h e a lt h p o l ic y b r i e f
1
w w w. h e a lt h a f fa i r s .o r g
Health Policy Brief
u p dat e d : m ay 2 9 , 2 0 1 4
The Multi-State Plan Program.
During the ACA’s first open enrollment
period, exchanges in thirty states and D.C.
offered multistate insurance plans.
what’s the issue?
One of the key mechanisms for expanding
health insurance coverage under the Affordable Care Act (ACA) was the creation of insurance exchanges—Marketplaces where people
can compare qualified private health plans
on benefits, quality, and price; find out if they
qualify for financial assistance; and use a
premium subsidy to buy insurance. All plans
sold on the exchange must offer ten essential
health benefits, creating more standardization among plans and providing more comprehensive options than previously seen in
the individual market. One goal of the ACA
is to make shopping for health insurance
easier, but a secondary goal is to create plan
choice and stimulate competition through
health insurance exchanges. In most states
the insurance markets for individuals and
small businesses are highly concentrated.
For example, in thirty states a single insurance company accounts for more than half
the enrollees in the individual market, and in
most states one or two insurers dominate the
small-group market. One insurance company
may sell dozens of different plans in a given
market, so even though a market offers plan
choice, it still may not be competitive.
©2014 Project HOPE–
The People-to-People
Health Foundation Inc.
10.1377/hpb2014.11
Before the ACA was enacted, many policy
makers and advocates argued that allowing insurers to offer plans across state lines—despite
states’ different regulatory environments—
would spur competition and keep premiums
low. Under the law, this idea took the form of
the Multi-State Plan Program (MSPP). However, in practice, the MSPP is likely only to
offer additional plan choice to the exchanges,
not necessarily additional competition. Any
carrier that is in the position to apply to offer a multistate plan is likely already selling
plans on the individual market in nearly every
state. The Office of Personnel Management
(OPM), which administers health insurance
programs for federal employees and members
of Congress, administers the MSPP and will
contract with health insurance issuers to offer at least two plans in every exchange within
four years.
This policy brief updates an earlier brief
on the MSPP based on the experience of the
program during the first open enrollment period. This update examines how the concerns
initially raised by state insurance regulators
played out and whether the addition of the
multistate plans increased competition in
states with highly concentrated insurance
markets.
what’s the background?
States had several options for organizing and
operating their exchanges, also known as
health insurance Marketplaces. A state could
h e a lt h p o l ic y b r i e f
150+ plans
The Office of Personnel
Management entered into a
contract with the Blue Cross Blue
Shield Association to offer over
150 plans in thirty states and the
District of Columbia.
“The Multi-State
Plan Program
was included in
the Affordable
Care Act to
increase the
number of plan
choices offered
through the
exchanges.”
2
t h e m u lt i - s tat e p l a n p r o g r a m
establish and operate its own exchange, work
with other states to establish regional exchanges, or run an exchange in partnership
with the federal government. If a state did not
establish its own exchange, the Department
of Health and Human Services (HHS) operated a federally facilitated Marketplace for the
state. In the end, only sixteen states and the
District of Columbia elected to operate their
own exchanges; seven states entered into a
partnership with the HHS; and the remaining states let the federal government operate
the exchange.
oversight: Historically, insurance regulation has been a state responsibility, but for
multistate plans the OPM will play a greater
regulatory role. In addition to oversight at the
federal level, the insurance companies must
also be licensed by each state in which they offer a multistate plan. They will be subject to all
pertinent state laws and regulations, so long
as these rules do not conflict with the federal
government’s multistate plan requirements.
The OPM has a review and appeals process in
place to deal with any unforeseen conflicts between federal and state requirements.
Regardless of which entity runs an insurance exchange, there are two types in each
state—one for individuals and their families
and one for the employees of small businesses—with the option that states could combine
their individual and small-group exchanges.
As it does with the FEHB plans, the OPM
has the authority under the ACA to negotiate
premiums with participating multistate plan
issuers. However, under the FEHB program
the OPM has much more leverage for negotiations than under the MSPP. The FEHB program offers a large, stable pool of employees,
employees are eligible for a large employer
contribution covering the majority of the
premium, and premiums are deducted automatically from employees’ paychecks making
the FEHB program attractive to insurance
carriers.
progr am specifics: As mentioned, the
MSPP was included in the ACA to increase
the number of plan choices offered through
the exchanges. Under the law, the program
is administered by the OPM, drawing on that
agency’s more than fifty years of experience in
administering the Federal Employees Health
Benefits (FEHB) Program. An estimated eight
million federal workers and their dependents,
federal retirees, and members of Congress and
their staffs obtain health coverage through
the FEHB program, making it the nation’s
largest employer-sponsored health insurance
program. The OPM has been recognized for
its ability to negotiate relatively low rates with
insurance carriers, keep administrative costs
low, and offer government employees a wide
range of health plans and coverage options.
The OPM was required to contract with
health insurance issuers (at least one of which
must be nonprofit) to offer a minimum of two
plans in at least thirty states. At least one plan
in each state must not offer coverage for abortion services beyond cases of rape, incest, or
life endangerment.
The multistate issuers were required to operate in at least 60 percent of states on January 1, 2014, expanding to every state and
the District of Columbia within four years.
The insurance carriers were allowed to offer
plans in only parts of a state and expand to
the rest of the state in later years. Insurance
carriers were allowed to offer plans only in the
individual markets and expand into the Small
Business Health Options Program (SHOP) exchange markets over time.
blue cross blue shield chosen: In September 2013 the OPM announced that it had
entered into a contract with the Blue Cross
Blue Shield Association (BCBSA) to offer over
150 plans in thirty states and the District of
Columbia for individuals and their families.
While the contract is between the OPM and
the BCBSA, multiple independent insurance
carriers operate under the BCBSA umbrella
and offer multistate plans in local markets.
The OPM also certified multistate plan options for SHOP in three states and the District
of Columbia offered by the BCBSA. For 2015
at least five more states will have a multistate
plan option based on the phase-in schedule
outlined by the OPM.
what are the concerns?
A core issue was whether the MSPP would
genuinely increase competition among health
plans in highly concentrated markets. In addition, there was some uneasiness among state
regulators on how the implementation of the
MSPP would affect their exchange strategies
and whether the OPM’s regulatory authority would preempt their traditional role as
the primary regulator of health insurance
coverage.
competition: As noted above, the main goal
of the MSPP was to increase plan choice and
h e a lt h p o l ic y b r i e f
3
t h e m u lt i - s tat e p l a n p r o g r a m
competition. However, few insurance companies were in position to participate in the
MSPP. Issuers must be licensed in each state,
have sufficient provider networks and financial reserves, and have an adequate information technology structure in place to meet
enrollees’ needs nationwide. As a result, the
BCBSA, representing thirty-seven independent BCBSA companies, was selected to offer
plans through the MSPP. Many policy experts
expected that the OPM would contract with
at least two insurance carriers based on the
language in the ACA that says the OPM “shall
enter into contracts with health insurance issuers to offer at least two multi-state qualified
health plans through each exchange.” However, the term “multi-state plan” is defined
as the health plan offered under the contract
between the OPM and the MSPP issuer. Because the BCBSA is offering at least two plans
in each of the states, the requirements of the
law are met even though the OPM has a contract with only one issuer. The OPM did not
publicly state how many applicants applied to
the MSPP.
The selection of the BCBSA, although not
surprising, may not do much to increase plan
choice or competition in heavily concentrated
markets. In all but a handful of states, the BCBSA-affiliated plans are already the most dominant plans in the individual market. In 2012
the BCBSA-affiliated plans held 50 percent
or more of the market share in the individual
market in twenty-three states. In forty-two
states the BCBSA-affiliated plans were one of
the three largest plans in terms of enrollment
in the individual market. In a statement the
OPM claims that “multi-state plans are already
helping to drive competition and expand the
number of plan options in many states.” The
OPM goes on to say that without the MSPP,
consumers in Alaska, New Hampshire, and
West Virginia would have only one other type
of insurance plan to choose from. However,
at least in New Hampshire and West Virginia,
exhibit 1
Multi-State Plan Program Options For 2014, By State
Multi-State Plan Program option
No Multi-State Plan Program option
source Office of Personnel Management, http://www.opm.gov/healthcare-insurance/multi-state-plan-program/. note Multistate plan options are also available
through the Small Business Health Options Program (SHOP) exchanges in Alaska, Maryland, Virginia, and the District of Columbia.
h e a lt h p o l ic y b r i e f
42
states
The BCBSA-affiliated plans were
one of the three largest plans
in terms of enrollment in the
individual markets in forty-two
states.
“Lawmakers
drafting the
ACA included
language
requiring
multistate
plan issuers
to operate on
a ‘level playing
field’ with other
plans in the
exchanges.”
4
t h e m u lt i - s tat e p l a n p r o g r a m
the other insurance plan is also offered by the
BCBSA. In fact, in most states with a multistate plan, the local BCBSA carrier is offering
similar non-multistate plans. Offering a large
number of plans in an exchange does not necessarily mean the market is competitive if the
majority of enrollment is concentrated in one
issuer’s plans. Detailed enrollment data by
insurance carriers are not available, but the
BCBSA recently testified before the House
Energy and Commerce Committee that as of
April 1, 2014, more than 280,000 individuals had enrolled in a multistate plan. This is
a relatively small number compared with the
overall enrollment figure of eight million.
conflicting aims: As details emerged on
the MSPP, one concern was the potential for
conflict between federal regulators and state
exchanges that wanted to be active purchasers. Under the law, an issuer that enters into a
contract with the OPM in the MSPP is deemed
certified by state exchanges. A handful of
states took an active purchasing strategy in
their exchanges. In other words, instead of
allowing all plans that met certification requirements to participate in the exchange,
some states issued requests for proposals and
selected only those plans that submitted the
lowest bids or met other standards, such as
quality benchmarks. Of the states that took
active purchasing strategies, only two—California and New York—also had a multistate
plan in their exchanges. However, there were
no public reports of any conflicts between the
multistate plans and regulators in those two
states.
regulatory conflicts: Lawmakers drafting the ACA included language requiring
multistate plan issuers to operate on a “level
playing field” with other plans in the exchanges. For example, the law specifies that if
a multistate plan were exempted from federal
or state laws in any of thirteen specific categories, such as with respect to solvency and financial requirements, then other health plans
would not be subject to those requirements,
either. This provision was intended to ensure
that multistate plans are neither competitively
advantaged nor disadvantaged compared with
other private health plans in the exchange.
But because the OPM is the primary regulator of multistate plans, some state insurance
commissioners and consumer advocates expressed concerns that multistate plans might
not be subject to important state oversight and
consumer protection laws and regulations beyond the thirteen categories cited in the law.
This, in turn, could give multistate plans an
unfair competitive advantage over other insurance plans offered through the exchanges. The OPM stated its intention to provide a
dispute resolution process if a state wanted to
challenge the OPM’s ruling that a state law is
not applicable to a multistate plan issuer. Information on the dispute resolution process
was just made available in a March 2014 letter,
so it is too early to tell if any states will take
advantage of this process.
service areas and phased-in coverage:
As mentioned above, multistate plans must
offer a plan in at least 60 percent of the states
as of January 1, 2014, and then expand to all
states incrementally over four years. The OPM
determined that multistate plans will be able
initially to offer coverage in only parts of a
state and to expand coverage statewide over
time. However, many stakeholders objected to
allowing multistate plans to have only partial
coverage within a state, arguing that the plans
could gain an unfair economic advantage by
avoiding high-cost areas.
Acknowledging concerns for “cherry-picking,” the OPM says that it will review and
approve expansion plans to ensure that they
are not discriminatory—that is, they have not
been designed to exclude high-cost or medically underserved populations. It does not appear that the BCBSA avoided states that were
running their own exchanges when determining in which states to offer a multistate plan.
Multistate plans in nine states and the District
of Columbia are running their own exchanges. States without a multistate plan are more
heavily concentrated in the West, upper Midwest, and Southeast (Exhibit 1), so many rural
states did not benefit from additional plan options provided by the MSPP. There is no evidence that the BCBSA discriminated against
certain states. In about half of the eleven states
in which it did not have a multistate plan option this year, the BCBSA did not have a large
market share based on 2012 enrollment data
in the individual market. It appears the BCBSA offered the MSPP in markets where it had
a strong existing presence.
what’s next?
Multistate plans’ 2014 experience will inform their future decisions about enrollment,
premiums, and outreach. The OPM recently
issued the 2015 Call Letter to interested applicants for the MSPP. This annual letter sets
out the requirements for applicants and outlines the OPM’s priorities. The OPM states
h e a lt h p o l ic y b r i e f
t h e m u lt i - s tat e p l a n p r o g r a m
that it is interested in “building a more robust [multistate plan] brand identity” across
states. However, the OPM says it needs to balance consumers’ desire for consistent plans
across states with issuers’ needs for flexibility to vary their plan offerings from state to
state to meet their business needs. Most of
the requirements of the Call Letter do not
differ from the requirements for all qualified
health plans stipulated by HHS. One exception is the requirement that multistate plan
5
issuers have a process in place to allow enrollees to receive out-of-network care in certain
instances without added cost sharing or balance billing. Qualified health plans are “encouraged” to have such processes in place, but
multistate plan issuers “must” do so. Finally,
in addition to offering a multistate plan in at
least five more states, the OPM hopes to add at
least one more multistate plan issuer, which
could increase the number of plans available
in many states. n
About Health Policy Briefs
Written by
Sarah Goodell
Health Policy Consultant
Editorial review by
Sabrina Corlette
Research Professor
Health Policy Institute
Georgetown University
Jane Hyatt Thorpe
Associate Research Professor
School of Public Health and
Health Services
George Washington University
Ted Agres
Senior Editor
Health Affairs
Rob Lott
Deputy Editor
Health Affairs
Health Policy Briefs are produced under
a partnership of Health Affairs and the
Robert Wood Johnson Foundation.
Cite as:
“Health Policy Brief: The Multi-State Plan
Program,” Health Affairs,
Updated May 29, 2014.
Sign up for free policy briefs at:
www.healthaffairs.org/
healthpolicybriefs
resources
Jost T, “Implementing Health Reform: The MultiState Plan Program Final Rule,” Health Affairs Blog,
March 2, 2013.
Kaiser Family Foundation, “Market Share and Enrollment of Largest Three Insurers—Individual Market,” 2012.
Office of Personnel Management, “Multi-State Plan
Program Issuer Letter,” February 4, 2014.
Office of Personnel Management, “Patient Protection
and Affordable Care Act: Establishment of Multistate
Plan Program for Affordable Insurance Exchanges,”
Federal Register 78, no. 47, March 11, 2013.
Riley T, Hyatt Thorpe J, “Multi-State Plans Under
the Affordable Care Act,” School of Public Health
and Health Services, George Washington University,
April 2012.