MIHealth Marketplace SM Michigan’s Health Insurance Exchange

1. MIHealth MarketplaceSMMichigan’s Health Insurance Exchange 2011 V-BID Center Symposium Steven H. Hilfinger, Director November 16, 2011

2. What is MIHealth MarketplaceSM? • The MIHealth MarketplaceSM is an online clearinghouse designed by Michiganders to meet the needs of the Michigan market, where buyers and sellers of health insurance – aided by agents, producers and “navigators” – will use technology to make insurance shopping as easy as other online consumer shopping experiences • Enhances market competition by allowing consumers (individuals and businesses) to easily compare multiple insurance plan offerings online, including a “calculator” showing cost differences • MIHealth MarketplaceSM will be a non-exclusive insurance portal; insurance products can and will continue to be sold outside of the exchange (through agents or otherwise) if individuals and businesses prefer; and individuals and businesses may keep their existing health plans if they prefer • Pending legislation in Michigan: Senate Bill 693

3. MIHealth MarketplaceSM Governance • MIHealth MarketplaceSM will be a non-profit corporation controlled by a Board of Directors • 7 voting members • OFIR Commissioner to serve as non-voting member • Appointed Board members will need to meet qualifications in federal law and regulations, and under Michigan law • Executive Director appointed by the Board will run day-to-day operations • Supported by larger advisory board, composed of various stakeholders • Non-profit will facilitate market-based decisionmaking

4. Structure: Single Administration of Two Marketplaces • SHOP Marketplace (i.e. Small Group Market): • Two-year, 50% Federal Tax Credit toward an eligible employer’s contribution for those who buy at MIHealth MarketplaceSM • Will serve groups of 2-50 members until 2016, when it will then expand, per federal law, to serve groups from 1-100 members • Job providers can find the best value for their needs and their employees, using the MIHealth MarketplaceSM website and call center, and may continue to use their existing agents and producers • Individual Marketplace: • For individuals/families with incomes between 133% and 400% of the Federal Poverty Level (i.e. $30,843 to $88,200 for a family of four), federal tax subsidies will be available to make premiums more affordable • Many currently uninsured Michiganders will be able to purchase private insurance, thereby reducing current “hidden tax” of $1,000/Michigan family for the uninsured

5. Why Act Now on MIHealth MarketplaceSM ? • If Michigan does not start the process now, a federal exchange will be forced upon us. Acting now would give Michigan time and flexibility to ensure a fiscally prudent and managed approach, and give more certainty to the private sector; not acting now will only increase uncertainty, which leads to higher risk in the insurance marketplace, and higher costs for Michigan consumers and job providers • Reasons for Michigan Legislature to act this Fall: • After legislation passes, MIHealth MarketplaceSM will need to procure IT systems, hire staff, make policy and business decisions that may impact the cost of insurance, coordinate with the Federal Government, the State of Michigan and the private sector, and “go live” in less than 2 years to avoid a federal takeover • Waiting will lead to higher costs • Insurance and uncertainty do not mix • Those who procure first IT resources will get better pricing/deeper bench • Complex IT initiative with tight federal timelines, including complicated integration of IT systems for MIHealth MarketplaceSM, the Federal Government, the State of Michigan, insurance carriers, providers, businesses and others; overwhelming stakeholder input from these groups’ voices favor acting now, rather than waiting

6. Timelines and Financing IMPLEMENTATION 12/30/11: Next opportunity to Apply for Level 2 1/1/13: HHS to certify MIHealth Marketplace 1/1/14: Benefits Begin 2011 2012 2013 2014 2015 9/30/11: MI Applied for Level 1 Funding 6/29/12: Last opportunity to Apply for Level 2 10/1/13: Open Enrollment begins 1/1/15: Exchange Must be Financially Self-Sustaining Cost to establish borne by Federal Government, but State must first meet benchmarks, including having the legal authority to operate an exchange FINANCING Changes to Medicaid IT Systems to interface with exchange: 90% federal match rate

7. What Happens If Congress or the Supreme Court Reverses the Affordable Care Act? • The ACA is the current “law of the land”; given the current legislation and timelines, we need to plan now to ensure the best outcome for Michigan if the law is upheld and remains in place • Even if a portion of the law is deemed unconstitutional, the health insurance exchange portion of the law may be unaffected by such decision • If the ACA is repealed by Congress or ruled unconstitutional, that would give Michigan even more flexibility to structure a market-based MIHealth MarketplaceSM without any federal requirements, providing enhanced market competition; would need to be self-sustaining financially or it will not survive (free market) • None of us have a “crystal ball”; key is to preserve “optionality”

8. Detriments of a Federal vs. State Exchange • A federal exchange would result in the loss of state control over an important aspect of our insurance markets, replacing the ability of the State of Michigan to certify health plans with a federal decisionmaker • A federal exchange would result in the loss of state control over a significant portion of its budget, as it relates to Medicaid funding and cost containment efforts, impacting many State departments; exchange-related costs would be determined by the Federal Government and imposed upon the State of Michigan • A federal exchange would have other significant negative impacts on Michigan job providers, in terms of inability to control costs, potential lack of participation of agents and producers, and potential absence of Michigan companies in vendor base for federal exchange • A federal exchange is a “one size fits all” approach, including covered benefits

9. Financing of MIHealth MarketplaceSM • To Date: • $1 million planning grant awarded by HHS in 2010 (study) • $9.8 million Level 1 grant applied for on September 30, 2011 to HHS • Level 1 Establishment Grants provide one year of funding for states that have made progress in order to continue to prepare for an establishment of an exchange • From Now until December 31, 2014: • Level 2 Establishment Grants: Provides funding through 12/31/14 to establish and operate an exchange, but States must meet certain benchmarks to apply (including legal authority) • Exception: 10% of IT costs associated with integrating Medicaid with MIHealth MarketplaceSM must be borne by the State; these expenses will be required even if the Federal Government operates the exchange • On and After January 1, 2015: • Must be self-sustaining financially; to be financed by fees and assessments on plan issuers, and other sources as determined by the Board of Directors

10. Plans To Be Offered on MIHealth MarketplaceSM • Health plans in the MIHealth MarketplaceSM will be “Qualified Health Plans” • “Qualified Health Plans” to be certified by the Office of Financial and Insurance Regulation (OFIR) and MIHealth MarketplaceSM • There will be 4 coverage options, known as “Precious Metal Plans”: • Bronze 60% actuarial equivalent • Silver 70% • Gold 80% • Platinum 90% • Carriers who want to participate in MIHealth MarketplaceSM will be required to at least offer a Silver and Gold Plan, but any plan in MIHealth MarketplaceSM must be offered, at the same price, outside of MIHealth MarketplaceSM

11. V-BID Plans and Exchanges V-BID Plans tend to increase actuarial projections (upon which “precious metal plans” are based), so the characteristics of a state exchange could dictate the number of V-BID plans on an exchange Clearinghouse vs. Active Purchaser Clearinghouse: the state does not prescribe benefits over and above what is required in federal and state law and all carriers that meet state requirements can participate. This does not require carriers to offer V-BID plans, and instead relies on the market to determine Active Purchaser: the state can prescribe benefits on the exchange and/or be selective about the carriers on the exchange. However, if too many benefits are mandated, the number of more affordable V-BID plans (e.g. bronze and silver) could be limited MIHealth MarketplaceSM is based on the clearinghouse model

12. Does Value-Based Insurance Design Fit into MIHealth MarketplaceSM? • Does Value-Based Insurance Design Fit into the Marketplace? • Yes, but demand will drive the options offered through the Marketplace, not government mandates • However, with more employers interested in and offering a V-BID option, we believe there will be affordable V-BID options on MIHealth MarketplaceSM due to free-market demand for value-based products • Education could drive demand • Quality Ratings: The MIHealth MarketplaceSM Board of Directors could decide to use the quality ratings feature in the Marketplace as a way to inform consumers about their options, which could drive demand for V-BID plans • Agents, Producers and Navigators: Because the MIHealth MarketplaceSM will be partnering with agents, producers and navigators, they could inform consumers about V-BID options. Agents and producers could not only help enroll consumers into plans that meet their health care needs, but their relationship with carriers could also help shape the products on the Marketplace

13. LARA MIHealth MarketplaceSM Leadership Team

14. Questions? Contact us: (517) 373-1820 www.michigan.gov/lara Thank You