business insurance | disb | doing business 2.0

DoingBusiness2.0: Business Insurance

Philip Barlow, Associate Commissioner

D.C. Department of Insurance,

Securities and Banking

May 15, 2013

Small Group Health Insurance Under

Health Care Reform

1. Goals of the Health Care Reform

2. How the DC Marketplace Exchange Will Help Small

Businesses

3. What’s New as a Result of Health Care Reform?

4. Marketplace Exchange

5. Questions

Presentation Overview

2 | DoingBusiness2.0: Business Insurance

• Provide access to needed medical care and financial

security

– Health insurance must work for you when you are

sick not just when you are healthy

• Create a real private market where individuals and

small businesses are in the driver’s seat

– Insurers compete based on quality and efficiency

(Marketplace Exchanges)

• Provide more options and better prices

Goals of the Health Care Law


• Providing health insurance for employees is the most expensive benefit offered by employers. It is also a useful benefit to help attract and retain good employees.

• Health care reform includes several benefits for small business owners.

• Under the federal health care reform legislation, starting in 2014 many businesses will be required to offer health insurance to their employees or pay a fine.

How the DC Marketplace Exchange Will Help Small Businesses


More Choices

More Options

Real Price Competition

Better Benefits



1. MORE CHOICES

In the current marketplace, most small businesses cannot offer their employees a choice of health insurers and choice of policies. The Marketplace Exchange creates new options for small businesses to offer their employees choices of insurers and policies and employers can decide what kind of choices to provide.

– The Marketplace Exchange has invited all carriers to participate in the marketplace and has placed no limits on the number of plans they offer as long as they meet the minimum requirements;

– Carriers can offer additional benefits – beyond the essential health benefits – for employers and individuals who want them; and

– All grandfathered plans are exempt.



2. MORE OPTIONS

Today, most small businesses can offer policies from only one carrier. The Marketplace Exchange gives small businesses new options including the ability to offer:

– A choice of all carriers and all policies in a metal level (i.e., Silver);

– A choice of plans offered by one carrier in two contiguous metal levels (i.e., Bronze and Silver); or

– The traditional model of one carrier and one policy



HEALTH CARE POLICY METAL LEVELS

• The four metal levels of coverage are based on “actuarial value.” Actuarial value indicates the percentage of health costs that, for an average population, would be covered by the health plan. The four levels provided in the ACA are:

• Bronze: 60%

• Silver: 70%

• Gold: 80%

• Platinum: 90%

In other words, for a bronze plan, the health plan would cover 60% of the cost for an average population and enrollees (on average) would cover 40%. For a platinum plan, an average individual would pay 10% out of pocket for their covered benefits and the plan would pay 90%.



3. REAL PRICE COMPETITION

National studies indicate small businesses pay an average of 18% more than larger companies. The D.C. Marketplace Exchange will help slow the growth in premiums and create more stability in future rates by:

– Creating one big marketplace for small group policies will combine the purchasing power of small businesses by enlarging the pool of covered lives;

– Insurers will be required to display their prices, benefits, and other important information in one, easy-to-use website, allowing employers to compare prices and products and choose those that best fit their needs and budgets; and

– Providing a transition that allows small employers to renew existing coverage in the current market before moving to the Exchange Marketplace in 2015.



4. BETTER BENEFITS

Some small group policies sold today lack the comprehensive benefits that employers want to protect their workers’ health. The Marketplace Exchange will ensure policies will include the kind of comprehensive coverage employees need.

– Parity of treatment of mental health and substance use disorders without day or visit limitations;

– Inclusion of one or more drugs in each category of covered medications in a plan’s drug formulary; and

– Defining covered habilitative services to include treatment of autism spectrum disorder.



NEW BENEFITS

• All individual and small group policies must cover

“essential health benefits” (EHB)

• Policies also must fully cover (with no cost-sharing)

recommended preventive care

• Coverage for behavioral health must be equal to

coverage for physical health (i.e., parity)

• Annual and lifetime limits on EHB prohibited

What’s New as a Result of Health Care

Reform?


ESSENTIAL HEALTH BENEFITS

• Doctor visits

• Hospital care, including ER visits

• Maternity and newborn care

• Prescription drugs

• Mental health and substance abuse services

• Lab services

• Preventive and wellness benefits

• Rehabilitative and habilitative services and devices

• Dental and eye care for children


Reform?


NEW RIGHTS

• Private insurance reforms

– Access to private health insurance guaranteed

– Pre-existing conditions must be covered

– Rates based on health or claims, gender,

occupation/industry, and tobacco usage are

prohibited; age limited to 3 to 1

– Can’t charge small businesses higher rates

– Can’t cancel/rescind coverage


Reform?


BETTER QUALITY

• The legislation improves the quality of coverage by:

– Requiring 100% parity for mental health and

substance abuse services without limits on visits or

days;

– Not allowing substitution of benefits within the EHB

(this protects against weakening coverage);

– Ensuring essential prescription drug coverage; and

– Clarifying that treatment for applied behavioral

analysis for autism is covered under habilitative care


Reform?


What is the Marketplace Exchange?

• A one-stop shop to compare plans, choose coverage, and pay

premiums

• Transparent marketplace with easy-to-understand information

about health plans

Who is Eligible to Use an Exchange?

• Small businesses (up to 50 employees) and their employees

How is Coverage Paid for?

• One payment for all coverage made to the Marketplace.

• Small businesses are eligible for federal tax credits on a

sliding scale to ensure affordability.

Marketplace Exchange


Will the Marketplace change the way small businesses

provide health insurance for employees? Yes and No

YES

• Employers will have greater flexibility to offer multiple

carriers and plans to their employees.

• Businesses will get the benefit of being pooled with other

companies for greater purchasing power.

• Businesses will have access to all plans available in the

Marketplace.

• Greater transparency in comparing plans and options.



Will the Marketplace change the way small businesses

provide health insurance for employees? Yes and No

NO

• Businesses can continue to use the agent or broker of

their choice to help them select coverage.

• The same carriers that provide employer group insurance

now will still be offering coverage in the Marketplace (with

some new carriers as well).

• Even if employees choose multiple carriers, the business

will still just deal with one entity (Marketplace Exchange)

for payment and administrative issues.



Questions?


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