Some state health insurance markets are in for another exodus of pre-health reform plans, as regulators pursue stability on and off the public exchanges.
In Colorado, the Division of Insurance has decided to phase out all non-Affordable Care Act compliant health plans by the end of the year. Like 35 other states, Colorado allowed insurers to renew these "grandmothered" plans for at least another year, after the Obama Administration gave states the choice in the matter following the "if you like your plan, you can keep your plan" controversy.
Now, in Colorado, and likely other states, a few hundred thousand insurance consumers are set to come into the ACA market. "It's time for them to get on to a better plan," Colorado insurance commissioner Marguerite Salazar told the Denver Post, referring to the 190,000 state residents who will be affected by the renewal phase-out
"Last year it was a hard decision because we really wanted people to have access to ACA-compliant plans because they are a better product. But I heard from so many people that they needed more time," Salazar said. "The ACA became law in 2010, Connect for Health Colorado came online in 2013, and plans that meet the requirements of the ACA began in 2014. We're now in 2015 and it's time to complete the transition to ACA plans."
In the last open enrollment, Connect for Health Colorado helped 139,000 people find private health plans, a little more than half of them qualifying for a subsidy, and enrolled another 80,000 in Medicaid and CHIP.
Almost as many Coloradans, though, decided to spend 2014 and 2015 in health plans initially purchased in 2013 that insurers renewed. Of them, 74,800 were covered in individual plans and 114,000 were covered in small group plans, according to the Division of Insurance.
Insurers now have to notify those employers and the individual members at least 90 days ahead of the 2016 open enrollment, at the end of this year. The Colorado DOI is also barring insurers from automatically enrolling, or "mapping," those subscribers into a new ACA compliant plan, although the consumers can still enroll directly through the insurer if they are not eligible for a subsidy.
The Colorado DOI, under Democratic governor John Hickenlooper, is getting criticism from a number of Republican lawmakers who believe the state should leave open the renewal option for insurers and consumers. But healthcare advocacy groups are supporting the idea.
"Colorado has made significant progress in establishing a competitive health insurance marketplace both inside and outside of Connect for Health Colorado," said Adela Flores-Brennan, executive director of the Colorado Consumer Health Initiative. "This decision is a significant step toward completing Colorado's transition to our new health insurance market and ending market distortion."
By ending the non-ACA complaint plans, Colorado's insurance market as a whole will have more premium stability and affordability, Flores-Brennan argued. In 2015, she noted, Colorado saw an average health insurance premium increase of just 1.18 percent (although it also saw some of the highest exchange premiums in 2014).
Colorado's decision doesn't affect grandfathered plans, those in effect in March 2010 that under the ACA can continue as long as benefits and costs remain the same. Although about 30 percent of Americans in employer-sponsored insurance were still in grandfathered plans in 2013, the membership is expected to decline, along with the grandmothered plans.
Last year, thirty-five states ended up deciding to "grandmother" health plans and give insurers the choice to renew non-compliant plans at least into 2015. California did so in just the small group market, while most other states did so for both individual and group plans, including Florida, Illinois, Michigan, New Jersey and Pennsylvania.