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HEALTH INSURANCE:
WHAT’S NEXT FOR
STATES &
FLEXIBILITY
FRIDAY, APRIL 24, 2015
1:00 PM ET/ NOON CT/ 11:00 AM
MT/ 10:00 AM PT
April 24, 2015
A periodic series of events for legislators, staff
and associates. Always free to members.
Welcome: NCSL Health Program
Webinar
RICHARD CAUCHI, NCSL (Moderator)
Program Director with NCSL’s Health Program in Denver
ASHLEY NOBLE, NCSL(Q&A Moderator)
Policy Associate with NCSL’s Health Program in Denver
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This Webinar is made possible in part
by a grant from
The Commonwealth Fund
You may pose a question during the
presentations or the Q&A segment at the end of
this webinar. Type your question in the box
located at the lower left-hand side of your
screen.
During this webinar, we will have 1-2 poll
questions. When they appear on your screen,
respond directly on your computer, following the
prompt.
This entire slide presentation is available to
download at this site, or later at www.ncsl.org
Tips for Use Online
3
Brian Webb, NAIC
Kevin Lucia, J.D., MPH, Georgetown University;
Commonwealth Fund author
Leanne Gassaway, AHIP
Representative James Dunnigan, Utah
Presenters Today:
Brian Webb is the Manager of Health Policy and
Legislation for the National Association of
Insurance Commissioners (NAIC). The NAIC
represents the insurance regulators in all 50 states,
the District of Columbia, and 5 U.S. territories.
Before joining the NAIC, Brian worked on Medicare and
Medicaid policy for the BlueCross BlueShield Association
and, prior to that, was the Assistant V-P for Legislation for
the then-Federation of American Health Systems (FAHS).
Brian has a masters degree in Public Administration from the
George Washington University and a bachelor's degree from
BIOLA University in California.
BRIAN WEBB, NAIC
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Who Regulates Health Insurance?
(pre-ACA)
StateRegulated
Federally Regulated
Fully Insured Group Plans
Medigap Plans
MEWAs
Self-Insured Group Plans
Nongroup PlansLimited Benefit
Plans
Who Regulates Health Insurance?
(post-ACA)
StateRegulated
Federally Regulated
Fully Insured Group Plans
Medigap Plans
MEWAs
Self-Insured Group Plans
Nongroup PlansLimited Benefit
Plans
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PreemptionProvisions of PPACA can potentially preempt state laws
• Similar to HIPAA:
• States can go beyond federal rules, but if a state’s laws or regulations prevent a federal law from being implemented, then that law or regulation is preempted
• Assumption is that the state will enforce federal rules. AL, MO, OK, TX, WY not enforcing.
Nothing in this title shall be construed to preempt any State law that does not prevent the application of the provisions of this title.
PPACA §1321(d)
State Roles
Licensure
Solvency
Exchange Operation State-Based Marketplace
Federally-Supported State Marketplace
Partnership Marketplace
Plan Management Marketplace
Federal Marketplace
Rate Review
Form Review Benefits
Mandates
Network Adequacy
Benefit Design
Consumer Protections
Consumer Assistance/ Complaints
Enforcement
** 2017 WAIVERS **
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Take Our Poll ….
Check off your opinion or observations…
answers are anonymous
Kevin is a Research Professor and Project Director
at Georgetown University's Health Policy Institute.
He is lead author on several reports published by
The Commonwealth Fund.
He focuses on the regulation of private health insurance, with
an emphasis on analyzing the market reforms implemented by
federal and state governments in response to the Affordable
Care Act. He received his law degree from the George
Washington University Law School and his master’s degree in
health policy from Northeastern University.
KEVIN LUCIA, J.D., MPH
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Health Insurance: State Flexibility and
ACA Market Reforms
NCSL Webinar
Health Insurance: What’s Next for StatesApril 24, 2015
Kevin Lucia, JD, MHP
Monitoring and Analysis of
Health Reform: Research
Base Research
Other Regulatory
Changes
Market Rules
Essential Health Benefits
Health Insurance
Marketplaces
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Market Regulation Prior to the ACA
• Individual Market
• Availability: Medical underwriting; risk of rescission
• Affordability: Few rate restrictions; limited financial assistance
• Adequacy: Benefit mandates; pre-ex exclusions; elimination riders
• Small Group Market (2-50)
• Availability: Guaranteed issue and renewable
• Affordability: Rating bands (typically)
• Adequacy: Benefit mandates; pre-ex exclusions
• Large Group Market (Fully Insured and Self-Insured)
The Affordable Care Act
2010 – Early Market Reforms
• Eliminates lifetime and annual caps on benefits essential health benefits
• Bans preexisting condition exclusions for children under 19
• Expands dependent coverage to age 26 without limitations
• Requires minimum standard of appeals procedures after an insurer denies a claim
• Implements new medical loss ratio standards
• Requires states to review rate increases
• Establishes temporary federal high risk pools
2012 and 2013 – Preparing for 2014
2014 – Heavy Lifting
• Guaranteed issue/renewal
• Modified community rating
• Ban on preexisting condition exclusions
• Coverage of essential health benefits
• Nondiscrimination
• Health insurance marketplaces
• Implemented in phases:
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State-run marketplace (13 + DC)
State-run marketplace using
Healthcare.gov (3)
State-federal partnership exchange; state conducting
plan management and consumer assistance (7)
State-run small business marketplace; federal
government running individual marketplace (1)
Federally facilitated marketplace; state
conducting plan management (7)
Federally facilitated exchange (19)
Expanding (22 + DC)
Approved Customized Medicaid Expansion
(6)
Medicaid Expansion Under Discussion (6)
Not expanding (16)
Exhibit 1. State Action on Health Insurance Marketplaces and Medicaid Expansion, As of February 2015
*Adults in Wisconsin are eligible for Medicaid up to 100% of federal poverty. Note: CMS has approved waivers for expansion with variation in Arkansas, Indiana, Iowa, Michigan, and Pennsylvania. New Hampshire’s waiver is under review but they have already begun to enroll people. Source: The Commonwealth Fund, http://www.commonwealthfund.org/interactives-and-data/maps-and-data/medicaid-expansion-map
State Flexibility in Implementation
• The ACA sets minimum federal standards for consumer protection.
• States may enforce these standards.
• The federal government will enforce if the state does not.
• States can act to match these standards.
• They may exceed them.
• They may not “prevent the application” of the federal standards.
• In some areas, states have discretion to develop a customized
framework.
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State Standards that
Exceed the ACA’s Requirements• A numbers of states have acted to set (or maintain) market
standards that are stronger – more consumer protective – than
the ACA.
• Accessibility
• Open and special enrollment rights
• Affordability
• Premium rate restrictions
• Adequacy
• EHB selection; benefit substitution; standardized benefits
• Transparency
• Summary of benefits and coverage
Notes: Nebraska selected a benchmark plan that was not among the 10 options identified in federal guidance and was instead assigned the default choice. Maryland initially
selected a state employee plan but switched to a small-group plan during the federal rulemaking process.
Source: Authors’ analysis.
State Approaches to Selection of an
Essential Health Benefits Benchmark Plan (2014-2015)
Largest commercial
HMO (selected by state):
3 states
FL
NC
SC
GA
LATX
AL
AR
KS
OKAZ TN
MS
NV
UT
NM
CA
WY
ID
WA
OR
ND
SD
NE
IN
MT
MO
MI
WI
IL
ME
OH
KY
HI
AK
PA
WV
VA
CTNJ
DE
MD
RI
NH
VT
DC
MA
CO
NY
IA
MN
State employee plan
(selected by state):
2 states
Small-group plan
(selected by state):
21 states
Small-group plan
(federal default choice):
25 states
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State Action on EHB:
Other Critical Choices• States have considerable flexibility over EHB – benchmark plan
selection is only the beginning.
• Other important flex points include:
• Benefit substitution
• Habilitative services
• State-mandated benefits
• Prescription drug coverage
• Pediatric dental services
Notes: New York and Oregon prohibit substitution for standardized plans but permit at least limited substitution in non-standard plans. Washington bars substitution for plans
issued or renewed through the end of 2016, but will allow the practice in years thereafter.
Source: Authors’ analysis.
State Approaches to Regulation of
Essential Health Benefit Substitution (2014)
State does not prohibit
benefit substitution:
40 states
FL
NC
SC
GA
LATX
AL
AR
KS
OKAZ TN
MS
NV
UT
NM
CA
WY
ID
WA
OR
ND
SD
NE
IN
MT
MO
MI
WI
IL
ME
OH
KY
HI
AK
PA
WV
VA
CTNJ
DE
MD
RI
NH
VT
DC
MA
CO
NY
IA
MN
State prohibits insurers
from substituting
essential health
benefits: 11 states
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State Action on Rating Reforms:
Critical Choices• States have considerable flexibility over implementation of the
rating reforms.
• Important flex points include:
• Further restrict (or ban) age rating
• Further restrict (or ban) tobacco rating
• Customize rating areas
Source: Authors’ analysis.
State Standards for Age Rating in the Individual Market (2014)
Federal default rating
ratio applies; State uses
customized age curve:
3 states (DC, MN, UT)
Federal default standard
applies (3:1 rating ratio
and federal age curve):
45 states
FL
NC
SC
GA
LATX
AL
AR
KS
OKAZ TN
MS
NV
UT
NM
CA
WY
ID
WA
OR
ND
SD
NE
IN
MT
MO
MI
WI
IL
ME
OH
KY
HI
AK
PA
WV
VA
CTNJ
DE
MD
RI
NH
VT
DC
MA
CO
NY
IA
MN
State permits age rating
at a rating ratio < 3:1
and uses customized
age curve: 1 state (MA)
State prohibits age
rating: 2 states (NY, VT)
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Source: Authors’ analysis.
State Standards for Tobacco Rating in the Individual Market (2014)
State permits tobacco
rating at a maximum
ratio < 1.5:1:
3 states (AR, CO, KY)
FL
NC
SC
GA
LATX
AL
AR
KS
OKAZ TN
MS
NV
UT
NM
CA
WY
ID
WA
OR
ND
SD
NE
IN
MT
MO
MI
WI
IL
ME
OH
KY
HI
AK
PA
WV
VA
CTNJ
DE
MD
RI
NH
VT
DC
MA
CO
NY
IA
MN
State prohibits tobacco
rating market-wide:
7 states (CA, DC, MA,
NJ, NY, RI, VT)
Federal default rating
ratio applies:
40 states
State prohibits
tobacco rating for
marketplace
coverage, only: 1 state (CT)
Notes: In Kentucky, state law establishes a combined maximum rating ratio for all “case characteristics” including geographic area and age. In New Mexico, state law imposes a
similar requirement, and the state’s insurance marketplace places additional limits on the differential between the highest and lowest rated areas.
Source: Authors’ analysis.
State Standards for Geographic Rating
in the Individual Market (2014)
State permits
geographic rating; areas
designated by county,
zip code, or their
combination: 37 states
FL
NC
SC
GA
LATX
AL
AR
KS
OKAZ TN
MS
NV
UT
NM
CA
WY
ID
WA
OR
ND
SD
NE
IN
MT
MO
MI
WI
IL
ME
OH
KY
HI
AK
PA
WV
VA
CTNJ
DE
MD
RI
NH
VT
DC
MA
CO
NY
IA
MN
State prohibits
geographic rating:
7 states (DC, DE, HI, NH,
NJ, RI, VT)
State permits
geographic rating;
areas designated
pursuant to federal
default method
(areas = MSAs + 1):
7 states (AL, NM, ND,
OK, TX, VA, WY)
State limits
geographic rating
pursuant to maximum
rating ratio: 5 states (KY, MA, ME, NM, WA)
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The Future:
State Implementation and Enforcement• Will states continue to implement the federal minimum
standards, or go beyond?
• Relatively little action in 2014
• States will likely continue to vary their approaches, including the
types of action they take
• Over time, more customization
• Will the reforms be enforced consistently, state to state?
• All but five states retained primary responsibility for enforcement
• But gaps in authority may exist
• In the federal direct enforcement states, questions remain
• Alabama, Missouri, Oklahoma, Texas, Wyoming
The Future:
Emerging Issues and State Flexibility• Essential Health Benefits benchmark framework
• How will states adjust benchmark plan for 2017?
• Adequacy of provider networks
• Fewer levers to affect premiums – network design remains
• State pushback against “narrow” networks?
• Transparency
• Insurer data is critical to assessing consumer experience
• E.g., EHB, network adequacy
• Will States move ahead with implementation of transparency requirements?
• Nondiscrimination
• Will States take further steps to limit discriminatory benefit designs?
• External events will matter; e.g. King v. Burwell
15
Thank you!
Kevin Lucia, JD, MHP
Senior Research Fellow
202-687-4928
LEANNE GASSAWAY, AHIP
Leanne Gassaway is a
Vice-President of State Affairs,
America’s Health Insurance Plans,
based in California. AHIP is a national trade association that represents over 1,200
health insurance plans covering more than 200 million
Americans. In her capacity, she is responsible for assisting in
legislative, regulatory and policy advocacy efforts in the states;
she also works on federal and state driven efforts regarding
the federal Patient Protection and Affordable Care Act (ACA).
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Health Reform – What’s Next for States:
Addressing Affordability, Access, Stability
and Choice
Leanne GassawayVice President, State AffairsAmerica’s Health Insurance Plans
National Conference of State Legislatures (NCSL) WebinarApril 24, 2015
Hot Topics in the States
(1) network adequacy
(2) prescription drugs
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Health Plan Networks:
State Approaches to Network Adequacy
ACA/NAIC Baseline Existing Components
Maintain a network that is
sufficient in number and
types of providers to
assure that all services will
be accessible without
unreasonable delay.
Access to Providers
Access to Non-Participating Providers
Access Plan (Filing or Certification)
Emergency Services Access 24/7
Geographic Standards
ACA Compliance
New York Times, April 14, 2015, accessible at
http://www.nytimes.com/2015/04/14/business/health-insurance-
shoppers-look-to-limited-networks-to-save-money.html?_r=1
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Network Innovation
Clearing the Roadblocks
Roadblocks to Integration
and Collaboration
Cyber-security and Data Systems
Interoperability
Removing Barriers to Delivering
Quality CareAligning
Performance Measures
Transparency
19
Growth over the past 12 months:
• Prescription drugs grew most rapidly
among the major categories (13.0%).
• Physician and clinical services grew
the slowest among major categories
at 2.9%.
• For the preceding 12-month period
ending December 2013, prescription
drugs showed the highest growth
among the major categories, at 5.7%,
whereas dental spending rose the
least, by 1.0%.
Health Spending Growth in 2014
Prescription Drug : State Proposals
Drug Cost Transparency
Biosimilars & Interchangeability
“Cap the Copay”
20
State Representative James Dunnigan is the
Majority Leader of the Utah House of
Representatives.
For several years he served as Co-chair of the Legislature’s
Business & Labor Committee and Co-chair of their Health
Reform Task Force. He received a B.S. in Business
Management from the University of Utah and currently owns his
own insurance agency.
REP. JAMES DUNNIGAN
UTAH
The Utah Legislature debated a wide range of health policies in 2015.
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Medically Vulnerable (SB 153)
Medicaid eligibility for those
at risk of becoming disabledMatch: 70/30
FPL: 0–100%
Coverage Gap (HB 307)
Medicaid eligibility for
ineligible adultsMatch: 90/10
FPL: 0–100%
Utah Cares (HB 446)
Medicaid eligibility + PCN
for ineligible adultsMatch: 70/30
FPL: 0–100%
Healthy Utah (SB 164)
Medicaid funding of premium
assistance for commercial coverageMatch: 100/0
FPL: 0–138%
ACA Expansion (SB 83)
Medicaid eligibility as
originally envisioned by ACAFPL: 0–138%
Match: 100/0→90/10
But Medicaid expansion dominated the discussion.
And although no proposal carried the day,
all agreed to continue working toward a solution.
Healthcare Resolution (HCR 12)
Commitment to continued
collaboration to find
solution
22
Other health insurance issues on the horizon:
Updated definition of essential health benefits
(including coverage of "habilitative services")
State innovation waivers (Section 1332)
State insurance code updates
King v. Burwell!!
Eosinophilic disordersRequires coverage of elemental
formula, regardless of delivery method(H.B. 230, Moss)
Free office visitsRequires PEHP to allow one free office visit per year(H.B. 255, Thurston).
State employee health clinicRequires PEHP to establish an on-site clinic(H.B. 148, Barlow)
Post-employment health insurance benefitsProhibits by schools unless fully funded(H.B. 208, Eliason)
Line-of-duty death benefitsRequires health coverage for surviving spouse
and children of peace officer or firefighter(H.B. 288, Ray)
PEHPDirects PEHP how to structure cost
sharing for its traditional plan and how
to use $19 million in excess reserves(H.J.R. 10, Dunnigan)
Denial of coverageProhibits denial of coverage based on
terminal conditions or life expectancy (S.B. 271, Bramble)
Legislatures continue to work on other insurance issues as well.
23
Health sharing ministriesExempts certain ministries from state regulation(H.B. 431, Kennedy)
Insurance licenseesAddresses noncommission compensation
and modifies disclosure requirements(H.B. 23, Stanard)
Insurance modificationsAddresses stop-loss and extends the
Defined Contribution Risk Adjuster Act(H.B. 24, Dunnigan)
InducementsAddresses inducements(H.B. 141, Knotwell)
InfertilityRequires insurers to disclose
information about infertility coverage(H.B. 152, Christensen)
Abuse deterrent opioid analgesicsRequires PEHP to study the use of(S.B. 265, Stevenson)
Legislatures continue to work on other insurance issues as well.
Innovation Waivers: An Opportunity for
States to Pursue Their Own Brand of
Health Reform April 15, 2015 | Issue Brief
What's Behind Health Insurance Rate
Increases? An Examination of What Insurers
Reported to the Federal Government in
2013–2014
January 20, 2015 | Issue Brief
Publications by The
Commonwealth Fund
More Health Insurance reports: www.commonwealthfund.org/publications
24
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