1. NAIFA – Dallas Meeting Shannon P. Meroney Senior Manager, State Government Relations Aetna October 2012 Health Insurance Reform: What does the Future Hold?

2. 2  Guaranteed issue  Individual coverage mandate  Individual subsidy  State individual and small group exchanges operational  Rating rule changes  Insurer taxes  Employer “Pay or Play” Mandate  Essential health benefits  Medicaid expansion  90-Day maximum waiting period  Auto-Enrollment  Annual reporting of employee coverage  Definition of full-time employees  Wellness incentives Health Insurance Reform Timeline 2010 – 2020  Benefit coverage changes -Preventive Care at 100% in network -Dependents < age 26 -No pre-ex < age 19 -Prohibits rescissions except fraud -No lifetime limits/ annual limits on essential benefits -Patient protections -Grievance and appeals updates  Temporary high-risk pool  Uniform MLR definition (NAIC)  Federal rate review process Source: Patient Protection and Affordable Care Act  Minimum MLR requirements  Medicare Advantage plans begin to have payments frozen  Medicare Advantage cost sharing limits effective  Pharmaceutical fee  Rate review implementation  Increased penalties on individual mandate  Increased insurer taxes  States must allow groups with <100 employees into exchanges (2016)  “Cadillac tax” (2018) 201020112012201320142015-2019  Patient Centered Outcomes Research fee  MLR reporting goes “live”  Administrative Simplification begins to phase in  Uniform summary of coverage  Medical Device fee  Exchange coverage notice  FSA Cap  Tax deduction for Medicare Part D subsidy eliminated

3. 3 Individual Mandate Tax Credits and Subsidies Taxes and Fees Risk Management Mechanisms Key ACA Provisions effective in 2014 Prohibits health plans from denying coverage or rating applicants based on their health status Levels the playing field between health plans and mitigates the impact of Guaranteed Issue and pricing uncertainty in the short term Institutes penalties for failing to purchase health insurance Lowers the cost of coverage for the low and middle income populations in the Individual market Levies against health insurers and other groups to fund subsidies and risk management mechanisms Institutes penalties for employers who fail to offer affordable comprehensive coverage Creates government regulated Individual and Small Group health insurance marketplaces Insurance Exchanges Employer Mandate Guaranteed Issue (GI) and Rating Changes Prominent ACA Provisions in 2014 Key ACA provisions, which will become effective in 2014, will have a significant impact on the health insurance marketplace.

4. 4 Impact of Affordability Challenges on Individual Plan Premiums ILLUSTRATIVE *This example uses the 2011 Plan Premium of Aetna’s popular PPO 5000 plan for a 40-year-old male in Dallas, TX as its starting point **Represents ability to capture a more balanced risk pool due to risk mitigation provisions and incentives created by the individual mandate and subsidies in the ACA

5. 5 Source: AHIP: Health Insurance Exchanges; Developing an Industry Playbook: March 2, 2011 Promote and regulate marketing of products and services Marketing Oversight Determine who may participate and who is eligible for subsidies Eligibility/Subsidy Determination Provide assistance in navigating the shopping, subsidy eligibility, and enrollment process Navigator Premium Collection/Reconciliation Determine premium obligations and combine with subsidies to ensure payment for coverage Interoperability with Health Plans Build technology and operational interoperability with health plans Certify and select health plans for the Exchange; Monitor health plan quality and performance Health Plan Certification and Quality Oversight Comparison Shopping and Customer Service Provide information that consumers and small businesses can use to identify, review, and select products. Respond to inquires Enrollment and Eligibility Maintenance Support standard enrollment processes and ongoing maintenance Specify products will be available and what information is required Product Availability/Specifications Mandated Exchange Functions and Capabilities Exchanges will need to develop a broad array of capabilities. The robustness of these capabilities will likely vary from state to state.

6. 6 Update on Essential Health Benefit (EHB) Plans Federal law requires essential health benefits to include coverage for ten categories of coverage; Each state may define an essential health benefits standard by selecting a benchmark plan; The benchmark plan will comprise the essential health benefits package, which must be covered by all individual and small group plans in and out of the Exchange in 2014; Texas must pay the cost of any state mandates that apply to individual or small group plans that are not contained in the benchmark plan; TDI is working with carriers to estimate the cost of such mandates as required by Rider 19;

7. 7 Update on Essential Health Benefit (EHB) Plans Required Categories of Coverage Ambulatory patient services Emergency services Hospitalization Maternity and newborn care Mental health and substance use disorder services, including behavioral health treatment Prescription drugs Rehabilitative and habilitative services and devices Laboratory services Preventive and wellness services and chronic disease management Pediatric services, including oral and vision care Benchmark Plans HHS proposes 4 types with 10 options Benchmark Plan will represent the EHB standard in each state If excludes a required coverage, must be supplemented States cannot modify the chosen option Largest small group plan is the default plan Deadline was September 30 for states to choose or default;

8. 8 Update on Essential Health Benefit (EHB) Plans Plan Types Plan Options TX Enrollment Largest 3 Sm Grp BCBSTXBestChoice PPO 345,781 UHC Choice Plus PPO 181,105 BCBSTX BlueEdge HSA 83,532 Largest State EE ERSHealthSelect 440,104 TRSActiveCare Plan 2 270,490 UTUT Select 180,299 Largest 3 Nat’l Federal Employee Plans BCBS Standard Option PPO Not available BCBS Basic Option PPO Not available GEHA Standard Options PPO Not available Largest Insured Commercial Non- Medicaid HMO Aetna Open Access Managed Choice (POS) 153,588

9. 9 Update on Essential Health Benefit (EHB) Plans Public Forum was held August 28; 122 attendees and 114 by phone. TDI believes they do not have clear guidance from HHS on the process to submit a benchmark plan. HHS posted the default plan (BCBSTX Best Choice PPO), for public comment. TDI believes the September 30 deadline was “soft,” giving them additional time to select a benchmark plan. For now, they have not done so. A minority of states (approx 15) have made an affirmative selection by Oct 1.

10. 10 What is next….. The Supreme Court decision did not change our business strategy or commitment to system reforms that make quality care more affordable and accessible. At the same time, we know that much more must be done to fix the problems that remain in our health care system. We believe there is still time -- if people can come together in a bipartisan way -- to improve quality and affordability. That security is what Americans want and need. We are focused on delivering the next generation of health care through innovative solutions that improve quality and health outcomes, which ultimately makes care more affordable. We remain committed to working with policymakers and other stakeholders to make our health care system work better for everyone.