Health Insurance Exchanges: What Your States Need to Do

1. Health Insurance Exchanges:What Your States Need to Do

2. What You Need • Exchange for the individual market and a SHOP exchange • One exchange or two? • Exchanges will serve as • Regulatory body • Subsidy administrator • Enrollment portal • Informational portal • Federal grants for establishing exchange will begin in March 2011 • HHS issuing more guidance on structure of exchanges through 2011 • Including what are essential benefits

3. Exchange Timeline

4. Developing the Website Portal • Secretary is required to operate and maintain an internet portal and assist states in developing and maintaining theirs • Directs qualified individuals and employers to… • Standardized information on qualified health plans • Eligibility determination • Premium tax credit or cost-sharing reductions eligibility • Still waiting on further guidance

5. Website Examples: Massachusetts

6. Website Examples: Massachusetts

7. Website Examples: Utah

8. Website Examples: Utah

9. Website Examples: Wisconsin, prototype

10. Website Examples: Wisconsin, prototype

11. Governance Structure • Bricks and Mortar Approach • Establish new governance structure • Might duplicate existing state government functions • Utilize existing state regulatory authorities • Department of Insurance • State Medicaid/CHIP Offices • Non-Profit Entity • Most state exchanges will be governed by a Board representing stakeholders and policymakers.

12. Financing: Start Up Grants • State Government financing • In July, HHS provided $50 million in grants to help states start the planning process • In January, HHS announced a second round of grants to help states to continue implementation • States will have multiple opportunities to apply for funding as they progress through Exchange establishment • Exchanges must be financially self-sustaining by 2015

13. Financing: Ongoing Operations • State options to finance Exchanges after 2015: • Massachusetts imposes a 4 percent assessment on exchange participants • Utah assists only small groups offering defined contribution coverage, and does not impose a levy on enrollees • Additional Fees: • Exchange participants • All consumers • State Government Financing • Increase burden on state budgets • Expand the Individual Mandate penalty • Additional penalty state collects to finance exchange • States may explore assessments on carriers

14. Pooling • PPACA requires insurers to pool all individual members in one risk pool and all small employer group members in another • Currently carriers keep the two pools entirely distinct • State exchange can determine if they want combined risk pools or separate • Individual market benefit from larger risk pool? • PPACA contains mechanisms that ensure adequate sized pools in all markets • Massachusetts combination experience resulted in higher premiums • 2007-2008: premiums in small group grew 5.8%

15. Plan Selection • Negotiator vs. Facilitator Models • Negotiate with plans to lower rates • Exclude plans with bids that are “too high” or benefits that are inadequate • Greater standardization and easier to compare plans • Facilitate a marketplace- more or less “file and use” • Exchange does not manage plan selection • Greater plan design flexibility and better able to compete with the non-exchange market

16. Questions&Comments

17. Contact Us Danielle Jaffee djaffee@nahu.org 703.276.3839 Michael Keegan mkeegan@nahu.org 703.276.3809 Ken Statz saquotecenter@msn.com 440.546.8330 Adam Brackemyre abrackemyre@nahu.org 703.276.3808 Brooke Bell bbell@nahu.org 703.276.3818 Russ Childers childr@bellsouth.net 229.924.7617

18. Health Insurance Exchanges:What States Are Doing

19. Existing Exchanges: Massachusetts • Massachusetts Health Insurance Connector established in 2006 • Separate legal entity from the state • Massachusetts Connector Authority • 10 member board, with a spot specifically reserved for a member of the Massachusetts AHU • Financed through premium surcharges on Commonwealth Care and Commonwealth choice products • Individual Mandate • Penalty assessed based on income and cost of the lowest-priced Commonwealth Care plan • Employer Mandate • Offer coverage or a “fair share” contribution

20. Existing Exchanges: Massachusetts • Connector open to: • Individual Market, “nongroup” • Small Group (2-50) • Limited large group: all employers establish section 125 plans for employees not eligible/offered group coverage • Four Product Tiers: • Bronze- low premium, higher cost-sharing • Silver- moderate premiums, moderate cost-sharing • Gold- high premiums, low cost sharing • Young Adult Plans (YAP)- special low-cost and low benefit coverage for those up to age 26 • Merged small group and individual market pools • Same risk pool inside and outside of connector for each carrier

21. Existing Exchanges: Utah • Controlled by Office of Consumer Health Services, part of the Governor’s Office of Economic Development • State retains budgetary control and authority • Connector serves as an informational portal • “Travelocity” model • Exchange open to: • Small group (2-50) • No individual market- links individuals to carriers, producers and an insurance plan comparison chart • Launching a large group pilot program this year • Does not administer additional programs

22. Existing Exchanges: Utah • Exchange functions to allow small employers to offer defined contribution plans • Employer contributes specific amount and employee free to choose plan for themselves • Allow employees to pull money from multiple sources • Individuals can carry plan with them if they change jobs • No employer or individual mandate • No set product levels or plan choices • Small group risk pool combined for inside and outside of the exchange

23. Developing Legislation • States will likely pass legislation to create the exchange during the 2011 legislative session • States need to provide a business model to HHS in 2013 • Legislation Currently introduced in: • AK, AZ, DC, HI, MD, NJ*, NH, MS TX • NAIC and NAHU models currently circulating • NAIC model very straightforward to what PPACA outlines • Leaves several areas vague for states to determine • States can adapt for their existing markets and insurance laws • No two exchanges will look the same

24. Key Differences in the NAHU Model • Definition of “Health Insurance Producer” • Establish a producer as an individual licensed to sell health insurance in a state • Navigators and their qualifications • Enrolling individuals in a qualified health plan requires you be licensed and regulated by the State and the Commissioner • Includes all individuals affiliated or employed by an entity facilitating enrollment • Still allows Navigators to serves as informational resource

25. Key Differences in the NAHU Model • Governance Structure • Public-private partnership • Establish Exchange Board of Directors • Representation: • 3 persons affiliated with state authorized health insurers • 2 licensed health insurance producers • 3 representatives of the general public • 1 state Medicaid representative • Insurance commissioner or his/her designee • Duties • Board accountable to the Insurance Commissioner

26. What States Are Currently Doing • Nebraska • Working on developing a business model before legislation • Develop structure, financing, authority • Texas • Rep. John Zerwas introduced HB 636 • Bill tracks the NAIC model, but requires 3 of the 5 voting board members to have insurance background • Establishes “Navigator” program consistent with PPACA • Ohio • Received grant from the Robert Woods Johnson Foundation in 2008 • State Coverage Initiative tasked to look at way to cover more Ohio consumers • Recommendations included many PPACA-related reforms

27. Questions&Comments

28. Contact Us Danielle Jaffee djaffee@nahu.org 703.276.3839 Michael Keegan mkeegan@nahu.org 703.276.3809 Ken Statz saquotecenter@msn.com 440.546.8330 Adam Brackemyre abrackemyre@nahu.org 703.276.3808 Brooke Bell bbell@nahu.org 703.276.3818 Russ Childers childr@bellsouth.net 229.924.7617