2011 ALEC Annual Meeting August 4 , 2011 New Orleans, LA

1. Health Insurance Exchanges: States In Charge! 2011 ALEC AnnualMeeting August 4, 2011 New Orleans, LA

2. Agenda • What States Face in the Wake of PPACA • Exchanges: A Look at State Actions • HHS’ Proposed Rule on Exchanges • Looking Ahead: Critical Decisions and Strategic Imperatives

3. PPACA Timeline 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

4. Functioning State Exchanges Alaska Hawaii DC Functioning Statewide Health Insurance Exchange 4 Last updated Jul 11, 2011

5. PPACA Compliance Alaska Hawaii DC States with PPACA Compliant Exchanges Last updated Jul 11, 2011

6. Federal Funding for Exchanges Alaska Hawaii DC Planning & Establishment Grant Applied for and Awarded Last updated Jul 11, 2011

7. Federal Funding for Exchanges Alaska Hawaii DC Early Innovator Grant Recipient Last updated Jul 11, 2011

8. Federal Funding for Exchanges Alaska Hawaii DC Rejected, Returned, Intend to Return, or Intend to Reject PPACA Federal Funds for Exchange Establishment Last updated Jul 11, 2011

9. Federal Funding for Exchanges Alaska Hawaii DC Level I Round One Grant Recipient Last updated Jul 11, 2011

10. State Exchange Implementation Authority Alaska Hawaii Establishment Legislation DC Study Committee Legislation Failed Legislation Pending Alternative Authority No Bill Last updated Jul 11, 2011

11. State Actions: A Closer Look (I) • California • Early out of the gate with legislation • Slowing momentum • Georgia • 2011 legislation dies in the face of opposition • Gov. Deal issues Executive Order creating Exchange Study Panel • Idaho • Gov. Otter issues Executive Order prohibiting state agencies from implementing PPACA provisions • Vetoes similar legislative measure, concerned it may prohibit establishment of a state exchange

12. State Actions: A Closer Look (II) • Mississippi • Legislation fails fourth year in a row • DOI uses existing language • MS exchange board is now the longest-established board in the country • Oklahoma • 2011 exchange legislation fails • State returns $54.6 million Innovator Grant • Not willing to default to the federal model, many state lawmakers remain committed to state established exchange • Special Joint Legislative Committee established to study exchange implementation

13. HHS’ Proposed Rule on Exchanges • No big surprises • HHS is preparing to implement the federal fallback • Early mover advantage • Emphasis on state flexibility

14. Potential State Positions on Exchanges • Fully operational • State designs, builds, and operates an exchange complete with all the features specified in PPACA • Hybrid model • State oversees some functions of the exchange while contacting with HHS for other features • Minimalist approach • State implements exchange with just enough functionality to get “conditional approval” from HHS • Do nothing • State defaults into federal exchange; cedes control of all features and functions

15. Mandated 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 CUSTOMERSERVICE Administration Interface Notifications Admin, Life Events, etc. Billing or Invoices State Insurance Agency Certify, Recertify Decertify Health Plans Customer Service Communication Interface RISK ADJUSTMENT Employee or Consumer Carrier 1 Carrier 2 Carrier 3 Carrier 4 FISCAL AGENT Pay Premiums

16. Core Functions Portal / Web site Enrollment Interface Plan Comparison Interface Health Plan #3 Health Plan #1 Health Plan #2 Health Plan #4 Administration Interface Admin, Life Events, etc. Communication Interface Employee or Consumer Carrier 1 Carrier 2 Carrier 3 Carrier 4 Billing or Invoices Employer

17. Early Decisions for States Government Agency Market Facilitator QuasiGovernmental Non-Profit State Established Government Agency Selective Contractor Exchange QuasiGovernmental Non-Profit Federally Established

18. Operational Priorities for States • Establish guiding principles • Develop a general timeline • Develop baseline information • Engage stakeholders and create feedback mechanism • Establish authority and governance

19. Strategic Imperatives for States • Retain maximum control at the state level • Regulatory • Budgetary • Lead, rather than follow • BY you or TO you • Influence federal regulations

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