Health Insurance
Exchanges:
What Your States Need
to Do
What You Need
• Exchange for the individual market and a SHOP exchange
• One exchange or two?
• Exchanges will serve as
• Regulatory body
• Subsidy administrator
• Enrollment portal
• Informational portal
• Federal grants for establishing exchange will begin in March
2011
• HHS issuing more guidance on structure of exchanges through
2011
• Including what are essential benefits
Exchange Timeline
October, 2010
HHS awards first round of planning and
establishment grants to states
January, 2011 –
March, 2012
States authorize exchange through legislation
January, 2013
HHS determines if state is willing and able
to establish exchange by January, 2014
November, 2013
Exchange begins selling health insurance
January, 2014
State exchange must be fully operational
January, 2015
Exchange must be self-sustaining
2017
State may open exchange to large groups (>100)
Developing the Website Portal
• Secretary is required to operate and maintain an internet
portal and assist states in developing and maintaining theirs
• Directs qualified individuals and employers to…
• Standardized information on qualified health plans
• Eligibility determination
• Premium tax credit or cost-sharing reductions eligibility
• Still waiting on further guidance
Website Examples: Massachusetts
Website Examples: Massachusetts
Website Examples: Utah
Website Examples: Utah
Website Examples: Wisconsin, prototype
Website Examples: Wisconsin, prototype
Governance Structure
• Bricks and Mortar Approach
• Establish new governance structure
• Might duplicate existing state government functions
• Utilize existing state regulatory authorities
• Department of Insurance
• State Medicaid/CHIP Offices
• Non-Profit Entity
• Most state exchanges will be governed by a Board
representing stakeholders and policymakers.
Financing: Start Up Grants
• State Government financing
• In July, HHS provided $50 million in grants to help states
start the planning process
• In January, HHS announced a second round of grants to
help states to continue implementation
• States will have multiple opportunities to apply for
funding as they progress through Exchange establishment
• Exchanges must be financially self-sustaining by 2015
Financing: Ongoing Operations
• State options to finance Exchanges after 2015:
• Massachusetts imposes a 4 percent assessment on exchange
participants
• Utah assists only small groups offering defined contribution
coverage, and does not impose a levy on enrollees
• Additional Fees:
• Exchange participants
• All consumers
• State Government Financing
• Increase burden on state budgets
• Expand the Individual Mandate penalty
• Additional penalty state collects to finance exchange
• States may explore assessments on carriers
Pooling
• PPACA requires insurers to pool all individual members in one
risk pool and all small employer group members in another
• Currently carriers keep the two pools entirely distinct
• State exchange can determine if they want combined risk
pools or separate
• Individual market benefit from larger risk pool?
• PPACA contains mechanisms that ensure adequate sized
pools in all markets
• Massachusetts combination experience resulted in higher
premiums
• 2007-2008: premiums in small group grew 5.8%
Plan Selection
• Negotiator vs. Facilitator Models
• Negotiate with plans to lower rates
• Exclude plans with bids that are “too high” or benefits that
are inadequate
• Greater standardization and easier to compare plans
• Facilitate a marketplace- more or less “file and use”
• Exchange does not manage plan selection
• Greater plan design flexibility and better able to compete
with the non-exchange market
Questions
&
Comments
Contact Us
Adam Brackemyre
abrackemyre@nahu.org
703.276.3808
Danielle Jaffee
djaffee@nahu.org
703.276.3839
Brooke Bell
bbell@nahu.org
703.276.3818
Michael Keegan
mkeegan@nahu.org
703.276.3809
Russ Childers
childr@bellsouth.net
229.924.7617
Ken Statz
saquotecenter@msn.com
440.546.8330
Health Insurance
Exchanges:
What States Are Doing
Existing Exchanges: Massachusetts
• Massachusetts Health Insurance Connector established in 2006
• Separate legal entity from the state
• Massachusetts Connector Authority
• 10 member board, with a spot specifically reserved for a
member of the Massachusetts AHU
• Financed through premium surcharges on Commonwealth Care
and Commonwealth choice products
• Individual Mandate
• Penalty assessed based on income and cost of the lowestpriced Commonwealth Care plan
• Employer Mandate
• Offer coverage or a “fair share” contribution
Existing Exchanges: Massachusetts
• Connector open to:
• Individual Market, “nongroup”
• Small Group (2-50)
• Limited large group: all employers establish section 125 plans
for employees not eligible/offered group coverage
• Four Product Tiers:
• Bronze- low premium, higher cost-sharing
• Silver- moderate premiums, moderate cost-sharing
• Gold- high premiums, low cost sharing
• Young Adult Plans (YAP)- special low-cost and low benefit
coverage for those up to age 26
• Merged small group and individual market pools
• Same risk pool inside and outside of connector for each carrier
Existing Exchanges: Utah
• Controlled by Office of Consumer Health Services, part of the
Governor’s Office of Economic Development
• State retains budgetary control and authority
• Connector serves as an informational portal
• “Travelocity” model
• Exchange open to:
• Small group (2-50)
• No individual market- links individuals to carriers,
producers and an insurance plan comparison chart
• Launching a large group pilot program this year
• Does not administer additional programs
Existing Exchanges: Utah
• Exchange functions to allow small employers to offer defined
contribution plans
• Employer contributes specific amount and employee free
to choose plan for themselves
• Allow employees to pull money from multiple sources
• Individuals can carry plan with them if they change jobs
• No employer or individual mandate
• No set product levels or plan choices
• Small group risk pool combined for inside and outside of the
exchange
Developing Legislation
• States will likely pass legislation to create the exchange during
the 2011 legislative session
• States need to provide a business model to HHS in 2013
• Legislation Currently introduced in:
• AK, AZ, DC, HI, MD, NJ*, NH, MS TX
• NAIC and NAHU models currently circulating
• NAIC model very straightforward to what PPACA outlines
• Leaves several areas vague for states to determine
• States can adapt for their existing markets and insurance
laws
• No two exchanges will look the same
Key Differences in the NAHU Model
• Definition of “Health Insurance Producer”
• Establish a producer as an individual licensed to sell health
insurance in a state
• Navigators and their qualifications
• Enrolling individuals in a qualified health plan requires you
be licensed and regulated by the State and the
Commissioner
• Includes all individuals affiliated or employed by an entity
facilitating enrollment
• Still allows Navigators to serves as informational resource
Key Differences in the NAHU Model
• Governance Structure
• Public-private partnership
• Establish Exchange Board of Directors
• Representation:
• 3 persons affiliated with state authorized health
insurers
• 2 licensed health insurance producers
• 3 representatives of the general public
• 1 state Medicaid representative
• Insurance commissioner or his/her designee
• Duties
• Board accountable to the Insurance Commissioner
What States Are Currently Doing
• Nebraska
• Working on developing a business model before legislation
• Develop structure, financing, authority
• Texas
• Rep. John Zerwas introduced HB 636
• Bill tracks the NAIC model, but requires 3 of the 5 voting board
members to have insurance background
• Establishes “Navigator” program consistent with PPACA
• Ohio
• Received grant from the Robert Woods Johnson Foundation in
2008
• State Coverage Initiative tasked to look at way to cover
more Ohio consumers
• Recommendations included many PPACA-related reforms
Questions
&
Comments
Contact Us
Adam Brackemyre
abrackemyre@nahu.org
703.276.3808
Danielle Jaffee
djaffee@nahu.org
703.276.3839
Brooke Bell
bbell@nahu.org
703.276.3818
Michael Keegan
mkeegan@nahu.org
703.276.3809
Russ Childers
childr@bellsouth.net
229.924.7617
Ken Statz
saquotecenter@msn.com
440.546.8330