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Proposed Rates Plan Year 2020 Public Hearing

DISB Public Hearing 2020 PROPOSED HEALTH INSURANCE RATES August 22, 2019 DC Health Benefit Exchange Authority Mila Kofman, JD Executive Director. Proposed Rates Plan Year 2020 Public Hearing.

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Proposed Rates Plan Year 2020 Public Hearing

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  1. DISB Public Hearing2020 PROPOSED HEALTH INSURANCE RATESAugust 22, 2019DC Health Benefit Exchange AuthorityMila Kofman, JDExecutive Director

  2. Proposed Rates Plan Year 2020 Public Hearing We appreciate Commissioner Taylor’s support for the Health Benefit Exchange Authority (HBX), your contributions as a Board Member, and your consideration of our recommendations.

  3. DC Health Link, a public-private partnership, is the on-line health insurance marketplace for residents and small businesses in the District of Columbia. • Established to get people covered and provide transparency, encourage market competition, and simplify the purchase of insurance, DC Health Link provides residents and small businesses the type of market power only large employers had in the past. • DC Health Link advocates for the lowest possible rates for District residents and small businesses.

  4. ACA and DC Health Link Background DC: 96%+ of District residents insured Uninsured rate cut in half since DC Health Link opened Last state to start IT build, 1 of 4 state marketplaces opened for business on time (& stayed open) Oct 1, 2013 Small group & individual market through DC Health Link (full transparency and price competition): 100,000 covered lives (private health insurance): 79,000 people in SHOP (5,000+ District small businesses covered; 11,000 Congress -- Members and designated staff in district offices and on the Hill); 17,000 residents (individual); 5,000 residents with individual dental insurance (market didn’t exist before); 800+ brokers Health plans that fit all budgets (2019): 152 health plans (3 United Health Companies; 2 Aetna; Kaiser Permanente, and CareFirst Blue Cross Blue Shield) – small group 25 health plans (Kaiser and CareFirst) – individual

  5. HBX Recent Awards and Recognition • 2018 & 2016 Best Practices in Innovation: Amazon Web Services (AWS) City on a Cloud international competition • for shared services with the Massachusetts Health Connector for Business & open source code in the cloud with agile development(works on all devices – don’t need internet and computer access; daily deployments and no off-line for deployments) • 2018 and 2017 Ranked #1 for consumer decision support tools (ranking of SBMs and FFM) • 5 PR News Awards in 2018 and 2019 • 2017 AWS IT case study on cloud solutions (https://aws.amazon.com/solutions/case-studies/DC-HBX/) • First in the nation SBM partnership. Selected by the Massachusetts Health Connector to provide IT solution and on-going operations support for the MA SHOP (Feb 2017)

  6. HBX’s role in rate review: • HBX advocates for the lowest possible rates for our small business and individual customers. • HBX provides actuarial analysis and policy reasons for the lowest possible rates for DISB’s consideration. • HBX outside actuaries (Oliver Wyman) analyze proposed rate filings: • Identify unsupported assumptions and errors • Work with DISB actuaries

  7. District addressed several federal actions that cause premiums to increase (a few examples): • Enacted the Health Insurance Marketplace Improvement Act of 2018 to protect residents and businesses against junk insurance & higher premiums • Feds: exempted AHPs and expanded short-term policies; estimated impact in DC: premium increases by more than $1000/year/person • By passing new law, DC avoided negative impact • Enacted an individual responsibility requirement • Feds: no requirement; estimated to increase premiums nationwide • By passing new law, DC avoided negative impact • Others: Extended Open Enrollment Period: Nov 1 to Jan 31 • Increased investment in outreach, marketing, and enrollment

  8. Summary: Insurer Proposed Rates and HBX Recommendations INDIVIDUAL MARKET SMALL GROUP *HBX believes that even these rates are too high and that additional action, e.g., federal reinsurance, is necessary to lower rates for all residents and District small businesses.

  9. DISB Approved Rates: 2015-2019 CareFirst HMO & PPO Individual Market

  10. Risk Based Capital Ratio

  11. Insurer Pricing Comparison *CareFirst, a not for profit, is proposing to pay a smaller share of premium for medical care than its for-profit competitors, United Health and Aetna.

  12. CareFirst 2020 Proposed Rates & HBX Recommendations *The impact on premium rates when changing one assumption includes a secondary effect due to the reduction in other components that are also priced as a percent of premium. **HBX believes that even these rates are too high.

  13. Proposed Alternative Rates Compared to HBX recommended Rates *United testified opposing alternative rate approach. Aetna- no position. CareFirst & Kaiser supported alternative rate approach. Source: June DISB hearing **HBX believes that even these rates are too high and that additional action is necessary to lower rates for all residents & small businesses.

  14. Number of Residents Impacted by Alternative Rate Proposal NOTE: Under alternative rates, United’s risk adjustment payment increases from $1.1 million to $3.3 million. CareFirst is the recipient. If United decides it can no longer compete in the District, all small businesses will be worse off. Without real competition, CareFirst rates will no longer be competitive.

  15. HBX strongly opposes alternative rate filing approach Short-term impact: • 82,836 people will be paying an average of $48.70/month more • 11,625 people will pay an average of $25.12/month less Long-term impact and risks: • Under alternative rates, United’s risk adjustment payment increases from $1.1 million to $3.3 million (CareFirst receives additional payments). • If United decides it can no longer compete in the District, all small businesses will be worse off. • Approximately 14,000 people may lose United coverage • 48 of 152 products potentially disappear • Without real competition, CareFirst rates will no longer be competitive for small businesses and non-profits. In other words, CareFirst small group rates will no longer be tempered by competition because there won’t be real competitors.

  16. ADDITIONAL POLICY CONCERNS WITH PROPOSED RATES: • DC residents, small businesses, and non-profits will no longer be able to afford their premiums. • DC Health Link customers’ testimony at DISB rate hearings establish a strong record • Small businesses and non-profits may drop their health insurance coverage. • DC residents may become uninsured. • Healthy people are more likely to drop coverage than sick people. • Sicker pool means higher prices for everyone. • Rate increases threaten market stability for all residents, small businesses, and non-profits.

  17. Conclusion Thank you Commissioner Taylor for holding this hearing and considering our recommendations.

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