Today, 13 state-based marketplace directors submitted a joint letter to the US Department of Health and Human Services responding to its request for comment on possible changes to state insurance rules that could eliminate automatic re-enrollment and change cost-sharing reduction policies by 2021. The directors expressed concern that potential changes curtailing those policies would, “create market instability, harm consumers, and intrude on states’ rights to manage their insurance markets.” Read their letter.
Enrollment is still open in some states and coverage continues across the nation.
Washington, DC – On the heels of the Texas federal district court ruling against the Affordable Care Act (ACA), the National Academy for State Health Policy (NASHP) convened state health marketplace directors for reaction. They stressed the ACA remains the law of the land, coverage continues without change, and enrollment remains open in 10 states and Washington, DC – which represent nearly 25 percent of the US population.
States that operate their own marketplaces face not just the implications of the recent court action, but also confront the headwinds of federal policy changes that weaken the individual market and have been predicted to affect enrollment. States have tailored their operations to respond, ensuring their consumers continue to have reliable and available coverage.
Kevin Patterson, chief executive officer of Connect for Health Colorado, said, “Consumers need to know we have their backs – coverage continues.”
In Maryland and other states, officials report higher than expected enrollment on Saturday, following the court’s Friday night announcement. “Consumers want affordable health coverage and states are working hard to cut through the confusion and help them find it,” said Michele Eberle, executive director of the Maryland Health Benefit Exchange, “and our early enrollment figures are encouraging.”
Covered California Executive Director Peter Lee said, “We’ve extended the deadline for Jan. 1, 2019, coverage until this Friday (Dec. 21, 2018) amid a surge in enrollment last week as well as confusion resulting from the Texas District Court ruling. Insurance has to be sold,” he said, “which is why we will continue promoting enrollment with robust marketing and outreach efforts well into the New Year.”
In Massachusetts, which has required its adult residents to carry comprehensive coverage for a decade, Massachusetts Health Connector Executive Director Louis Gutierrez observed, “Massachusetts is proud of its progress in health care to ensure nearly universal coverage, and our busy open enrollment so far is proof that our residents continue to seek out access to affordable coverage. The Massachusetts Health Connector remains open for business, with open enrollment running through Jan. 23, 2019, to ensure everyone who wants insurance has the opportunity to enroll in coverage.”
In Connecticut, James Michel, Access Health CT chief executive officer, added, “We want to let Connecticut residents know that the Texas ruling does not affect their ability to sign up for and use 2019 health insurance plans through Access Health CT. We are continuing to focus on helping people get the right plan for them and their families, and are extending the open enrollment period until Jan. 15, 2019.”
Final enrollment figures for 2019 are expected to be announced in February, after all states’ open enrollment deadlines have passed. States with extended enrollment deadlines include:
Washington State Dec. 20, 2018
Vermont Dec. 21, 2018
Rhode Island Dec. 31, 2018
Minnesota Jan. 13, 2019
California Jan. 15, 2019
Colorado Jan. 15, 2019
Connecticut Jan. 15, 2019
Massachusetts Jan. 23, 2019
Washington, DC Jan. 31, 2019
New York Jan. 31, 2019
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During NASHP’s recent state health policy conference, state insurance experts explored the dramatic changes that recent federal action has foisted on their individual health insurance markets. In a second report from this conference session, they highlight strategies they’ve used to stabilize markets and identify lingering challenges to insurance markets’ affordability and choice.
While many state insurance commissioners and Affordable Care Act (ACA) marketplace directors work in tandem with state lawmakers to develop new policies that can support and stabilize markets, several experts noted that state leaders wield significant authority to influence their own markets. For example, through insurance rate review programs, state insurance commissioners have significant influence over the cost of premiums and scope of coverage sold in the markets they regulate.
Pennsylvania, for example, requires insurers to file rates using standard rating factors (a specific percent that all insurers must use to account for cost-sharing reduction calculations). Standard rating factors help the state minimize arbitrary variability between insurers’ rates and encourages competitive pricing practices among insurers.
Panelists also noted the importance – especially this year — of investments in outreach and education to teach consumers about the varying coverage levels of insurance plans now on the market. This is especially important given the expanded availability of short-term and association health plans that may confuse consumers.
Jane Beyer, senior health policy advisor to Washington State’s insurance commissioner, suggested the development of simple tables comparing coverage options (e.g., short-term plans, health care ministries, and broader qualified health plans) as important tools to educate ACA exchange navigators and other outreach workers as they help consumers purchase policies.
States that operate their own state-based marketplaces are uniquely positioned to support their individual markets through effective marketing and innovative consumer tools to help attract consumers.
- Mila Kofman, executive director of Washington, DC’s health insurance marketplace, stressed the importance of a local approach to marketing and outreach. Beyer touted the benefits of Washington State’s new marketplace app and “Smart Planfinder” decision tool that assists consumers in making informed decisions about their coverage options.
- Kate Harris of Colorado’s marketplace explained, “People wildly underestimate what they are eligible for.” She said Colorado is constantly evolving its outreach strategy to find new approaches to expand its reach to uninsured consumers.
- Wes Trexler, Idaho’s Department of Insurance Actuary and Bureau Chief of Product Review, cited his state’s systems control and its ability to create an integrated outreach and enrollment process for its consumers as big factors to its success.
Addressing Affordability through Reinsurance and Other Reforms
Affordability remains a huge threat to stable markets, especially among consumers earning more than 400 percent of the federal poverty level (FPL) and individuals earning less than 100 percent of FPL in non-Medicaid expansion states (see more on Medicaid below), who do not qualify for federal tax credits to purchase individual market coverage. Trexler said states must address the plights of individuals who fall into coverage gaps, including individuals who cannot afford their employer plans but do not qualify for tax credits and individuals who struggle with eligibility for subsidized coverage because of variability in their income throughout the year. As insurance rates rise, these individuals are increasingly priced out of the market and opt for no insurance coverage.
State-based reinsurance programs, instituted through 1332 state innovation waivers, have been successfully leveraged by some states to help reduce premium costs. A state’s reinsurance program pays insurers that take on higher-costs, enabling those insurers to lower their insurance premiums. The payments are funded through a combination of state funds and federal savings achieved from lower tax credit payments paid to subsidize the premiums of coverage sold through the state’s health insurance marketplace.
However, panelists raised concerns about the high costs of implementing state reinsurance programs, the sustainability of these programs, and the political challenge of getting legislation passed to submit a 1332 waiver. Some state officials expressed support for a federally-funded reinsurance program, which could help stabilize state markets and lower federal spending on tax credits.
States, faced with the prospects of market erosion from the emergence of short-term and association health plans, are contemplating options that will balance affordability with the need to keep a robust risk pool that includes healthy and sick; young and old. They are looking into other creative solutions to offer more affordable plans to their consumers.
Colorado recently passed legislation to support a study to use a 1332 waiver to allow for the sale of catastrophic health plans to individuals older than 30. Catastrophic health plans have low premiums, yet high out-of-pocket costs to consumers. Under the ACA, they are only available to individuals under age 30. By adding these plans to its individual market, Colorado plans to offer more affordable options to consumers. The law stipulates that catastrophic plans must be sold through the state’s health insurance marketplace and that Colorado would only pursue the waiver if the study finds that the expansion of catastrophic plans would not lead to overall premium increases OR decreases in tax credits received by consumers.
Under an executive order, Idaho is exploring granting greater flexibility to insurance carriers to sell products that do not comply with federal requirements under the ACA, but would be part of the individual market risk pool. Specifically, these plans would:
- Not meet pre-existing condition protections,
- Allow for a 5-to-1 age rating ratio, meaning that insurers can charge older enrollees up to five times as much for coverage as younger enrollees (the ACA sets this cap at a lower 3-to-1 ratio);
- Allow for annual coverage limits of no less than $1 million; and
- Allow year-round enrollment and not limit enrollment to special time periods).
As envisioned by Idaho’s Department of Insurance, these insurance products, called “state-based plans,” would complement ACA-compliant products. They would bring consumers into the state’s individual market, help to stabilize the risk pool, and force any insurer that sold a state-based plan to also sell a fully ACA-compliant product through the state’s insurance marketplace, thus encouraging product competition through the marketplace.
The Centers for Medicare & Medicaid Services (CMS) rejected the proposal, due to non-compliance with federal law. However, Idaho is continuing conversations with CMS to develop federally-compliant solution for its market.
During the conference session, state officials described a slew of other proposals they plan to explore to help stabilize their markets, including:
- Merging individual and small group markets;
- Forging stronger links between ACA-compliant qualified health plans and public programs (see Washington’s public-employee law described below);
- Providing state-funded subsidies for insurance in addition to federal tax credits; and
- Working with insurers to create more efficient plan design (e.g., changing benefit and network requirements).
Several panelists said it was important to ensure that future solutions do not undercut their individual markets — as new federal policies promoting market segmentation do (e.g., promulgation of short-term plans and health care ministries). Several states have explored implementing a state-based insurance mandate to help ensure that consumers continue to participate in their insurance markets to help stabilize their risk pools for all.
Washington, DC’s new mandate , for example, is modeled closely after the federal mandate, though it made small changes, such as including an automatic exemption for those eligible for Medicaid based on their income even if they were not currently enrolled in Medicaid. Under federal law, these individuals had to actively pursue an exemption, and would often not apply on time if at all. Money collected from the mandate will be used to fund additional affordability programs and coverage outreach initiatives. Washington State leveraged its state purchasing power to require that any insurer offering school or state employee coverage must also offer individual market plans in those counties through the state’s health insurance marketplace.
Medicaid’s Bearing on Individual Market Costs
A few panelists cited the positive effect that states’ decisions to expand Medicaid have had on their individual markets. In Medicaid expansion states, Medicaid eligibility is raised to 133 percent of FPL, meaning that individuals earning between 100 to 133 percent of FPL — who would otherwise be eligible for subsidies for private coverage through the health insurance marketplaces — are enrolled in Medicaid coverage. Studies indicate that Medicaid expansion states have better individual market risk scores than those that have not expanded coverage, suggesting that populations at lower-income thresholds are in poorer health than those at higher-income levels. This suggests that the individual market risk pool in expansion states is healthier, leading to lower overall costs in those markets.
Building on this concept, Idaho, a non-expansion state, explored a dual waiver program in which it would use an 1115 Medicaid waiver and a 1332 state innovation waiver to allow individuals earning below 100 percent of FPL to receive subsidies for coverage through its health insurance marketplace, while enrolling individual earning between zero to 400 percent of FPL with complex medical needs in Medicaid. The program would have enabled more individuals to access coverage, while lowering premiums for marketplace enrollees by taking those with unhealthy risk out of the individual market risk pool.
The proposal was ultimately rejected by Idaho’s state legislature in part due to concerns over costs to the state’s Medicaid program. However, supporters of expansion in Idaho have secured a ballot initiative so residents can vote on whether the state should expand Medicaid in November. Similar initiatives will also be on the ballot in Nebraska and Utah.
Future State Solutions
Challenges remain for states pursuing stabilization strategies. Several officials expressed hope the federal government would refrain from new actions that could de-stabilize markets or reduce state authority over markets, such as restricting state decisions on “silver-loading” to account for CSR losses. Some also expressed a desire for greater flexibility over 1332 waivers that could ease states’ ability to apply for waivers or allow more state experimentation. .
This remains a unique time for states, observed Washington, DC’s Mila Kofman, with consumer groups, insurers, and state policymakers united in their goal to enact policies that create more stable and affordable insurance markets.
NASHP will continue to closely monitor state strategies and report on their efforts to create stable and affordable markets.
Last week, Sens. Lamar Alexander (TN) and Patty Murray (WA) released a bipartisan bill designed to bring short-term stability to the health insurance markets. The bill is co-sponsored by 22 senators — 11 Democrats, 11 Republicans, and one independent.
While there are indications that Alexander and Murray secured the 60 votes needed for passage in the Senate, it faces an uncertain fate in the House and with the President. It is also possible that the bill could get attached to another legislative vehicle, such as funding for the Children’s Health Insurance Program (CHIP) that Congress is currently debating. Even if sufficient political support is mustered, it is unlikely that the bipartisan bill would be enacted before December.
The bill proposes several changes that could affect health insurance markets beginning in 2018, including an appropriation for the cost-sharing reduction (CSR) program, changes to the 1332 waiver program, and funding that could help states conduct enrollment outreach. Below is a summary of provisions of great interest to states.
Appropriates CSR payments for 2017, 2018, and 2019. The bill provides a short-term appropriation for the CSR program. Payments covering the remainder of 2017 would be effective upon passage of the bill, meaning that insurers would still bear the full cost of CSR payments from October 2017 through the date of this bill’s passage. (Read more: The Administration Ends CSR Subsidy Payments—What Comes Next).
States and insurers have already locked in their 2018 insurance rates. Most states “loaded” or increased rates on the assumption that CSR funding would end, which led to significant premium increases in several states. However, a proportionate increase in advanced premium tax credits (APTC), which are calculated based on local premium rates, will offset those increases for qualifying consumers.
As rates have already been set, the bipartisan bill provides flexibility for states to address availability of the CSR funds with their insurers in 2018.
One option allows states to direct their insurers to reject the CSR payments. This option allows states whose insurers “loaded” rates to maintain the loaded rates planned for 2018, rather than readjusting rates to take into account the reinstated CSR payments.
The second option requires state insurance departments to develop a rebate strategy to avoid any “double-dipping” by insurers who raised their rates to account for CSR losses, but then ultimately received CSR payments.
States have broad discretion over the design of these strategies to accommodate the appropriated CSR funds, and these strategies must be developed within 60 days of enactment of the bill. The rebate strategy must be incorporated into calculations relevant to APTC, the medical loss ratio—which mandates that insures spend 80 percent of premium dollars on medical services—and other relevant calculations that affect the price of coverage sold on the health insurance marketplaces.
Changes to the 1332 waiver program. The bill proposes a series of mostly administrative changes to the 1332 program, including changes intended to expedite and ease the process for states to apply for and achieve approval of these waivers. This bill would:
- Expedite the timeline under which the US Department of Health and Human Services (HHS) must issue waiver approvals;
- Establish an expedited waiver process for waivers that are similar to those that have been previously approved for other states and those requested to address “emergency” situations, such as escalating premium increases or the existence of bare counties;
- Allow states to apply for waivers without state legislation if the state’s Governor submits a certification for the waiver; • Lengthen the term of waivers to six years;
- Enable states to calculate budget neutrality (ensuring it does not cost more than is currently budgeted) based on the term of the waiver, instead of year-by-year;
- Enable states to include federal funds from other programs when making budget neutrality calculations (e.g., Medicaid); and
- Require HHS to issue model waivers as examples for states.
The bill also proposes a change to the comparability standard required under current law. Instead of being “at least as affordable,” the bill stipulates that any coverage offered under a state’s 1332 waiver must be of “comparable affordability” for low-income individuals, individuals with serious health needs, and other vulnerable populations. This could provide states with additional latitude to make changes to cost-sharing and benefit design under a 1332 waiver. The bill nullifies any previously existing regulation relevant to 1332.
Expansion of catastrophic (“copper”) plans. The bill eliminates restrictions in place under the Affordable Care Act that limited availability of copper plans to individuals under age 30 or those who did not otherwise have access to affordable coverage. It also eliminates the requirement that these plans cover at least three primary care visits per year per enrollee and adds a requirement that copper plan enrollees be included as part of the single individual market risk pool. (Currently, they can be separated from the risk pool). The changes may broaden access to lower-cost, lower-value plans to consumers, while also minimizing any negative repercussions that would have resulted if these consumers were able to exit the risk pool.
Funding for outreach and enrollment in 2018 and 2019. The bill dedicates $105.8 million from what is collected in insurer user fees for outreach and enrollment activities for plan years 2018 and 2019. Funding is earmarked for activities relevant to the Federally-Facilitated Marketplace (FFM, HealthCare.gov) and may be given directly to states through contracts.
Public reporting of marketplace data. This requires HHS, for plan years 2018 and 2019, to issue biweekly public reports during open enrollment in the FFM and the Federally Facilitated Small Business Health Options Program (FF-SHOP). Each report shall include a summary and state-by-state information (as available) on a series of defined metrics to monitor utilization and enrollment in the FFM and FF-SHOP. Within three months of the end of open enrollment, HHS must publish a report about enrollment data, information on Navigator performance, and advertising and outreach performance.
Regulation pertaining to health insurance compacts. This requires HHS to issue regulations related to the establishment of multi-state insurance compacts, which were originally proposed under the ACA to allow the sale of insurance across state lines.
Full text of the letter is available here.
Today, Executive Directors from twelve health insurance marketplaces sent a letter to leadership of the Senate Health, Education, Labor and Pensions (HELP) Committee detailing consensus strategies to bring immediate stability to the individual market.
The state-based marketplaces (SBMs) and state-based marketplaces operating on the federal platform (SBM-FP) represent diverse state needs and political leadership dedicated to the mutual goal of providing choice, transparency, and value to states’ health insurance consumers.
“The state-based marketplaces, and state-based marketplaces on the federal platform, are on the ground every day, working to understand and meet the local needs of our insurance markets and consumers. We have direct experience with how state flexibility and innovation can result in functional, competitive markets,” said Louis Gutierrez, Executive Director, Massachusetts Health Connector Authority.
On average, SBM and SBM-FP states have attracted a healthier risk mix, attained lower rates of attrition, and maintained steadier issuer participation in their marketplaces than in states operating on the FFM (federally facilitated marketplace). Drawing from their own experiences, SBM and SBM-FP leadership recommend the following strategies to achieve individual market stability.
- Assure consistent funding of cost-sharing reduction (CSR) payments
- Establish a permanent, federal reinsurance program
- Maintain flexibility over the use of 1332 waivers
- Promote stability through a commitment to certainty and long-term solutions
“We believe a focus on these strategies will enable us to maximize competition and affordability of products offered through our marketplaces in 2018 and beyond,” said Pam MacEwan, Chief Executive Officer of the Washington Health Benefit Exchange.
The Senate HELP Committee is currently scheduled to hold hearings the first week of September on stabilizing the individual market.
Full text of the letter is available here.
The National Academy for State Health Policy is home to the State Health Exchange Leadership Network, a consortium of state leaders and staff dedicated to operation of the SBMs and SBM-FPs.