Health Insurance Exchanges: Unprecedented Opportunities or Potential Pitfalls?

1. Health Insurance Exchanges: Unprecedented Opportunities or Potential Pitfalls? Presented to the Senate Department of Community Health Subcommittee Michigan State Legislature October 27, 2011

2. What is an Insurance Exchange? • Online marketplace—A tool that enables individuals to shop, compare, and enroll in a health insurance plan • Definition—Varies by intended role of the exchange • Massachusetts—Intended to address access • Utah—Intended to address costs State models are still in development…

3. MA and UT: Compare and Contrast

4. PPACA Timelines Preliminary insurance regulations take affect Jan 1, 2014 State Exchanges required to go live HHS must determine if states have made sufficient progress in developing exchange Jan 1, 2016 States must choose to engage in healthcare Choice Compacts March 23, 2011 Deadline for HHS Secretary to award Exchange grants Jan 1, 2015 Employer & Individual mandates in effect 2010 2011 2012 2013 2014 2015 2016 2017 2018 Jan - May Non bi-cameral State legislatures convene Jan 1, 2015 Exchange must be financially self-sustaining Jan 1, 2014 Premium tax credits available for enrollees under 400% FPL Jan 1, 2017 Large group Exchange to go live July 1, 2010 Healthcare.gov goes live, simulating first Exchange

5. Mandated State Exchange Functions Navigator Portal / Web site Guidance Data Service Hub Verify Income IRS Enrollment and Eligibility Interface Tax Credits TREASURY Subsidies Cost Reduction STATE Medicaid Eligibility SOCIALSECURITY Verify Citizenship HOME LAND SECURITY Verify Residency HHS Reporting Plan Comparison Interface ONLINE CALCULATOR Display Total Costs Health Plan #1 Health Plan #2 Health Plan #3 Health Plan #4 Employee or Consumer • TPA • CustomerService • Financials • Risk Adjustment Administration Interface Notifications Admin, Life Events, etc. Billing or Invoices State Insurance Agency Certify, Recertify Decertify Health Plans Communication Interface Customer Service Employee or Consumer Carrier 1 Carrier 2 Carrier 3 Carrier 4 Pay Premiums

6. State Exchange Legislation Source: Center on Budget and Policy Priorities, September 30, 2011

7. 2010 and 2011 Exchange Grant Awards Source: Center on Budget and Policy Priorities, September 30, 2011

8. Barriers to Implementation • Overall lack of certainty • 2012 Elections • Constitutional challenges • Lack of timely guidance from HHS • Tough statutory timelines • Agreement among state officials • Stakeholder buy-in • Technology • Systems development • Strained public/private sector resources

9. Federal Funding Opportunities Through 2014 • Level I • Single year funding only • Period of Performance up to one year post award • Available only through 2011 • Application deadlines are March 30th, June 30th, September 30th, and December 30th • Level II • Multi- year funding • Period of Performance from date of award through December 31, 2014 • Available through 2014 • Application deadlines are March 30th, June 30th, September 30th, and December 30th • 90/10 Match • MMIS claims processing • Medicaid enrollment eligibility systems

10. Federal Funding Opportunities Post 2014

11. Likely State Policy Positions • Lack of federal guidance means many state reform efforts will largely be focused on the small group market • Exchanges will be used as tools to reform Medicaid • Fully functioning, PPACA compliant exchanges by 2014 is questionable • Majority of states indicate insufficient lead time on PPACA implementation • Political and practical barriers abound

12. Strategic Imperatives for States • Define the state’s vision; identify long- and short-term strategies • Perform environmental assessment • Develop a blueprint • Proactively engage all stakeholders • Act NOW • Be thoughtful, deliberative, and decisive in planning and implementation efforts • Understand the implications of actions or lack thereof • Be creative in finding unique solutions that work for the state’s unique circumstance

13. Leavitt Partners, LLC Washington DC Office 1776 I Street, NW 9th Floor Washington, DC 20006 Salt Lake City Office 299 South Main Street Suite #2300 Salt Lake City, UT 84111 Phone: (801) 656-9716 www.leavittpartners.com