Assignment 9: Health Insurance Exchanges
(KC) Risk adjustment
Covered in assignment 3.
What are the core functions of the health exchanges?
1. Determining eligibility - of Medicaid, CHIP, and subsidies Exchange needs virtually real-time access to household income, citizenship, residence, and whether the individual has access to affordable coverage through their employer. 2. Enrollment - in Medicaid, CHIP, and individual and group exchanges. 3. Plan management Exchanges have to certify qualified health plans. Must provide the essential health benefits required in ACA, plus any other terms in the final rules by Dept of Health and Human Services, and from the state exchange's own requirements. Exchanges also assign a quality ranking. They have to review marketing, network adequacy, accreditation, and QI programs. 4. Consumer assistance Individual must be able to enroll online, by phone, or in person. Exchange must provide outreach and education. People need considerable help, since they have to have a deeper understanding of insurance concepts to pick their plan. Navigators help with this. Plans also need to offer premium calculators. Some can go further into deductibles, copays, utilization, etc. 5. Financial management Exchanges are responsible for accounting, auditing, and reporting. They may collect premiums directly, or may pass premiums from purchasers to insurance. SIGNIFICANT ISSUE: State exchanges have to be financially self-sufficient by January 2015. (year 2) Options are fund out of state's general tax collections (least desirable), impose a fee on policies sold through exchanges, or impose a fee on all plans even outside the exchanges. There is flexibility here. States that took the federal default can still do some of these, like determine Medicaid and CHIP eligibility and/or some reinsurance activites. Those in a partnership could do either of those too, or could also be involved in plan management and/or consumer assistance.
(KC) Tax credits/cost-sharing subsidies/small employer subsidies
ACA gives an advanceable, refundable tax credit to people from 100-400% of the FPL. They get this credit to pay their premiums. It is enough to cover the second least expensive silver plan. Advanceable means they get the tax credit at the beginning of the years (so they can afford to pay their premiums). The Refundable part means they're eligible for the credit even if they don't make enough to pay taxes. So they could get a tax refund even though they don't pay taxes. (The credit amount is estimated up front and adjusted at tax time. So you might get a little bit more of a credit or might owe a little more at tax time) ----------- People at certain FPL levels also get their out of pocket costs subsidized. Normal person in a silver plan pays 30% liability out of pocket. 100-150% of the FPL = 6% out of pocket liability 150-200% of the FPL = 13% out of pocket liability 200-250% of the FPL = 26% out of pocket liability ----------- SMALL EMPLOYERS UNDER 50 FULL-TIME EMPLOYEES ARE NOT REQUIRED TO PROVIDE COVERAGE. But, if if they have less than 25 full-time employees, they can get a subsidy if they want to provide coverage. Under 25 full time employees can get a tax credit of up to 50% of the employer portion of premiums IF they meet these: If the employer pays more than 50% of the full premium and IF the average wage size is less than $50,000. (The size of the subsidy is reduced as firm size and average wage levels increase) Original legislation says the subsidies are available for 2 years.
(KC) Benchmark health plans for defining state benefits
ACA required the Secretary of Health and Human Services to define the essential benefits in more detail. The secretary says states can use one of four general benchmark plans to help define the benefits in their state. They can pick from: 1. One of the three largest small group plans in the state, by enrollment 2. One of the three largest state employee health plans, by enrollment 3. One of the three largest federal employee health plan options, by enrollment, or 4. The largest HMO plan offered in the state's commercial market, by enrollment The services required in the benchmark plan would be required to be offered by plans in the state's exchange. If a state chose to use the federal exchange, the largest small group plan in their state will be their benchmark. Most state-based or partnership exchanges chose to do the same.
What are the expected impacts to rates based on the age differential rules?
Before ACA, premiums for 65 year old males were more than 6 times higher than 20-year old males. Now, they can't have that differential between premiums in different age bands. Expected: Men under 55 are worse now than before ACA. Men over 60 are better off. Women under 45 are better off. Women over 60 are worse off.
(KC) Risk-corridor program
Covered in assignment 3.
(KC) Transitional reinsurance
Covered in assignment 3.
What is ambulatory care?
DEFINITION WAS NOT IN THIS CONTENT, but I googled it because they keep using the term: Ambulatory sounds like it is used interchangeably with outpatient. Diagnosis, observation, consultation, treatment, intervention, and rehab services on an outpatient basis. outside of hospitals.
If a state wanted to run an exchange, when did they have to submit their blueprints?
Early 2013
(KC) "The medal levels"
Exchanges MUST OFFER four tiers (the medal levels) plus a catastrophic plan. Each tier includes all the essential benefits. The differences between the plans are: 1. The share of the actuarial cost of the essential benefit package. Bronze must cover 60% of the cost of the covered services. Silver 70%, Gold 80%, Platinum 90% 2. The plans within a tier can have differences in how the consumer satisfies the actuarial cost. They could have a high deductible then a low copay after. Or could have a small deductible but higher copays and coinsurance. Insurers are NOT required to offer plans in every tier. They DO have to provide one silver and one gold plan in every exchange where they participate. Catastrophic plans are in the individual market for people who: Are under 30 OR are exempt from buying coverage because it would be more than 8% of their income. Catastrophic plans don't have rules around the actuarial cost, but the deductibles and out-of-pocket maxes must meet the current reqs for HSA plans.
What does the assignment say about whether the SHOP exchange would be ready in time?
In summer of 2013, federal government said SHOP wouldn't be fully functional in time. Wouldn't be able to offer full set of options across all plans and tiers. Employers would have to pick a single plan for all their workers (much like small employers typically did before)
What did most state or partnership exchanges pick as their benchmark plan for determining essential benefits?
Most picked the largest small group plan in their state. (This is the same thing that is required to be used if the state chose the federal exchange)
Does an insurer have to offer plans in all 4 medal level tiers?
No, an insurer does not have to offer plans in every tier. They DO have to provide a silver plan and a gold plan for every exchange they are in.
Can the exchanges use gender to set premiums?
No, exchanges can NOT use gender to set premiums.
Can the exchanges use preexisting conditions to set premiums?
No, exchanges can NOT use preexisting conditions to set premiums
Can the exchanges use health status to set premiums?
No, the exchanges can NOT use health status to set premiums.
Is the Medicaid expansion required?
No. Original ACA legislation said states must expand Medicaid coverage to ages 19 to 64 with incomes under 138%, or lose federal matching $$ for Medicaid. Supreme Court said no in July of 2012. So then states could decide whether to expand. If they don't, people starting at 100% of FPL will be eligible for subsides. But those people below 100% won't get anything, and they would have under the Medicaid expansion. (This was all up for debate at time of writing)
(KC) Navigators
People enrolling through exchanges have to make their own decisions about picking a plan, and need help. Exchanges are required to have Navigators to help consumers select and access their health plan. Who are the navigators? Could be exchange employees or contracted groups, like the chambers of commerce or community enters Specifically, the ACA legislation says that navigators may include trade, industry and professional associations, commercial fishing industry organizations, ranching and farming organizations, community and consumer-focused nonprofit groups, chambers of commerce, unions, resource partners of the Small Business Administration, other licensed insurance agents and brokers, and other entities that: a. are capable of carrying out the required duties b. meet the issued standards c. provide information consistent with the standards An entity that serves as a navigator shall: (I shortened these) a. raise awareness of availability of qualified health plans b. Distribute fair and impartial information c. Facilitate enrollment d. Provide referrals to health insurance consumer assistance or ombudsman established by federal law, or any other appropriate state agency, for any enrollee with a grievance, complaint, or question regarding their health plan or coverage e. provide info in a manner that is culturally and linguistically appropriate. The Secretary of Health and Human Services "has" the task of establishing standards for navigators. Like, the navigator can't be a health insurance issuer or receive any consideration directly or indirectly from any health insurance issuer
(KC) Intended purposes of health insurance exchanges
Purposes of the ACA's marketplaces/exchanges: - Where individuals and small businesses can compare plans a buy coverage - Where eligibility for individual subsidies is calculated and applied - The entry point for coverage in Medicaid (existing and expanded) and to the state's Children's Health Insurance Program (CHIP)
(KC) Quasi-governmental agency
Quasi-governmental agency is the most common way that a state can organize and govern their exchange: Established by legislature and governed by a state-appointed board. + Can be chartered to work with an existing agency, like Medicaid agency to determine eligibility and state revenue department to gather income for subsidies. + independent enough from the state that they can have the flexibility to create the exchange - challenge: have to create a whole management structure, accountability, and operating procedures. Other things the states could do, instead of quasi-governmental agency: 1. Use an existing state agency, like department of insurance or the Medicaid agency + clear oversight since they are already a government agency, they have access to PHI already and it is kept in house. - may lack flexibility or speed to hire staff - procurement or financial rules might inhibit the exchanges role - possible conflict of interest. Medicaid is already busy with their expansion, can they give enough focus to this too? Or can the department of insurance (which usually regulates insurers) also provide outreach and marketing for an exchange plan? IF YOU TAKE THE FEDERAL EXCHANGE DEFAULT OPTION, THIS DECISION DOESN'T APPLY
(KC) Distinct risk pools
Small employers with health employees and low claims experience will likely stay outside of the exchanges, where their premiums will closely relate to usage. So the small firms with higher claims are the ones that are going to join the exchanges, hoping their claims experience will blend with other employers and their premiums will be lower. States will likely keep individuals in a separate risk pool, so that the individual market can somewhat be shielded from the premium-increasing aspects of the above phenomenon.
What did 2013 study think would happen to premiums in the nongroup health insurance market?
Society of Actuaries had a 2013 study. They thought that in 2017 (3 years after implementation), per-member per-month premiums for coverage purchased through an exchange would be 31.5% higher under the ACA than they would have been otherwise. There is big variation. 80% higher in Ohio and Wisconsin. 13% lower in New York and Massachusetts.
(KC) Market facilitator/selective contractor/active purchaser
States were given 3 options for creating exchanges: State-run (17 plus DC picked this) State-federal partnership (7 picked this) Default to the federal exchange (Remaining 26) (You can change your approach over time. Illinois chose partnership but planned their own for 2015. Utah proposed state-based for small employers but federal for individuals. There is flexibility) IF YOU CHOOSE STATE-BASED, you have 3 options: 1. Market facilitator - Offers *all* qualified health plans. State is impartial, they are really just providing a structure for people and businesses to compare/purchase plans. 2. Selective contractor - The state limits the plans further. They could limit any way they want: quality, depth of network, being geographically broad, deductibles/copays, premiums... they can limit any way they want. 3. Active purchaser - the state exchange functions like an employer. It selects the plans that it wants, with which copays/benefits/deductibles, and negotiates premiums with the insurer.
(KC) Affordable coverage
The ACA's definition of affordable coverage is: Out-of-pocket premium contribution is no more than 9.5% of household income.
How will ACA premium rules affect what women and men pay?
The SOA study thought men's premiums would increase by 70.5% and women's premiums would go down by 29.3%. particularly Men under 55 should expect to see their premiums rise compared to what they paid before ACA.
What is Adverse Selection?
The phenomenon in the insurance mechanism whereby individuals who have higher than average potentially insurable risks 'select against' the insurer. Aka, those with greater probabilities of loss, and who therefore need insurance more than the average insured, attempt to obtain coverage.
When were the exchanges supposed to start?
The schedule was October 1, 2013 for a 2014 benefit year. At the time of writing, they said the regulations providing details on operation of exchanges hadn't been complete in 2nd quarter of 2013. We know the OE date was delayed but the book was earlier than that.
(KC) Small business health options program (SHOP) exchange
There must be 2 exchanges: individual and the Small Business Health Options Program (SHOP exchange) States can combine both of these into one exchange, or can keep them separate. They can combine the two risk pools or keep them separate. States are expected to combine the administration. it would save money on running it. But they will likely have two risk pools (see next KC)
(KC) Essential health benefits
These are all required by the ACA: 1. Ambulatory patient services 2. Emergency services 3. Hospitalization 4. Maternity and newborn care 5. Mental health and substance abuse services 6. Prescription drugs 7. Rehab services and devices 8. Lab services 9. Preventive and wellness services and chronic disease management 10. Pediatric services, including oral and vision care
Are dental and vision considered essential health benefits?
They are for kids, but not for adults.
(KC) Stop-loss coverage
Why might the relatively healthy small employers stay out of the exchanges? They could be self-insured and just buy stop-loss coverage. If their claims rise unexpectedly, they could also join the exchange later since the plans are guaranteed issue.
Does an exchange have to offer all 4 medal levels?
Yes the exchanges have to offer all 4 medal levels. The individual marketplace also have to have the catastrophic plan for people under 30 and people who are exempt from buying coverage because it would be more than 8% of their income.
Can the exchanges use family composition to set premiums?
Yes, definitely. They charge different prices for EE only versus EE + family.
Can the exchanges use age to set premiums?
Yes, they can use age to set premiums. But the oldest age group can be no more than 3 times the cost of the lowest age group.
Can the exchanges use geographic area to set premiums?
Yes, they can use geographic location to set premiums.
Can the exchanges use tobacco use to set premiums?
Yes, they can use tobacco use to set premiums. But a smoker's rates can't more than 1.5 times the cost of the non-smokers.