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PPACA Implementation
Joshua Goldberg National Association of Insurance Commissioners
May 1, 2011
National Health Expenditures as a Percentage of GDP, 1960–2020
0
5
10
15
20
25
1960 1965 1970 1975 1980 1985 1990 1995 2000 2005 2010 2015 2020
Percent of GDP
Data: Centers for Medicare and Medicaid Services, The Lewin Group.
Projected Source: Commonwealth Fund
Average Family Premium as a Percentage of Median Family Income, 1999–2020
11 1213
1416
17 18 18 18 18 19 19 19 20 20 21 21 22 22 23 24
18
0
5
10
15
20
25
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
Data: Commonwealth Fund calculations based on Kaiser/HRET, 1999-2008; 2008 MEPS-IC; U.S. Census Bureau, Current Population Survey; Congressional Budget Office.
Projected
Percent
Percentage Uninsured, 1999-2009
10%
12%
14%
16%
18%
1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009
Source: U.S. Census data
Percentage Uninsured, 1999-2009
10%
15%
20%
25%
30%
35%
1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009
All Americans Males, 18-24
Source: U.S. Census data
PPACA Implementation Timeline 2010 2011 2012 2013 2014 2015 2016 2017
Temporary High Risk Pool Program
Immediate Market Reforms: •No Lifetime Limits •Restricted Annual Limits •Restrictions on Rescission •First Dollar Coverage of Preventive Services
Medical Loss Ratios with Rebates
Exchanges
Subsidies
Individual/Employer Mandates
Market Reforms •Guaranteed Issue •No Pre-Existing Condition Exclusions for Adults •Rating Rules •Essential Benefits •No Annual Limits for Essential Benefits
Risk Adjustment
•Extended Dependent Coverage •Internal/External Review •No Pre-Existing Conditions for Children •Disclosure of Justifications for Premium Increases
Individual Market Reinsurance and Risk Corridor Programs
Temporary Reinsurance Program For Early Retirees
Co-Op Plans & Multistate Plans
7
Preemption
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)
Provisions of PPACA will potentially preempt state laws.
Similar to HIPAA:
Exceptions: • Mandated benefits: States must cover cost of mandated benefits beyond
essential benefits package.
• Grandfathered plans: States may not require grandfathered plans to be pooled with post-reform plans.
Early Reforms • Reforms Effective “Plan Years” Beginning on or
after 9/23/2010 – Lifetime Limits – Annual Limits – Rescissions – Preventive Health Services – Adult Dependent Coverage – Pre-Existing Condition Exclusion for Under 19 – Internal and External Review Process – Patient Protections
• Medical Loss Ratios • Rate Review and Disclosure
9
2014 Market Reforms • Guaranteed Issue • No Pre-Existing Condition Exclusions for Adults • Rating Rules
– No health status – 3 : 1 maximum variation for age – 1.5 : 1 maximum variation for tobacco use
• Single Risk Pool Requirement • Essential Benefits Package • Individual Mandate • Employer Responsibilities
10
ME
NY
PA
NH
CT
VT
MA
NJ
VA
NC
SC
GA
FL
WV
KY
AL MS
MI WI
MN
IA
HI
AK
KS
NE
ND
SD
MO
IL IN
TX
MT
ID
NV UT
WY
CO
NM AZ
CA
OR
WA
LA
AR OK
OH
MD
DE
RI
Community Rating
25.1:1 or greater
Small Group Premium Variation
DC
Adjusted Community Rating
Rating Band Variability:
No Rating Structure 19.1:1 – 25:1 13.1:1 – 19:1 13:1 or less
*Note: Michigan HMOs and Blue Cross/Blue Shield are restricted to 3.12:1 maximum variation. All others may use 3.96 maximum variation
TN
Rating Schemes
11
ME
NY
PA
NH
CT
VT MA
NJ
VA
NC
SC
GA
FL
WV
KY
TN
AL MS
MI WI
MN
IA
HI
AK
KS
NE
ND
SD
MO
IL IN
TX
MT
ID
NV UT
WY
CO
NM AZ
CA
OR
WA
LA
AR OK
OH
MD
DE
RI
Rating Bands Hybrid Michigan Blue Cross/Blue Shield must use community rating. There is no rating structure for other carriers.
Individual Market Rating
DC
Adjusted Community Rating Community Rating No Rating Structure
Addressing Risk: Risk Adjustment (Ongoing)
Risk Adjuster
Exchange Plans
Non-Grandfathered
Plans
$
$
$
$
Risk
Reinsurance Entity
Individual Plans
Small Group Plans
Large Group Plans
Third Party Administrators
Addressing Risk: Reinsurance (2014-2016)
$ $
$ $
$
Addressing Risk: Risk Corridors (2014-2016)
>103%: Plan Receives Payment
< 97%: Plan Contributes
Payments and contributions based upon ratio:
Claims Costs
Premiums – Admin Expenses
100% 100%
Health Insurance Exchanges
Levels of Coverage
Bronze-60% of actuarial value of benefits Silver-covers 70% of actuarial value of benefits Gold-covers 80% of actuarial value of benefits Platinum-covers 90% of actuarial value of benefits
Health Insurance Exchanges: The Basics • Each state will have two Exchanges
– Individual • Sole source of subsidies for individuals between 133% and 400% of
poverty level
– SHOP (small group) • Employers may select a tier of coverage • Employees select insurer and plan within tier of coverage
• The Exchanges must be operated by a governmental agency or nonprofit entity.
• The Exchange may not make available non-qualified plans to individuals or employers. (Dental plans OK)
Plans Available in Exchange • “Qualified Health Plans”
• Provides Essential Benefits and is licensed by state
• Insurer agrees to offer at least 1 Silver and 1 Gold Plan
• Agrees to charge same price in and out of Exchange
• Co-Op Plans • Multi-State Plans
Exchange Functions • Certify, recertify, and decertify health plans • Operate website and toll-free hotline • Assign a quality rating to each plan • Present insurance options in standardized format • Inform individuals of eligibility for Medicaid and CHIP • Certify exemptions from the individual mandate • Maintain a calculator of actual cost of coverage after
subsidies • Provide Treasury with data on workers receiving
subsidies • Establish a Navigator program
Additional Functions • Selective Contracting
• States may choose to restrict the number of plans allowed to participate in Exchanges
• Require plans to make price concessions or offer extra benefits and services
• Single risk pool may complicate
• Application and enrollment • Premium collection
• Exchanges are not required to collect premiums from enrollees, but could do so
• Could be particularly important in the SHOP Exchange
21
Key Decision Points
• Focus – i.e., marketplace or public program?
• Governance • Additional Functions of the Exchange • Additional Information for Consumers • Regulation of the Outside Market • Mandated Benefits • Funding of Operations • Role of Agents
22
NAIC Exchange Model Act • Provides basic framework for establishment of
the Exchange • Does not take a position on:
– Governance – Financing – Additional functions – Agents and Brokers – Navigators
• Available at: – http://www.naic.org/index_health_reform_2010.htm
2010 2011 2012 2013 2014
2010 2011 2012 2013 2014
Exchange Implementation Timeline
1/1/14: Coverage Effective
1/1/13: HHS Certifies State Readiness
3/23/11: HHS Awards Planning & Establishment Grants Fed. Policymaking
State Legislation & Rulemaking
Federal & State IT Buildouts
Plan Certification
Marketing & Outreach
Enrollment
24
Exchange Challenges • Time • Guidance
– Exchange regulations expected late spring/early summer 2011
– Essential benefits regulations expected spring 2012
• CO-OP and Multistate Plans – Must be held to the same standards as other QHPs
• IT Systems • Politics
25
Early Challenges • Child-Only Coverage
– Some or all carriers in most states have halted new sales of child-only policies. • States have enacted laws and regulations in response:
– Establishing open enrollment periods – Requiring sales to children
• No problems in guaranteed-issue states • Medical Loss Ratios
– Maine has received an adjustment – 8 States + 1 Territory have applied
• FL, GA, IA, KY, LA, ND, NV, NH + Guam • Annual Limits
– This could force limited benefits plans out of the marketplace or lead to large premium increases for these plans.
– HHS is issuing waivers to limited benefits plans to allow them to remain in the market
– 4 states have received waivers for laws or programs that require or encourage insurers to offer limited plans.
26
General Implementation Challenges
•Adverse selection – Will the mandate be effective? – Expansion of small group market could
encourage self-insurance – Grandfathering regulations create secondary
market for grandfathered plans
•Market Disruption – No major market withdrawals yet
•Cost control is a major long-term challenge
27
What Are States Working On?
•Rate and Form Filing Reviews – New forms and rates based on early reforms – Review of rate review processes
• Enforcement of Early Reforms – Possible legislation – Review of External Review laws and
regulations
• Exchange Planning and Development
What are the Feds Working On?
• Exchange Regs – Including reinsurance/risk adjustment/risk corridors
• Rate Review Regs – How will HHS determine whether a state has an
acceptable rate review program? – State specific thresholds
• Consumer Information Regs – Uniform Definitions – Explanation of Coverage – Coverage Facts Labels
Cost Control •Rate review, MLR provisions attempt to
deal with administrative costs of insurance companies.
•Unless we get underlying costs under control, we will not solve the long term crisis.
•ACOs, bundled payments, are attempts to influence underlying costs.
The Necessity of Cost Control
0
5
10
15
20
25
1960 1965 1970 1975 1980 1985 1990 1995 2000 2005 2010 2015 2020
Percent of GDP
Data: Centers for Medicare and Medicaid Services, The Lewin Group.
Projected Source: Commonwealth Fund
