1. 2 introduction ceo of health insurance risk-sharing plan (hirsp) authority, which administers...
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Introduction
• CEO of Health Insurance Risk-Sharing Plan (HIRSP) Authority, which administers Wisconsin’s 30 year-old state high-risk pool.
• Board Chair, National Association of State Comprehensive Health Insurance Plans (NASCHIP), which is the association for 35 state high-risk pools and 21 PCIPs.
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Overview
• State High-Risk Pools
• Pre-Existing Condition Insurance Plans
• Impact of PPACA on Future of Pools
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• There are currently 35 state high-risk pools in operation across the country. All but Florida (which has been closed for many years), are actively taking new enrollment.
• Some risk pools (CT, MN, WI) have been operational for over three decades. Others have been created more recently (NC).
• As of December 31, 2010, almost 222,000 individuals were covered under the state risk pools. The pools incurred almost $2.4 billion in expense for pool operations in 2010. Both enrollment and costs increased from 2009 to 2010.
State High Risk Pools
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• High risk pools offer an alternative to individuals who would otherwise be uninsured.
• Risk pools were originally established to provide coverage to individuals for primarily two reasons:– Medically uninsurable – Loss of group health insurance (HIPAA)
• A number of risk pools also serve individuals eligible for Medicare due to disability (19 states) and HCTC eligible individuals (23 states)
Who’s Eligible?
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Risk Pool Funding
Risk pool funding sources vary by state but are generally comprised of member premiums, insurer assessments, state GPR, and federal grant funding:
• All 35 states charge premiums for coverage
• 31 of 35 states assess insurers to fund pool costs
• 6 states receive state GPR support and 5 others receive funding through other state monies (e.g. premium taxes, unclaimed property tax fund, tobacco settlement)
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• HIRSP offers a Medicare supplemental policy and five major medical plans:
– HIRSP 1,000 - $1,000 deductible– HIRSP 2,500 - $2,500 deductible– HIRSP 5,000 - $5,000 deductible– HIRSP Health Savings Account - $2,500 deductible, HSA Plan– HIRSP Health Savings Account - $3,500 deductible, HSA Plan
Plan Choice
The pools offer a wide variety of plan options, including HSA- qualified plans in 21 of the states. In 17 of the 35 states, the most popular plan has a deductible of at least $2,000. Of these, 11 are at least $5,000, which would likely exceed PPACA limits.
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Costs
• On average, risk pool members claims costs are over $889 per member per month (PMPM).
• Administrative costs are low at $46 PMPM.
• Even though risk pools premiums are at levels above what a “standard risk” would pay in the commercial market, the premiums comprised only 54% of the revenues collected by the pools in 2010. In other words, there was significant subsidization to supplement member premiums and keep the pools solvent.
• Member liability for claim costs (e.g. deductible, co-payment or co-insurance) in 2010 averaged 20% for the 23 states for which data was available. The pools paid the remaining 80% of the claims.
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PCIP Authorization
• Under the Affordable Care Act, the HHS Secretary is authorized to implement the temporary, federal risk pool (PCIP) either directly or through contracts with states or non-profit entities.
• The PCIP was created to offer coverage from July 1, 2010 through December 31, 2013. At that time PCIP enrollees would be transitioned to the Exchange.
• Total funding provided for PCIP by Congress is $5 billion, which is allocated to states under a formula similar to what was used for CHIP allocations.
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PCIP Administration
• PCIP is administered by HHS in 23 states through a contract with GEHA, the health plan for federal employees.
• In the remaining 27 states, the PCIP is administered at the state level.
• 20 of these state-run PCIPs are in states that are also administering a state-risk pool.
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PCIP Eligibility
Eligibility:• Citizen of US or Legally Present and WI Resident
• Uninsured for Previous Six Months
• Pre-existing Condition
Premium:• A standard rate for a standard population (i.e. what a healthy person
would pay in commercial market)
Pre-existing Waiting Period:• Pre-existing waiting periods are prohibited under PCIP.
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Covered Benefits
In states where the state pool and PCIP are administered side-by-side coverage is generally the same under both pools and represents very comprehensive coverage. Comprehensive coverage is also available in the federally run PCIP states. For example, in Wisconsin coverage includes:
• Provide first dollar coverage for an annual physical exam with labs and select preventive services such as colonoscopies and mammograms with no cost sharing from members;
• Provide mental health benefits comparable to all other medical benefits (mental health parity);
• Offer $5 generic drug copayments
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PCIP Premiums
Premiums vary considerably by state. For illustrative purposes, Wisconsin PCIP premiums for the two most popular plans are included below:
HIRSP Federal 2,5000 to 18: $11219-24: $11925-29: $12630-34: $14335-39: $170 40-44: $20245-49: $25050-54: $31055-59: $38160+: $445
HIRSP Federal 3,5000 to 18: $9419-24: $10025-29: $10630-34: $12035-39: $143 40-44: $17045-49: $21050-54: $26155-59: $32060+: $374
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Key Differences
• Six month uninsurability for PCIP coverage, but no waiting period for pre-existing conditions
• Evidence of medical uninsurability/pre-existing condition may vary (e.g. market rejection versus physician letter). More likely to be the case in a state with a state run risk-pool and federally administered PCIP.
• Low-income subsidy support available in majority of state risk pools. No income subsidy support in any PCIP.
• Plan Choice: Higher deductible, lower premium options may be available in state pool versus PCIP.
Choosing Plans: Someone who has been uninsured for six months will most likely do better in PCIP; however, if the applicant is low-income they may find the coverage in the state risk pool more affordable, if they reside in one of the 19 states were subsidy is available.
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PCIP Adverse Selection
• Members in the federal pool are less likely to have accessed coverage via an insurance agent. Only 12% of HIRSP Federal applications were submitted via an agent. By comparison, almost 50%of HIRSP applications are submitted via an agent.
• HIRSP Federal members have a higher morbidity than HIRSP members. On a per member per month basis, HIRSP Federal members had significantly higher medical costs, which were only partially offset by lower pharmacy costs. This pattern is consistent with the other state high-risk pools administering the PCIP in their state.
• Nine state requested 2012 funding above their allocation (Alaska, California, Colorado, Montana, New Hampshire, New Mexico, Oregon, South Dakota and Utah).
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What Can be Learned?
• Low-income Americans are more likely to be uninsured and may be more likely to seek enrollment in the PCIP only when coverage is necessary for obtaining needed treatment. This is a more feasible option then what was available in the legacy state risk pool because there is no waiting period for treatment of pre-existing conditions.
• Individuals who have been uninsured for at least six months may have created mechanisms for managing their health (e.g. using community clinics and generic drug programs). It may take considerable education in addition to traditional outreach strategies to identify and enroll these individuals.
• More data is needed to understand whether low-enrollment is a function of lack of knowledge; whether it is a function of the plan design (e.g. six month “go bare” requirement, guarantee issue/no pre-ex); or premium affordability.
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2014 and Guarantee Issue
Guarantee Issue in 2014 theoretically eliminates the need for risk pools since all individuals will be guaranteed access to coverage in the commercial market regardless of health status in the newly created State Exchanges.
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Risk Pools and State Exchanges
– What are the implications for the stability and premium affordability of the State Exchanges if risk pool members are all transferred on day one and the exchange utilizes modified community rating?
• The recently released Gorman/Gruber analysis reports that merging HIRSP into the commercial market in Wisconsin would result in a 16% premium increase overall. This impact was estimated based on 2009 data. Since that time HIRSP has grown at a faster rate than the market as a whole, and estimates now stand at a 20-21% impact.
– How will plans and benefits available through the exchanges compare to the risk pools?• Risk pool benefits have been designed to mirror the commercial market, but in many
cases have been enhanced to better serve individuals with rare and complex diseases.
– How will the cost of coverage (premiums and cost sharing) available through the exchanges compare to the cost of coverage through the risk pools?• Analysis in New Mexico suggests that the subsidies available through the risk pool are
greater than the subsidy available through the tax credit.
– What will happen to individuals served by risk pools that will not be eligible to transition to the State Exchanges (Medicare eligibles, non-citizens)?
Transition Concerns
• NASCHIP and its members are committed to ensuring a smooth transition for its member when the PCIP expires and if the state risk-pools are phased out.
• Some PCIP and risk-pool members could be newly eligible under the PPACA Medicaid expansions. Others could be seeking coverage in new guarantee-issue market.
• Auto enrollment will not work for this population as it did for Medicare Part D. Differences in covered benefits, networks, premiums and cost sharing make this unfeasible.
• Many high-risk pools have existing relationships and data sharing agreements with state Medicaid and HIV/AID premium subsidy programs to help facilitate transition members to Medicaid.
• Identifying for strategies for minimizing disruptions in care for members that are in the midst of treatments or are actively engaged in care management programs is also critical.
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Risk Allocation Strategies
• PPACA creates three risk allocation Programs and has issued draft regulations to outline how they would be implemented:
–Temporary Reinsurance
–Temporary Risk Corridors
–Ongoing Risk Adjustment
• The purpose of these programs is to help balance the marketplace if there are risk concentrations among select carriers and to ensure that carriers have an incentive to remain in the marketplace by providing them with compensation for excess risk assumption.
• States that operate their own Exchange are required to contract with a non-profit reinsurance entity to administer the three-year Reinsurance program. States may also opt to administer the ongoing Risk Adjustment for their state. HHS will administer the three-year Risk Corridor program in all states.
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Ongoing Role for Pools
• A number of risk-pools are exploring the possibility of taking on the responsibility of risk-adjustment and reinsurance for the State Exchanges. This role is consistent with the original purpose of the pools (keeping markets competitive and affordable) and requires similar skill and expertise.
• Work is also underway to explore options for pools to combine care and complex case management risk functions in conjunction with administration of the reinsurance program.
• A number of risk pools are also exploring options to keep their risk pools operational beyond 2014. Under some scenarios risk pools would be phased out over time to mitigate the “rate shock” to the market. In other cases, the pool is exploring how it may play a role as a issuer of coverage in the Exchange.
Implications of Supreme Court Decision
• If the individual mandate is deemed unconstitutional, it is possible that the 2014 guarantee issue requirement and other aspects of the law would be deemed as non-severable from the mandate. If the guarantee issue requirement was deemed severable, Congress may reconsider whether a guarantee issue market can function successfully without a mandate.
• If guarantee issue is not implemented in 2014, risk pools will continue to play an important role in assuring access to coverage for individuals with pre-existing conditions and may be expanded to play an even bigger role in the marketplace.
• If PPACA in its entirety was struck down by the Supreme Court, there would also be implications for the PCIPs, which were authorized under the Act.
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Contact Info
Amie Goldman
CEO, HIRSP Authority
Chair, NASCHIP Board of Directors
(608) 441-5777