At end of open enrollment, Exchange goals were not met

Open enrollment for health insurance ended Sunday. The Washington Health Benefit Exchange (HBE) has only provided approximate enrollment numbers: “Nearly” 160,000 renewed coverage or enrolled for the first time during the open enrollment period. Of those, “more than” 66,000 were new enrollees, meaning that renewals were not more than 94,000.

They did get a bounce in enrollments during February (in the chart, the enrollments reported Feb. 16 are for 15 days only, while those reported Feb. 5 are for the entire month of January). But the HBE made only about 77.6 percent of its goal for new enrollees (85,000) and about 72.3 percent of its goal for renewals (130,000). This has implications for its budget, which depends partially on a tax on plans bought through the Exchange.

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As the Seattle Times points out, after open enrollment last year, 164,000 had purchased insurance through the Exchange. One reason they may not have matched that number is affordability:

The amount available in tax subsidies is pegged to the price of the second-cheapest silver plan sold in a customer’s geographic area. That price decreased across Washington, so the subsidies shrank, too. The precise amount a person receives is determined by his or her income.

Monthly premiums for exchange plans rose a modest 2 percent for 2015. But insurance prices also go up each year according to a customer’s age.

Despite the exchange’s better showing last year, it appears that costs were a struggle then as well. Slightly more than half of the exchange customers missed at least one month’s payment last year. And by the end of December, roughly 44,000 had outstanding balances on their accounts.

Washington Exchange enrollment through January

The Washington Health Benefit Exchange (HBE) has released some enrollment numbers through January. I say “some” because they only include numbers for new and renewed qualified (private) health plans (QHP) and for new Medicaid enrollees under the expansion. They do not include numbers for Medicaid renewals or enrollments in Medicaid by those who were previously eligible for Medicaid but had not enrolled. They also do not provide updated numbers for business enrollees.

The chart below shows the QHP enrollments per report for this open enrollment period. Through January, 44,779 have newly enrolled in a QHP and 87,528 have renewed their coverage in a QHP.

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According to the HBE press release,

Current enrollment data shows that a larger percentage of residents are qualifying for Washington Apple Health (Medicaid) than previously expected.

“We have seen more than 630,000 individuals newly covered in Washington State, which is well beyond our combined 2015 enrollment forecasts for Qualified Health Plans and Washington Apple Health,” said [HBE CEO Richard] Onizuka. “While residents continue to qualify for Apple Health, we expect a large enrollment surge in new and renewing private health plan enrollment heading toward the Feb. 15 deadline.”

The 630,000 includes Medicaid enrollees; the numbers for QHP enrollees do not reach the goal the HBE had for this enrollment period, which is for 85,000 new enrollees in a QHP and 130,000 QHP renewals. The Seattle Times notes that the insurance commissioner is less optimistic than the HBE CEO:

“I’m not exactly encouraged with the enrollment numbers we’re seeing right now,” said state insurance commissioner Mike Kreidler. “There might be a mad rush at the end.”

“Too few people” buying insurance through the Healthplanfinder

The Seattle Times has a good article from Lisa Stiffler about enrollment issues at the Washington Health Benefit Exchange (HBE). I wrote last week that enrollments are well short of the HBE’s goal for this year’s open enrollment, which ends Feb. 15. Stiffler provides more details:

The trouble for the Washington Health Benefit Exchange, which runs the state insurance marketplace, is that too few people are buying their coverage through the Washington Healthplanfinder website, which needs to reach the enrollment targets to help pay for its operating costs. . . .

There are numerous reasons for the underwhelming sales. Some officials think the nationally set enrollment window was badly timed, spanning Thanksgiving and Christmas holidays, when distractions abound and pocketbooks are strained. Then there’s the challenge of enrollment closing before most people fill out their tax returns, which means many uninsured people will realize too late how much they’re being penalized for going without coverage.

In addition, enrollment projections in Washington underestimated how many residents would be eligible for Medicaid, pulling them out of the pool of potential exchange customers. In the past 16 months, the number of Medicaid enrollees has grown by nearly half a million, to 1.7 million.

Finally, many exchange customers from the first enrollment received confusing or insufficient notices about what they needed to do to renew their plans, sometimes leaving them uninsured when they meant for their coverage to continue.

On the point about the timing of open enrollment, Howard Gleckman of the Tax Policy Center compares getting insurance under the Affordable Care Act (ACA) to charitable giving. Gleckman argues that since both these activities are tax-driven, their deadlines should be linked to tax filing season, rather than the end of the calendar year (or thereabouts). This, he thinks, would help maximize participation.

Also, it’s interesting that the HBE underestimated the numbers who would be eligible for Medicaid. There are three sets of people signing up for Medicaid through the Exchange. First are those who were covered by Medicaid before the ACA — they are simply re-enrolling and are funded at the regular federal match (the state pays 50 percent and the feds pay 50 percent). Second are those who are newly eligible for Medicaid as a result of the ACA’s expansion. These are funded 100 percent by the federal government through calendar year 2016, 95 percent in 2017, 94 percent in 2018, 93 percent in 2019, and 90 percent thereafter. Third are those who were previously eligible for Medicaid but had not enrolled; they are funded at the regular match.

The HBE has not released Medicaid enrollment numbers broken down into these categories for this enrollment period. A September report noted that enrollments in Medicaid by those newly eligible under the expansion totaled 352,386; enrollments by those previously eligible totaled 199,631; and renewals totaled 583,765. The apparently unexpectedly high Medicaid numbers are doubly problematic for budget purposes: It means the Exchange gets less business, hurting its budget, and it means that the state must pay more to fund Medicaid (even though there is a high federal match for a portion of those enrollees).

Regarding the HBE budget, Stiffler writes,

. . . funding for Healthplanfinder comes from three sources: the exchange’s share of a 2 percent tax on all insurance premiums, a fee charged on insurance companies selling through the exchange, and from cost sharing with the state agency that manages Medicaid. . . .

The board overseeing the exchange is asking state lawmakers to approve a budget request of $147 million over two years, which is already higher than what the Legislature initially allocated.

Through new sales or renewals, the exchange needs to sell 86,000 plans in the last three weeks of open enrollment to reach its target and provide funding to operate within that request.

Marchand said the exchange knows lawmakers will be looking everywhere to make cuts, not grow budgets.

That could mean paring back services, he said. “We’ve got to figure out how to live within our means.”

Tax credit (and approximate enrollment) numbers from the Washington Exchange

Yesterday the Washington Health Benefit Exchange (HBE) announced that Healthplanfinder customers received $334 million in tax credits last year.

The average monthly tax credit per family was $390 a month, or more than $3,100 annually to help lower the costs of health insurance. . . .

Customers who enrolled in 2014 coverage provided their estimated annual income to Washington Healthplanfinder to determine their eligibility for financial help.

Because credit amounts are based on estimated income, many taxpayers may be in for a surprise when they do their federal taxes. As Megan McArdle writes,

I’ve written before that the big Obamacare event of this year will not be the exchange enrollments, but tax season, when people who got too much in subsidies find out how much money they owe the government (and been told by a tax preparer that it was even worse than I thought).

The other piece of news buried in the HBE press release is on enrollment:

As of Jan. 25, more than 127,000 residents have enrolled in Qualified Health Plans for 2015 coverage, with approximately 40,000 of those customers signing up for the first time through Washington Healthplanfinder.

So the Exchange is still well short of its goal of getting 85,000 new enrollees and 130,000 renewals by the end of open enrollment Feb. 15. (Last year they did get a bump at the end of open enrollment, but they got a much bigger bump in December 2013 at the deadline for coverage beginning in January 2014. They did not get a huge bump at the December 2014 deadline for coverage beginning 2015, so it’s unlikely they’ll get a big bump at the end of this year’s open enrollment. Still, it is possible.)

How does the Washington Health Benefit Exchange fare in the governor’s budget?

As I wrote in October, the Health Benefit Exchange (HBE) had requested $67 million for 2015-17 (in addition to the $80 million that had already been appropriated for the biennium).

Gov. Inslee’s budget proposal would provide that amount: $33.3 million in federal funds, $13.8 million from the state general fund, and $20.2 million in the HBE account. The federal and state general fund amounts would be for Medicaid-related costs, while the funds from the HBE account would be “to maintain current operations,improve customer experience, retain current enrollees, and generate an additional 200,000 health plan enrollments.” (For more on the governor’s budget, in terms of the near general fund-state plus opportunity pathways account, see here.)

Additionally, the AP reported earlier this week that the HBE has won a $27 million federal grant to improve its website. (They had asked for $42 million.) Meanwhile:

Exchange staff also reported that re-enrollments to date were lagging behind expectations. According to Pam MacEwan, chief of staff, as of Dec. 31, 79,000 of approximately 130,000 account holders had re-enrolled for 2015. “The numbers continued to bump up but it is not at our expectation,” she said.

MacEwan did note that some consumers might be taking longer to re-enroll because there are indications that more consumers than expected are switching to other qualified health plans. Also, the holidays might have caused some consumers to put off enrolling. Still, she noted, most other states “seem to be clicking along fine with enrollments. Right now we need to get these folks enrolled.”

Exchange staff also said that some consumers may have been confused by messages that went out from carriers mistakenly indicating that if consumers wanted to keep their current account they didn’t need to take any action.

That’s not true. Consumers need to contact the exchange to renew or change plans.

I wrote about the latest enrollment data here.

Washington Exchange enrollments through December

As of the end of 2014, there are 27,753 new enrollees in qualified (private) health plans (QHP) through the Washington Healthplanfinder. An additional 79,318 have renewed their QHP coverage during the open enrollment period. Nine employers have signed up under the business plan. (See here for information on the Dec. 11 enrollment report.)

Although enrollment is open until Feb. 15, Dec. 23 was the deadline for coverage beginning Jan. 1. As the Exchange noted in December, “Based on data from the first open enrollment period, enrollments are expected to surge considerably ahead of the Dec. 23 deadline.” Since there’s only one other data point, it’s hard to say whether new enrollments “surged,” but renewals certainly didn’t.

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With a little over a month to go, the Exchange is still short of its goals. According to the Seattle Times,

So far only 80,000 of the 140,000 former customers that enrolled in the first enrollment have renewed their plans through the state, according to officials. Their goal is for 130,000 of their past customers to renew their coverage, plus they hope to sign up 85,000 new enrollees. . . .

Looking back at the enrollments during the first sign-up period, by the end of December 2013, some 67,000 people had purchased insurance through Washington’s exchange. But by the close of enrollment in March, more than 164,000 people were enrolled. The enrollment period is shorter this time, but Frey said they still expect to see a surge before the end.

Washington Exchange enrollment news

Open enrollment for health insurance through the Washington Health Benefit Exchange began November 15 and ends February 15; yesterday was the deadline to purchase insurance for coverage beginning January 1. (But there will be “a 60-day special enrollment opportunity for consumers who were unable to meet the deadline because of technical errors associated with the exchange.”)

Unfortunately, unlike last year, the exchange has not made available detailed weekly enrollment reports. On Nov. 18, the Exchange reported only that “More than 2,000 individuals have scheduled their payments for Qualified Health Plans.” On Dec. 11, the Exchange announced 10,082 new enrollments in qualified (private) health plans (QHP) and 45,843 QHP renewals. Additionally, three employees enrolled through Washington Healthplanfinder Business.

The launch of Washington Healthplanfinder Business has also generated a promising level of interest among employers. The marketplace allows employers in Washington with up to 50 employees to compare health plans, decide their contribution level, manage payment and access broker support in one place. The majority of businesses that have completed applications will provide their employees with a range of options in one metal tier of coverage – a benefit that is currently unavailable in the outside market.

Approximately 130,000 customers are currently enrolled in Qualified Health Plans for 2014 coverage. The Exchange expects to gain an additional 85,000 customers in Qualified Health Plans during the second open enrollment period, which ends on Feb. 15, 2015.

The Exchange has released a very detailed report on total enrollees through October 2014. In October 2014, there were 139,700 QHP enrollees, 86 percent of whom received premium subsidies. Additionally, there were 464,547 enrollees in Medicaid who were newly eligible under Medicaid expansion. Eleven employers and 34 employees enrolled through Washington Healthplanfinder Business. The report also includes information on how enrollment changed month to month:

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This open enrollment period hasn’t been without snags, as this Seattle Times article details. Because of some of those problems, the Exchange has withheld payments to Deloitte. Additionally, on Dec. 18, the Exchange “voted to take the state’s online insurance exchange out of the business of managing customer payments and invoices.”

Many board members have expressed frustration with ongoing problems the exchange has had in managing invoices and payments. In numerous cases, consumers have made payments according to procedures but have been told by their insurers that they do not have coverage. The insurers say the payments and other account information had not reached them.

As noted above, the Exchange hopes to have 85,000 new QHP enrollees by the end of open enrollment. It’ll be interesting to see how close to that they are after yesterday’s deadline.

Supporting biotech and more with growth-oriented tax policy

H. Stewart Parker, a pioneer in Washington’s life sciences industry, writes in today’s Seattle Times that our state risks falling behind in the competition for biotech investment.

Washington has a lot going for it business-wise, but we must not underestimate the competition for the life-sciences industry. The Washington state Legislature did not renew our industry tax incentives. Forty other states offer tax credits and other competitive incentives. To help ensure the next discoveries are “Made in Washington,” our representatives should create a tax policy that promotes growth.

A few years ago we published an economic profile of the life sciences sector, which has had an outsize impact on the state’s economy. Our research was used in a more comprehensive analysis by the University of Washington and Washington State University, Innovation and Impactfrom which the following graph is taken.

Life sciences graph

Parker’s observation of the importance of R&D incentives to the industry echoes other tech industry experts.  We reviewed the literature last February in our policy brief, Supporting Research and Development with Responsible Tax Policy, and found that the state’s R&D credit and sales tax deferral programs should be renewed. The legislature, as Parker notes, chose to allow them to expire. Lawmakers will have an opportunity to change course next year. They should, as their counterparts in Texas did.

Our 2012 analysis, Washington Prosperity Depends on a Vibrant Tech Sector, takes a longer look at the state’s innovation cluster. Our conclusion:

Washington’s vibrant tech cluster has had a strong, positive effect on the state economy. The sector accounts for nearly two-thirds of Washington’s job growth since 1990 and more than half of the growth in employee compensation. Major tax revenues generated by the sector grew 318 percent, to $2.9 billion in 2011.

The tech industry mitigated the effects of the national recession here, showing relatively stable income and employment patterns, even during the sharpest economic downturn in more than half a century.

Other states and regions witness the success of states with strong innovation clusters and strive to replicate it. They offer incentives, make education and infrastructure investments that the sector finds essential, and provide start-up assistance in the form of incubators and accelerators.

While Washington’s cluster may appear secure, policymakers should not be complacent. The state has advanced several key initiatives important to the innovation economy, including tax incentives, STEM investment, and the Washington Opportunity Scholarship. These strategies, however, do not differentiate Washington from other states.

While Washington’s incentive programs are generally consistent with good tax policy, “good tax policy” does not always guide the actions of our competition. States focusing on long-term cluster strategies are often willing to forego tax revenues far in excess of expected short-term returns. And businesses will respond. Location decisions are driven by many factors, but profit-and-loss calculations are always important.

Washington has been fortunate. The state’s tech cluster has generated significant economic growth, created thousands of jobs, cushioned the recession, and spurred investment in critical infrastructure and higher education. The growth here not only has been consistent with good public policy, including tax policy, but it has also provided the intellectual and economic foundation to support an enhanced quality of life.

Parker’s timely op-ed is a good reminder of what’s at stake.

Next year’s legislature must address transportation funding

In my column today, I revisit the Washington Roundtable-Boston Consulting Group report we posted on last week.

According to BCG, a $7 billion investment would return $42 billion in value over 30 years. The benefits show up in reduced congestion costs, improved safety, lower vehicle operating costs, expanded port activity, and lower future repair costs. The analysts estimate the package would generate 184,000 construction jobs over the next 12 years. And BCG calculates that the bump in economic activity would boost state and local tax collections by $2 billion over 30 years.

Analyzing research conducted for the U.S. Chamber of Commerce, economist Susanne Trimbath confirms the positive returns. She finds that nationally transportation improvements pay for themselves in 17 years. The improved roads roads and bridges will be in service much longer than that.

The public has lost confidence in government, as recently documented in our state by The Elway Poll. That’s been true for some time, but the trend continues to decline.

Voters don’t feel represented by state government: 57 percent, a 20-year high, told Elway they are represented “not very well” (38 percent) plus or “not at all” (19 percent).

• Voters are also dissatisfied with “the way state government and politics is heading today”: 52 percent said they were “dissatisfied” or “very dissatisfied”

And Elway adds to that: “Just 22% were satisfied or ‘very satisfied’— down from 33% in 2007, the last time we asked the question. The negative side of question was different in 2007; at that time 43% said they were ‘disappointed’ (35%) or ‘angry’ (8%) about the direction of state government, rather than dissatisfied.”

Adequately addressing the most crucial transportation challenges, I suggest, would be a step toward restoring public confidence.

Public confidence in government is low now, fostering resistance to higher taxes. Yet, one reason voters don’t trust government is that government too often fails to deliver. The memory of nonexistent “shovel-ready” stimulus projects and the no-longer-boring Bertha’s troubles in Seattle contribute to the skepticism.

The $7 billion package is different. It doesn’t involve phantom projects or high-risk tunneling. The risk here is that the improvements won’t be made.

Next year’s legislature should put that risk to rest by passing a long overdue transportation package.

Washington Health Benefit Exchange asks for $147 million for 2015-17

State Rep. Reuven Carlyle writes about the Washington Health Benefits Exchange’s (HBE) proposed 2015-17 budget:

At a time when state agencies are being asked to model and potentially cut 15% from their budgets, the Washington Health Benefits Exchange is poised to ask the legislature to lift the cap on their budget to an astonishing $147 Million over the next biennium. That’s almost twice the capped amount the legislature authorized in the last budget cycle. Among the largest pieces of the pie? Substantial new investments in technology.

The HBE’s budget proposal requests $66.9 million over and above the already-appropriated $80 million for 2015-17 “to maintain current operations and improve the customer experience to retain current enrollees and generate an additional 200,000 health plan enrollments.” The proposal also provides some background on the HBE’s budget:

The Exchange was initially funded through $266 million of federal grants for design, development, and implementation, and the first year of operations. This funding request moves the Exchange from federal, developmental funding to state-appropriated funds.

In 2013, the Legislature approved three funding sources for the Exchange. The first is allocation to the Exchange of the current two percent premium tax paid by commercial health insurance issuers participating in the Exchange. The second is an Exchange carrier assessment that is in the form of a per-member-per-month payment estimated on an annual basis. The third is the Medicaid cost allocation of services being provided by the Exchange on behalf of Medicaid. . . .

The Exchange Board has stated that a $40 million annual operating budget is insufficient to maintain current Exchange operations. The federal government has identified the Washington Health Benefit Exchange at operational risk with this level of funding. A $40 million annual budget would result in significant cuts to the call center, resulting in projected wait times of up to 90 minutes, a minimal outreach and marketing program, a minimal Navigator program, no additional broker support, and a reduction in staff that would result in decreased operational efficiencies.

Rep. Carlyle isn’t supportive of the request:

We are the home of technology, innovation and entrepreneurialism but too often our performance in government service delivery and the use of technology fails to take advantage of all that we have to offer as a state. Sate government is simply not a sophisticated technology customer. We depend upon proprietary vendors too much, we fail to adequately invest in our own technology professionals through adequate pay and professional development, and we frequently fail to deploy enterprise-wide strategies from applications to utility services.

I passionately support increasing access to quality health care. I believe the Affordable Care Act is a responsible step toward improving millions of lives across the nation, and I believe we have a strong executive team and approach here in Washington. But I don’t support tens of millions more for the Exchange’s technology systems in light of the lack of meaningful or independent technology oversight from anyone other than the agency itself.  Not only is it vital to hold the line on additional technology spending, it’s likely time to reconsider the governance structure of the Health Exchange itself as a quasi-independent entity.