5 percent from 2013 to 2014.
Arizonans signing up for health insurance through the federal marketplace rose from about 120,000 in the first year to 206,000 for the second enrollment period that ended in February, according to the Department of Health and Human Services report.
But a quarter of those Arizonans had dropped their plans by June or had failed to pay the initial premiums and lost coverage, said a report from the Centers for Medicare and Medicaid Services.
“We anticipate that we’ll pick up some of the newly enrolled during this cycle,” said Jim Walsh, chief operations officer of nonprofit insurance carrier Meritus.
Like most of the insurance companies set to offer marketplace coverage to Arizona residents, Walsh said Meritus continues to adapt to marketplace trends ahead of its third year on the exchange.
“It took us three years to see where the rates were going to be,” Walsh said. “We had higher rates in year one and in 2015 we did some things to tweak some of our plans.”
Meritus is among four marketplace insurance companies that will drop preferred provider organization plans from their on-exchange options this year.
PPO plans typically have higher monthly premiums and out-of-pocket costs for patients, but come with a broader choice of hospitals and doctors, according to the Obamacare website.
Health maintenance organization plans, which insurance companies around the country are adopting as cheaper alternatives to PPO plans, limit a customer’s choice of physicians and hospitals but offer lower monthly premiums in exchange.
A spokesman for Cigna, which also dropped its on-exchange PPO plans in favor of HMO options, said the move makes financial sense for insurance companies and consumers alike.
“Consumer research … tells us that monthly premium cost is the top priority among most consumers,” Cigna spokesman Jim Angstadt said in an email. “HMO plan designs in general have lower costs.”
Those sentiments were echoed by another Arizona insurance company that’s in the federal marketplace.
“Reintroducing HMOs to our plan portfolio is in response to what consumers are looking for – a quality plan with a lower price,” said Jeff Stelnik, senior vice president of Blue Cross Blue Shield of Arizona.
HMO plans will cost 10 to 15 percent less than a traditional PPO plan, Stelnik said in an email.
Those options are important, said Enroll America’s Caballero, as uninsured residents can expect to pay increasingly hefty fees.
“Come tax time, there is going to be a penalty, and that penalty continues to get bigger and bigger,” she said.