Transcript Insurance Reform

Addressing Risk
Brian Webb
National Association of Insurance Commissioners
September 2011
PPACA Implementation Timeline
2010
2011
2012
2013
2014
2015
2016
Temporary High Risk Pool Program
Temporary Reinsurance Program For Early
Retirees
Immediate Market Reforms:
•No Lifetime Limits
•Restricted Annual Limits
•Restrictions on Rescission
•First Dollar Coverage of Preventive Services
•Extended Dependent Coverage
•Internal/External Review
•No Pre-Existing Conditions for Children
•Disclosure of Justifications for Premium Increases
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
Co-Op Plans & Multistate Plans
Risk Adjustment
Individual Market Reinsurance and
Risk Corridor Programs
2017
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
3
Small Group Premium Variation
NH
VT
WA
MT
ND
MN
OR
WI
RI
MI
WY
PA
IA
NE
CO
OH
IN
IL
UT
CA
WV
AZ
NM
TX
VA
MD
DC
SC
AR
MS
HI
NJ
NC
TN
OK
CT
DE
KY
MO
KS
MA
NY
SD
ID
NV
ME
AL
GA
LA
FL
AK
Rating Schemes
Community Rating
*Note: Michigan HMOs and Blue
Cross/Blue Shield are restricted to 3.12:1
maximum variation. All others may use
3.96 maximum variation
Adjusted Community Rating
No Rating Structure
Rating Band Variability:
13:1 or less
13.1:1 – 19:1
19.1:1 – 25:1
25.1:1 or greater
4
Individual Market Rating
ME
WA
MT
VT
ND
NH
MN
OR
ID
WI
SD
MI
WY
NV
PA
IA
NE
IL
UT
CO
CA
OH
IN
MO
KS
AZ
NM
WV
VA
KY
TX
RI
NJ
MD
DC
NC
SC
AR
MS
HI
CT
DE
TN
OK
MA
NY
AL
GA
LA
FL
AK
No Rating Structure
Community Rating
Adjusted Community Rating
Rating Bands
Hybrid
Michigan Blue Cross/Blue Shield must use community rating.
There is no rating structure for other carriers.
5
Addressing Risk
Temporary?
• Reinsurance
• Risk Corridors
Ongoing:
• Single Risk Pools
• Risk Adjustment
Risk Adjustment
Participants:
• Non-grandfathered individual
• Non-grandfathered small group
• Inside and outside the Exchange
Establishment:
• State may establish if state operates Exchange
• HHS will establish if state does not
Addressing Risk:
Risk Adjustment (Ongoing)
NonGrandfathered
Plans
Risk
Exchange
Plans
$
$
$
Risk
Adjuster
$
Risk Adjustment: NPRM
Methodology:
• HHS will develop a methodology – similar to Parts C and
D in Medicare
• A state may use alternative, if certified by HHS
• HHS-certified alternatives may be used by other states
• HHS methodology will be published in a Federal Notice of
Benefit and Payment Parameters – with public comment
• State alternative must be published in a state Notice of
Benefit and Payment Parameters
– Must include factors, weights, data collection strategy, and nay
adjustments to determine actuarial risk
Risk Adjustment: White Paper
Questions:
• Choices in developing a risk adjustment model
– Prospective or concurrent or mix?
• Options for calculating and balancing payments
and charges
– “Baseline premium” and budget neutrality
• Issues created by permissible rating factors
• Methods for dealing with different benefit levels
• Accounting for other payments and reforms
Conclusion
Next Steps
• Comments on NPRM due Oct 31st
• Comments on White Paper ongoing
• Part of state planning discussions
• Discussions at the NAIC
Questions?
Brian Webb
Manager
Health Policy and Legislation
[email protected]
202-471-3978
Jolie Matthews
Senior Health & Life Counsel
[email protected]
202-471-3982
Josh Goldberg
Health Policy and Legislative Advisor
[email protected]
202-471-3984