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North Carolina: BCBSNC dropping grandfathered plans for 50K enrollees

Quick recap: As of 2013, the pre-ACA individual market consisted of around 10.7 million people. The vast majority of the policies these folks were enrolled in were not ACA-compliant for one reason or another, including not covering one or more of the 10 Essential Health Benefits (EHBs) required by the ACA, having annual/lifetime caps on benefits or any number of other reasons.

Under ACA regulations, non-compliant policies which people were enrolled in prior to March 2010 (when President Obama signed the ACA into law) were grandfathered in...that is, insurance carriers could continue to offer them to existing enrollees for as long as they wanted to, and existing enrollees could stay on them for as long as they wished, but they couldn't be offered to anyone else, and once a current enrollee dropped out of a grandfathered plan they aren't allowed to rejoin it later on. The number of "grandfathered" enrollees has gradually declined since 2013, of course, as people either move to other coverage, die off (hey, it happens) or the carriers decide to discontinue the policies altogether.

Meanwhile, non-compliant policies which people enrolled in after March 2010 (but before January 2014) were supposed to be terminated effective December 31, 2013...but after the "You Can Keep Your Plan" brouhaha/backlash in November 2013, the HHS Dept. allowed those policies to be bumped out by one additional year...and then three years...then four...and now the Trump Administration has bumped the deadline out yet again; at this point, it's safe to assume that this second batch of non-ACA policies will effectively be extended permanently as well.

Unlike grandfathered policies, individual states were allowed to decide whether or not to allow "transitional" or "grandmothered" plans; about 1/3 of the states cut them off at the end of 2013, a couple cut them off in 2015 or 2016, and the rest are allowing them pretty much as long as the carriers want to keep them around. Like grandfathered enrollees, the number of grandmothered enrollees has gradually declined as people drop their policies, die off or the carriers decide to discontinue the plans in question.

I've assumed until now that any carrier which hadn't already dropped their grandfathered/grandmothered policies probably never would--they'd just keep them going until the last enrollee drops before killing them off. Apparently that's not the case after all, however:

Health-insurance plans grandfathered into the federal Affordable Care Act will not be provided by Blue Cross and Blue Shield of North Carolina in 2018, the insurer confirmed in a blog post.

About 50,000 individuals in the non-group category will be affected statewide.

...Notices will be mailed to affected customers in October, which will include premium and comparable ACA plan information on deductibles and benefits.

Affected are Blue Cross customers who had a health plan in effect in March 2010 when the ACA was signed into law by President Barack Obama.

...Bolt said participation level in the pre-ACA plans has dropped from more than 330,000 in 2010 to 50,000 currently.

My data on the number of grandfathered/grandmothered enrollees is extremely spotty sparse; I only have hard numbers for a handful of states, and even that tends to be pretty out of date. The attrition trend is all over the place as well; for instance:

  • Florida had 145K Grandfathered and 409K Grandmothered enrollees as of August 2014; by March 2015 this had dropped to 165K and 87K respectively...a drop of over 54% in just 7 months.
  • In Iowa, big kahuna Wellmark had 151,000 individual market enrollees in 2013; I presume pretty much all of these were non-compliant plans. As of this spring, that number was down to just 2,300.
  • South Dakota appears to have had around 30,000 grandfathered/transitional enrollees as of July 2015.
  • I've heard from a trusted source that one major carrier in Louisiana has kept about 3/4 of their grandfathered enrollees to date, only dropping from 40,000 to 30,000 today.

...and so on.

Normally I would assume that the risk level of the grandfathered pool would gradually improve as time wore on, since older enrollees would gradually turn 65 and move to Medicare (or die off), while younger, healthier enrollees would stick around. Apparently I was wrong about that, at least in North Carolina:

“We know this will be tough news for our customers who love their grandfathered plans,” Bolt said.

“Because no new customers have joined this pool since 2010, the group as a whole has gotten older and sicker,” he said. “That means they have also become more expensive to insure, and we’d need to raise rates for these customers a significant amount to keep offering these plans in 2018.”

Bolt said there is a “good news-bad news scenario for most customers” who will transition to an ACA plan.

“The good news is their plan will cover more services, in most cases,” Bolt said. “The bad news is that this coverage will be more expensive than what many customers are paying today.”

...Bolt said some grandfathered customers will qualify for ACA subsidies, as do many current ACA policyholders.

The good/bad news thing is a mixed bag:

“Comparing current-year premiums for grandfathered plans to premiums for an ACA plan next year, young men and women over 50 will generally pay more for ACA coverage, while older men and young women will pay less,” Bolt said.

Huh.

It'll be interesting to see what sort of impact these 50,000 people will have on the NC individual market risk pool. Not all of them will enroll in an indy market plan, of course; those who qualify for tax credits probably will do so. They're "older and sicker" than they were a few years ago, but that doesn't necessarily mean they're "older and sicker" than the current individual market pool.

In the long run, however, anything which merges people into fewer, larger risk pools is a good thing, so from an actuarial and record-keeping POV, this is probably good news.