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Rhode Island Exchange Planning March, 2012 Deb Faulkner Faulkner Consulting Group

Rhode Island Exchange Planning March, 2012 Deb Faulkner Faulkner Consulting Group. Agenda. Exchange Context Exchange 101 What is an Exchange? Who will use Rhode Island’s Exchange? RI Exchange Status Implications for Employers. Exchange Context.

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Rhode Island Exchange Planning March, 2012 Deb Faulkner Faulkner Consulting Group

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  1. Rhode Island Exchange PlanningMarch, 2012Deb FaulknerFaulkner Consulting Group

  2. Agenda • Exchange Context • Exchange 101 • What is an Exchange? • Who will use Rhode Island’s Exchange? • RI Exchange Status • Implications for Employers

  3. Exchange Context Federal reform, post 2014, envisions affordable coverage for virtually all RIers, through the following elements:

  4. Rhode Island Executive Order established the RI Health Benefits Exchange as a division within the Executive Agency RI Health Benefits Exchange Ex-Officio Members Appointed by the Governor Small Business Rep Director of DOA Consumer Rep Director of Health Former Health Insurance Executive Labor Director of Administration Director of Health Consumer Rep Consumer Rep E-Commerce Expert Former US Attorney (with hospital system expertise) Former Delivery Sys Governance Small Business Rep Commissioner of Health Insurance Commissioner of Health Insurance Secretary of EOHHS Small Business Rep Small Business Rep Physician (not currently practicing) Former Insurance Executive Labor

  5. Agenda • Exchange Context • Exchange 101 • What is an Exchange? • Who will use Rhode Island’s Exchange? • RI Exchange Status • Implications for Employers

  6. Why establish an Exchange? MissionThe Rhode Island Health Benefits Exchange will serve as a robust resource for Rhode Islanders and Rhode Island businesses to learn about and easily compare the quality and affordability of their health insurance options, enroll in coverage and, if eligible, access subsidies for coverage.

  7. RI Exchange Goals Improve the health of Rhode Islanders Achieve near universal coverage Favorably impact health insurance cost trends Favorably impact health care delivery system effectiveness and efficiency Add value to employer health insurance purchasing

  8. Exchange Web Portal: Massachusetts

  9. Individuals (self pay – no subsidy) Medicaid eligible individuals Subsidy eligible individuals Employees of Small Employers Employees of Large Employers The RI Health Benefit Exchange A robust marketplace for all Rhode Islanders Rhode Islanders seeking Health Insurance (1) Web Portal: a robust marketplace for all Rhode Islanders to identify health insurance options and purchase coverage (2)Help Rhode Islanders Choose Health InsuranceDisplay insurance options in an easy to understand, highly interactive web page (3) EnrollDetermine eligibility,enroll in coverage, & facilitate subsidy

  10. Post 2014: Exchange Users RI anticipates three categories of Exchange users Shop through Exchange: 901,000 (check affordability, compare prices) Individual Medicaid (1) Employer-Based Use Exchange to Determine Eligibility: 256,000 Ind. Medicaid (1) Employer-based Enroll through Exchange: 81,000 Ind. (1) Medicaid totals do not include 17,000 Medicaid eligibles over 65 who will also use the system. Source: Preliminary estimates of post-2014 volume , modeled using CPS, DHS, OHIC, ACS and MEPS data and estimates of undocumented immigrants.

  11. Exchange Project Status Achieving our mission requires an aggressive change initiative impacting:  • Policy: business policy, practices and processes • Operations: people, roles & organizational structures • Technology: the systems that support the new policies & practices

  12. Agenda • Exchange Context • Exchange 101 • What is an Exchange? • Who will use Rhode Island’s Exchange? • RI Exchange Status • Implications for Employers

  13. Implications for Employers Key Elements of ACA: Implications for Employers Individual Mandate Employer Penalties (over 50), Tax Credits (Under 25) Commercial Market Reforms Essential Health Benefits Exchange: SHOP (Small Business Health Options Program)Individual Exchange

  14. Next Steps Less than 18 months from today - need fully operational exchange • Fall 2012 • “Operational Readiness” • January 2013 • Achieve certification • Summer 2013 • Soft Launch • October 2013 • Open enrollment begins • December 2014 • Exchange Establishment funding ends • December 2015 • Medicaid funding (90% federal match) ends

  15. Backup

  16. Exchange Principles • Exceptional Customer Experience • Simplicity • Affordability • Flexibility • Transparency • Fiscal Prudence • Alignment with other governmental health reform initiatives • Catalyst

  17. Small Employer Tax Credits Small employers will need to purchase insurance through the SHOP Exchange to access tax credits. • Who is EligibleEmployers with <25 employees with average wages of up to $50,000 • Amount of CreditSliding scale up to 50% of the amount they contribute toward insurance premiums • SHOP Requirement (after 2014)In order to receive the credit after 2014, small employers must purchase through the state’s SHOP Exchange. • TimingCredits are available starting in 2010. Employers may only receive the credit for 2 years after 2013. Source: Health Policy Brief: Small Business Tax Credits, Health Affairs, Jan 14, 2011, Robert Wood Johnson Foundation

  18. Employer Penalties Beginning in 2014, some small businesses may have to pay a penalty if they do not offer affordable coverage. • WhoBusinesses with 51 or more FTEs • Penalty$2,000 per employee (excluding the first 30 employees) if they do not offer coverage for employees who average 30+ hours per week.1 • CoverageMust cover at least 60% of the actuarial value of the cost of benefits. • Affordability RequirementEmployee’s premium cannot exceed 9.5% of their household income. • If not, employees may purchase insurance on their own through the exchange using tax credits. • Employers will either pay $3,000 per employee receiving the tax credit, or $2,000 per employee excluding the first 30 workers (whichever is less). 1 Note that there is no penalty for part-time employees not offered coverage. Source: Kaiser Family Foundation employer penalty flowchart

  19. Individual Mandate Source: Kaiser Family Foundation individual mandate flowchart • Who is exempted from the requirement to purchase insurance? • Religiously opposed to acceptance of benefits from a health insurance policy • Undocumented immigrants • Persons who are incarcerated • Members of an Indian tribe • Income below the threshold requiring filing a tax return ($9,350 - individual, $18,700 - family) • Anyone who has to pay more than 8% of income for health insurance, after taking into account any employer contributions or tax credits. • What insurance coverage is acceptable? • Medicare/Medicaid/CHIP • TRICARE or veteran’s health program • A plan offered by an employer • Insurance bought directly that is at least at the Bronze level • A grandfathered health plan in existence before the health reform law was enacted • What is the penalty for not having insurance? 1 • 2014: $95/adult, $47.50/child ($285 family max) or 1% of family income, whichever is greater • 2015: $325/adult, $162.50/child ($975 family max) or 2% of family income, whichever is greater. • 2016 and Beyond: $695/adult, $347.50/child ($2,085 family max) or 2.5% of family income, whichever is greater. After 2016, penalty amounts are increased annually by the cost of living. 1 The penalty is pro-rated by the number of months without coverage, though there is no penalty for a single gap in coverage of less than 3 months in a year. The penalty cannot be greater than the national average premium for Bronze level coverage in an Exchange .

  20. Context: Commercial Reforms Making health insurance accessible to all, leveling the playing field Young adults on parents’ coverage Pre-existing condition protections New restrictions on rate factors “Essential benefits”

  21. Starting Point Under 65 RI Population: Current Health Insurance Status Total = 901,000 (1)Medicaid total does not include 17,000 eligibles over 65. (2) Chart uninsured total based on ACS 2009 data. ACS data for 2010 shows 126,000 uninsured, mostly at lower incomes. Source: Census Bureau American Community Survey 2009, RI Medicaid, Commercial insurance data as reported to OHIC, Large Group/SI includes both carrier reported data and additional subscribers based on ACS data for total privately insured population.

  22. Work to Date: Policy Populations Served How Best to Serve Individuals How Best to Serve Small Businesses

  23. Work to Date: Operations Detailed workplan for operationalizing RI’s Exchange by 2014 Business requirements Business process designfocused on efficiencies across agencies, improved consumer experience

  24. Work to Date: Technology Translating business requirements into technical requirements Technology “Gap Analysis” New England Collaborative – Innovator grant

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