State of the States: Summer 2021

In this quarter’s news: advocates notch another win, securing state level protection against copay accumulator adjusters; Missourians begin enrolling in the state’s expanded Medicaid program; and ACA marketplaces report 2021 enrollment totals, rates for 2022, and other developments.

North Carolina becomes 12th state to ban copay accumulator adjusters

Governor Roy Cooper signed S.B. 257 into law last month, making North Carolina the 12th state (as well as Puerto Rico) to restrict the use of “copay accumulator adjusters” by state-regulated health plans.

The North Carolina legislation is part of a larger bill regulating pharmacy benefit managers. North Carolina follows the accumulator language enacted in four other states — Arizona, Arkansas, Georgia, and Kentucky — that prohibit accumulators under the prescription drug benefit only when no generic alternative is available (which is the case for most biologic drugs including bleeding disorders injectables). The other eight states all prohibit copay accumulators across the board.

Six states had already passed accumulator prohibitions in 2021 (see State of the States, Second Quarter 2021) and legislation remains active in at least Massachusetts, Michigan, Ohio, Pennsylvania, and Wisconsin. The 2021 legislative victories have encouraged lawmakers to begin drafting or filing accumulator bills ahead of upcoming 2022 legislative sessions in at least ten other states (including Alabama, California, Florida, Maryland, New Mexico, Oregon, and Utah).

However, it remains to be seen whether this state-level momentum will prompt the U.S. Centers for Medicare and Medicaid Services (CMS) to implement similar federal-level prohibitions against accumulators. Federal action is needed to reach large group and self-funded health plans, which are exempt from state legislation. A bipartisan bill in Congress restricting the use of copay accumulator adjusters is expected to be introduced in the last quarter of 2021.

Missourians begin enrolling in state’s voter-mandated Medicaid expansion

The Missouri Department of Social Services announced that more than 17,000 Missourians have applied to enroll in the voter-mandated expansion of the state Medicaid program. The program began processing applications on October 1st.

In August 2020, Missouri became the sixth state where voters approved a ballot referendum requiring reluctant lawmakers to participate in the Medicaid expansion under the Affordable Care Act (ACA), and the second (following Oklahoma) to do so by amending their state constitution (see State of the States, Summer 2020). The Missouri Medicaid program was supposed to begin providing benefits to eligible individuals as of July 2021, but the state legislature refused to appropriate the necessary funding. Advocates sued to compel the state to implement the voter-mandated expansion, and Missouri’s Supreme Court unanimously upheld the ballot referendum in July 2021.

Following that decision, a lower state court subsequently ordered the expansion to move forward, without increased premiums/cost-sharing or lower benefits for those newly-eligible. The state Medicaid program (MO Health Net) began accepting more than 17,000 applications – but insisted that applicants had to wait until October 1st for needed “software upgrades” before being enrolled in Medicaid (despite federal law requiring applications be processed in 45 days). MO Health Net also refused to advertise the expansion to the estimated 275,000 Missourians expected to qualify.

As a result of ACA matching funds and additional expansion incentives that Congress provided this spring through the American Rescue Plan Act (ARPA), Missouri will receive roughly $968 million in federal expansion funding over the next two years.

Record numbers sign up for ACA coverage during COVID special enrollment period

CMS released data in August showing that more than 2.8 million Americans enrolled in ACA Marketplace coverage during the special enrollment period (SEP) created in response to the ongoing COVID-19 pandemic, bringing total Marketplace enrollment to a record-high of 12.2 million.

In fact, the final tally is likely to be significantly higher given that several of the 14 states operating their own ACA Marketplaces have extended deadlines beyond the August 15th end of the SEP for the federally-facilitated Marketplaces. This includes New Jersey (which runs until November 30th), California and New York (through December 31st), and the District of Columbia (which expires at the formal end of the public health emergency).

More than half of all new enrollees (55 percent) reside in one of the dozen states that have yet to expand Medicaid under the ACA, in which those earning less than 100 percent of the federal poverty level (about $13,000 per year) typically have no access to Medicaid or ACA premium tax credits to purchase Marketplace coverage. These 12 states accounted for nearly half (49.7 percent) of all effectuated enrollment nationwide–a 44 percent increase from pre-pandemic levels in 2019. For the two years from August 2019 – August 2021, non-expansion states were responsible for three-quarters of total Marketplace enrollment growth.

CMS noted that Congressional action made Marketplace plans dramatically more affordable during the SEP. For example, the temporary expansion of ACA premium tax credits reduced premiums by an average of $67 (and lowered premiums for more than 90 percent of all SEP enrollees). Nearly half of new consumers were able to receive a monthly premium of $10 or less thanks to these tax credits. Median deductibles also fell by more than 90 percent as consumers were often able to purchase plans in more generous coverage tiers.

Marketplace insurance became more affordable for middle-income consumers as well. Prior to enactment of the ARPA, individuals and families earning over 400% of the federal poverty level (about $52,000 for an individual/$104,000 for a family of four) didn’t qualify for premium subsidies; as a result, many found insurance unaffordable. The ARPA eliminates that “subsidy cliff” for 2021 and 2022. With subsidies now available, some seven percent of all Marketplace enrollees now earn more than 400 percent of FPL, compared to only two percent prior to the ARPA.

Increased competition, reinsurance continuing to hold down ACA Marketplace premiums

Preliminary rate filings show that premiums in the ACA Marketplaces are likely to increase by  2.5 percent on average for the 2022 plan year.

While final rates will not be released by CMS until shortly before the November 1st start of open enrollment, the early data show that insurers remain unsure about the full impact from the COVID-19 pandemic and are attempting to offset potential costs. The modest increase would follow three consecutive years of declines (average premiums fell by 1.7 percent for 2021) but stand in marked contrast to first five years of the Marketplaces when premiums increased by more than 30 percent on average.

As usual, premium requests vary widely by insurer and state. For example, the Florida Office of Insurance Regulation approved a 6.6 percent average increase for individual ACA plans, despite that state continuing to lead all others in Marketplace enrollment. Vermont and West Virginia (where competition among individual market insurers is very limited) are also seeking increases averaging 12-13 percent for 2022. However, 11 states are likely to see average premiums decline, led by Georgia (9.47 percent), Alabama (8.36 percent), and Arizona (7.92 percent).

Georgia’s decrease is widely attributed to its recent approval for a federal reinsurance program, which will compensate insurers for exceptional claim costs. According to data recently provided by CMS, premiums in the 13 other states with federally-approved reinsurance programs were at least 14 percent lower than without the waiver (and up to 30-42 percent lower in states like Alaska and Maryland with limited insurer competition). As a result, insurers have been more willing to participate in the Marketplaces for those states (88 percent of enrollees in reinsurance states can now choose from at least three insurers).

Due to this success, CMS is providing more than $450 billion for existing state reinsurance programs, including a five-year extension it recently approved for Colorado (Alaska, Hawaii, Maine, Oregon, and Wisconsin are seeking similar extensions). However, CMS acknowledges that the need for these reinsurance programs may be significantly mitigated should the temporary expansion of ACA premium subsidies under the ARPA be made permanent.

Three new states assume full control over their ACA Marketplaces

CMS confirmed that three new states have officially completed their transition to full control over the ACA Marketplaces operated in their state.

The beWellNM Marketplace in New Mexico will let consumers start shopping for coverage directly from their state-based Marketplace (SBM) on October 1st, while Kynect in Kentucky and in Maine will start on October 15th. Open enrollment for all federally-facilitated Marketplaces (FFMs) and SBMs begins November 1st but SBMs can extend the closing date beyond the January 15th closing date for FFMs (and most do).

These three states join the 15 other existing SBMs, including Nevada, New Jersey, and Pennsylvania, that transitioned to state control in 2019-20 (see State of the States, Summer 2020). Virginia has already started the transition from FFM to SBM and will assume full state control for the 2023 plan year. (Oregon plans to ultimately transition to full state control but for now remains a SBM using the federal web portal.)

States that control their ACA Marketplaces can not only use their own web portals, determine their own user fees, and extend open enrollment deadlines, but they can also create their own special enrollment periods. (Maine officials cited the refusal of the Trump Administration to create a SEP during the COVD-19 public health emergency as a major factor in their decision to transition away from federal control.)  In addition, SBMs can set their own rules for plan certification and perform their own consumer assistance and outreach.