Health Insurance Exchanges under the Affordable Care Act Deborah Chollet, Ph.D. Senior Fellow

 Individual Exchanges and Small Business Health Options Programs (“SHOP” Exchanges)  Exchange design and implementation occur in the context of significant market reforms  Required duties of the individual Exchange: –Enrollment and consumer assistance –Eligibility determinations for public programs and subsidies –Oversight of Qualified Health Plans –Administration of the Exchange  State flexibility Overview 2

 Facilitate the individual purchase of coverage –Consumer information and assistance –Facilitate use of income-based subsidies to buy coverage –Facilitate enrollment in public coverage, when eligible  Assist small employers that offer coverage  Encourage the development of qualified health plans that compete on price and quality Why Exchanges? 3

Market reforms No preexisting condition exclusions for children No lifetime benefit caps Limited recissions Guaranteed issue Limits on rating: No rating on health status Limited age rating Essential benefit standard Individual coverage requirement Employer shared responsibility Ban on annual benefit caps phases in Penalty phases in for failing to meet individual coverage requirement ( ) Annual review of premium increases Public reporting of medical loss ratio Insurers must spend a minimum percent of premium on medical costs in small group (85%) and individual (80%) products, or rebate the excess Exchanges Federal regulations expected for individual and SHOP Exchanges States adopt individual and SHOP Exchange legislation, and start implementation State individual exchanges begin operation Premium and cost sharing credits for Exchange plans State option to: Expand SHOP Exchanges to mid- sized groups (2016) Design alternative coverage program (2017) HHS determines whether states will have working individual Exchanges by 2014, or HHS will operate them Market Reform and Exchange Implementation Timeline 4

 Facilitate initial, annual, and special open enrollment periods  Maintain internet web site with standardized information to help consumers compare plans and calculate their cost of coverage  Maintain a toll-free consumer hotline  Make eligibility determinations and enroll eligible Exchange applicants in Medicaid & CHIP  Work with the IRS to determine eligibility for and amount of individual premium or cost-sharing subsidies, if no qualified employer offer  Certify exemptions from the individual coverage requirement and notify employers and the Treasury of exemptions and individual terminations of coverage during the year  Establish a Navigator program, awarding grants to eligible entities to conduct Exchange education and enrollment Requirements for Insurance Exchanges: Enrollment and Consumer Assistance 5

 Certify qualified health plans and assign ratings based on relative quality and price  Present plan options to consumers in a standardized format with information about benefits and consumer satisfaction  Review premium increases and post carriers’ justifications on the Exchange website  Use authority to exclude plans from the Exchange if premium increases are deemed excessive Requirements for Insurance Exchanges: Qualified health plan administration 6

 Marketing that does not deter high-need individuals  Sufficient choice of providers—including essential community providers serving low-income, medically underserved individuals  Accredited with respect to local performance on –Clinical quality measures (e.g., HEDIS) –Patient experience ratings (e.g., CAPS) –Consumer access –Utilization management –Quality assurance –Provider credentialing –Complaints and appeals –Network adequacy and access –Patient information programs  Quality improvement strategy  Uniform enrollment form, standard presentation of health benefits, and consumer information about quality What is a Qualified Health Plan? 7

 Individual Exchanges must be self-sustaining by Jan. 1, 2015  Consult with stakeholders—consumers, small business, self-employed, Medicaid, advocates for hard-to-reach populations  Account for all activities, receipts, and expenditures, and report annually to HHS  Publish on an Internet website average costs of licensing, regulatory fees and required payments, administrative cost  Report on all operations annually to the Exchange board, Governor, legislature, and State Auditor Requirements for Insurance Exchanges: Exchange Administration 8

 What entity to administer the Exchange? Contract functions?  Exclusive, statewide, sub-state, or multi-state Exchanges?  Merge individual and SHOP Exchanges?  Extend SHOP to groups with employees and (in 2017) larger groups?  Allow all qualified health plans to participate in the Exchange, or only selected plans?  Allow Exchange plans to vary cost sharing, care management, other provisions consistent with federal guidelines?  Apply existing state mandates at state cost?  What entity will do risk adjustment in/outside the Exchange?  What role for agents and brokers, per federal guidelines?  What Exchange surcharge to support operations? State flexibility 9