Addressing the Challenges Ahead

State Law Resources Fall Meeting

Claudia Duck TuckerRegional Director State Advocacy

October 19, 2012

Health Care Costs and the Economy

Source: Center for Medicare and Medicaid Services, National Health Expenditures

Health Care Costs and Health Plan Administrative Costs

On average, 96% of the annual growth in health spending from 1961-2010 came from areas other

than the growth in health plan administrative costs.

Source: Center for Medicare and Medicaid Services, National Health Expenditures

Health Care Cost Drivers

Fee-for-service (FFS)

payment system

Unhealthy choices/lifestyles

Demographic challenges

Cost-shifting

Taxes, fees, and

compliance costs

Medical liability

Provider consolidatio

n

Bias toward new and

expensive vs. most effective

Lack of transparenc

y

Health Plans Leading the Way

ACA IMPLEMENTATIONAddressing the Challenges Ahead

Broad Participation Is Critical

“Avoiding such spirals requires minimizing adverse selection and instead attracting a

broad base of healthy individuals, over which the costs of sick individuals can be spread. Attracting healthier individuals

ultimately will help keep premiums more affordable and stable for all members in

the risk pool.”- American Academy of Actuaries

Source: American Academy of Actuaries, Making Health Care Reform Work: Why Broad Participation Is Necessary, http://www.actuary.org/files/Campaign_2012_Risk_Pool_FINAL_062812.pdf, June 2012

ACA Implementation: Need to focus on affordability and

workability

ACA Implementation: Interaction of 2014 Provisions

Premiums/Cost o

f CoveragePremium

Subsidies

Premium Tax

Age Rating

Compression

Essential Benefit

Changes

Modest Incentives

to Purchase Coverage

Cost-sharing

Subsidies

Transitional

Reinsurance

DE

Federal Exchange Grants to the States (as of October 11, 2012)

OR #@

CA @ NV @ UT

ID

MT ND

WY

AZ NM

NE

KS ♦

OK♦

HI @

MO

MN @

FL

MS

IL @

MI

WVVA

NCTN @

PA

NY #@

CT #

MA #@NH %

DC

WA VT #

OHCO @

AKTX

SD

IA @

WI ♦

# -- Received Early Innovator Grant in Addition to Establishment Grant

♦ -- Returned Early Innovator Grant

% -- Returned Planning Grant

@ -- Received Additional Level 1 Establishment Grant

America's Health Insurance Plans October 2012

KY @

Received Planning Grant Only (12)

Received Level 1 Establishment Grant (28)

MD #

NJ

Received and Returned Planning Grant (3)

Received Level 2 Establishment Grant (7)

AR @

ALLA

SCGA

ME

IN RI #

No Grants Received (1)

DE

State Implementation of ACA: Exchange Activity(as of October 11, 2012)

OR

CA NV UT

ID

MT ND

WY

AZ NM

NE

KS

OK

HI

MO

MN

FL

MS

IL

MI

WVVA

NCTN

PA

NY

CT

MANH

DC

WA VT

OHCO

AK

TX

SD

IA

WI

America's Health Insurance Plans October 2012

KY

Federally-Facilitated Exchange (FFE) (6)

Partnership Model (4)

MD

NJ

State-Based Exchange (16)

No Official Decision (25)

AR

ALLA

SCGA

ME

IN* RI

An Executive Order was issued in 2011 to establish the Indiana Health Benefit Exchange, however, the type of Exchange will be determined by the next governor.

*

WA

OR

CA

NV UT

ID

MT ND

WY

AZ NM

CO

SD

NE

KS

OK

TX

AK

HI

LA

AR

MO

IA

MN

FL

MS AL GA

WI

IL

MI

IN OH

KYWV

VA

NCTN

SC

ME

PA

NY

MD

DENJ

CTRI

VT

MA

NH

Rate bands 5:1 or greater

Rate bands less than 5:1

Age-Rating Compression: Higher Premiums for Younger Individuals in

42 States

The ACA limits the age band to 3:1, which will increase costs for younger individuals in the 42 states that currently allow health insurance rates to vary by age by 5:1 or more

Impact of the Premium Tax in the Fully-Insured Commercial Market

Increase in premiums

1.9%-2.3% in 2014

2.8%-3.7% in 2023

10-year increase in the cost of coverage

For Individuals:

$2,800

For Families: $6,500

Oliver Wyman. Estimated Premium Impacts of Annual Fees Assessed on Health Insurance Plans. October 31, 2011.

Independent State Studies Show Significant Benefit “Buy-Up” Due to

Essential Benefits Requirement

StudyIncrease in Non-Subsidized Premiums

due to Federal EHB Requirements

Ohio(Milliman - Prepared for the Ohio

Department of Insurance) 20%-30%

Maine(Gorman Actuarial/Gruber -

Prepared for the Maine Bureau of Insurance )

33%

Maryland (Oliver Wyman – Prepared for the

Maryland Health Care Commission)

8%-10%

Minnesota(Gorman Actuarial/Gruber – Prepared for the Minnesota Department of Commerce)

6%-7%

Essential Health Benefit (EHB) Benchmark Plan: Summary of State Selections(as of October 11, 2012)

OR

CA

UT

ID

MT

WY

AZ NM

NE

HI

AR

MO

MN

MS AL

IL

WVVA

TN

PA

NY

MD

NJCTRIMA

DC

WAVT

OHCO

AK

SD

America's Health Insurance Plans 2012

States that have made their final benchmark plan selection (22)

States that have indicated that they do not intend to select a benchmark at this time (13)

States that are working toward a decision (8 plus DC)

No information (7)

NH

DEKY

OK

TX

ME

NV

ND

KS

LA

IA

WIMI

IN

NCSC

GA

FL

State Implementation of ACA: Medicaid Expansion(as of October 11, 2012)

OR

CA NV UT

ID

MT ND

WY

AZ NM

NE

KS

OK

HILA

AR

MO

MN

FL

MS AL GA

IL

MI

INWVVA

NCTN

SC

PA

NY

CT

MANH

DC

WA VT

OHCO

AK

TX

SD

IA

WI

DE

ME

America's Health Insurance Plans 2012

KYMD

NJ

RI

Implementing ACA Medicaid expansion (10)

Not implementing ACA Medicaid expansion (6)

Undecided (26)

Unlikely to implement ACA Medicaid expansion (5)

Likely implementing ACA Medicaid expansion (4)

Stay Connected and Up to Date

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