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Commonwealth publishes paper on choosing health plans in State Exchanges

Posted on August 24, 2012 | No Comments

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Key Developments
Implementation Briefs

Beginning in 2014, the health insurance exchanges created under the Affordable Care Act (ACA) will be available in every state as marketplaces for individuals without employer insurance and small employers. All plans will include the same package of essential health benefits, but will vary by four different levels of “actuarial value,” or the percentage of medical costs that a plan pays for on average. The actuarial value of a plan will be indicated by the tiers of bronze, silver, gold, and platinum, and comparative information will be available to help people select plans. A new study recently published by the Commonwealth Fund looks at out-of-pocket costs that might result from plans with various designs and actuarial values. The study found that average out-of-pocket expenses decline as actuarial values rise, but two plans with similar actuarial values might result in different out-of-pocket costs for a given person. The overall affordability of a plan also will be influenced by age rating, income-related premium subsidies, and out-of-pocket subsidies, report the authors.

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On April 9th, the Senate Finance Committee held a confirmation hearing for Marilyn Tavenner to be the Administrator of the Centers for Medicare and Medicaid Services (CMS). Committee members submitted additional questions to Tavenner post-hearing on topics ranging from consumer outreach in state insurance Exchanges to pediatric dental services. Health Reform GPS has compiled a list of the Affordable Care Act related questions submitted by the Senate Finance Committee members. The list contains the name of the Senator asking the question, the question number, and the relevant ACA topic addressed.
A study released by the Council for Affordable Health Insurance (CAHI) found that in 2012, there were 2,271 state insurance laws on the books. According to CAHI, Rhode Island had the most state-mandated insurance laws at 69, with Idaho having the fewest at 13. CAHI found that the national number of state insurance mandates has grown over 167% in the last 20 years, and this increase in noted as being a contributor to the rising costs of health care.
A study published in Health Affairs, in conjunction with the University of Chicago, found that more than half of all people with individual health insurance in 2010 did not have coverage that would satisfy the essential health benefits requirement under the Affordable Care Act (ACA). These 2010 plans had an actuarial value of less than 60%, meaning they would not even qualify as a "bronze" medal plan in the 2014 Marketplaces. In contrast, group plans prior to the post-reform world had higher actuarial values, around 83%, than what is anticipated to be offered in the state Marketplaces.
Yesterday, the Republican Governors Association sent a letter to the White House with requests regarding state-implementation of the Affordable Care Act (ACA). The Republican Governors, who will lead 60% of states starting in January 2013, asked for more time to decide whether they want to establish a state-run health exchange and for a meeting with the administration officials to discuss concerns regarding ACA implementation. Secretary Sebelius of the U.S. Department of Health and Human Services (HHS) sent a letter to all 50 governors immediately following the election extending the deadline for state-federal partnership or federal-run exchange establishment. However, states still must notify HHS by November 16 whether they plan to pursue a state-run exchange. The Republican governors requested more time to finalize their plans. They also posed 20 questions regarding exchange implementation and 14 regarding Medicaid expansion and stated that they would not be able to move forward unless the questions were addressed by HHS.
A report released last week by the Congressional Research Service (CRS) examines the Health Insurance Exchanges under the Affordable Care Act (ACA). The CRS report outlines the required minimum functions of exchanges, and explains how exchanges are expected to be established and administered under ACA. The coverage offered through exchanges is discussed, and the report concludes with a discussion of how exchanges will interact with selected other ACA provisions.
Health insurance exchanges form the backbone of the private insurance reforms called for in the Affordable Care Act (ACA), as they will create a marketplace in each state for small employers and individuals without job-based health insurance to buy comprehensive health coverage, with premium subsidies available for those with low or moderate incomes. As of May 2012, 13 states, together with the District of Columbia, had taken legal action to establish exchanges, through legislation or executive order. State implementing laws are essential to the translation of broad federal policies into specific state and market practices. Overall, the laws in the 14 jurisdictions vary, but they tend to show a common approach of according exchanges much flexibility in how they will operate and what standards they will apply to the insurance products sold. In all states, these "threshold policies" will be followed by policy decisions, expressed through regulations, guidelines, and health plan contracting and performance standards. A new Commonwealth Fund issue brief analyzes the choices being made by the jurisdictions to begin establishing exchanges.
California, Colorado, and Maryland were among the first states to enact legislation establishing health insurance exchanges under the Affordable Care Act (ACA). The Commonwealth Fund recently published a brief outlining differences in the states’ initial approaches: the numbers and types of people initially appointed to the boards governing the exchanges; the role of the board relative to the state legislature; how the exchanges interact with existing insurance markets; and the involvement of stakeholders in each state. The report also reviews the decisions that these states will face going forward, including how to finance the exchanges, how to make risk-adjusted payments to insurers for people likely to have high medical expenses, and how to avoid gaps in coverage and care for people who may have changes in income.
The Centers for Medicare and Medicaid Services (CMS) today released a proposed rule on benefits and payment under the Affordable Care Act (ACA). The proposed rule outlines how CMS plans to run federal exchanges and suggests how risk adjustment data should be collected. The rule also lays out the three-year transitional program that the federal government will run to maintain premium costs in the individual market, and projected that premiums will be 10 to 15 percent lower than they would have been without the reinsurance program. With regard to the reinsurance program, CMS said that federal exchanges can impose a user fee on health plans to finance the exchanges. However, to prevent the user fees from making the health plans less attractive, CMS is asking the Office of Management and Budget (OMB) to exempt the requirement that those fees cover the whole cost in 2014. Before 2014, it wants to cap the monthly fee rate at "3.5 percent of the monthly premium charged by the issuer for a particular policy under the plan." The goal of the rule is to stabilize the new exchange market, limit risk, and smooth over the transition. Comments on HHS’s proposed rule are due December 31.
A draft of a multi-state plan application indicates that the Office of Personnel Management intends to allow the Affordable Care Act's (ACA's) multi-state plans to initially participate in part of a state, as opposed to the entire state. This comes as a surprise, as the ACA states that multi-state plans must be offered "in all geographic regions..." According to the ACA provision, these multi-state plans must be operating in 60 percent of states in the first year of an insurance plan's participation. By the fourth year, they must scale up and offer coverage nationwide. These plans will be certified to be offered in all exchanges, so they will not need to apply for separate state certifications. Comments on the draft application are due to OPM by October 22, 2012.
Previous updates have summarized final IRS regulations implementing provisions of the Affordable Care Act that provide premium tax credits to help low- and moderate-income individuals and families buy affordable health insurance through State health insurance Exchanges. The IRS regulations provide that premium assistance tax credits are available to all eligible state residents, regardless of whether their state Exchange is state-operated or federally facilitated. This Update examines a dispute that that has arisen regarding the availability of premium assistance tax credits in federally facilitated state Exchanges.