Health Reform 2010: ROLE OF HEALTH INSURANCE

EXCHANGESDecember 9, 2010

Jennifer CooperLegislative Director, National Indian Health Board

(JCooper@NIHB.org)

Doneg McDonoughConsultant to National Indian Health Board

(DMcDonough@NIHB.org)

NIHB Comments to OCIIO on Exchanges

The National Indian Health Board (NIHB) submitted detailed comments to the HHS Office of Consumer Information and Insurance Oversight (OCIIO) on October 4, 2010 http://www.nihb.org/indianhealthreform/docs/12082010/4_6_NIHB%20response_E

xchange.pdf

In response to the OCIIO / Indian Health Service (IHS) November 12 letter initiating Tribal consultation on Exchange standards, NIHB is preparing additional comments to OCIIO/IHSTribes and other organizations are encouraged to provide comments to OCIIO/IHS by December 31, 2010

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Key Exchange-related Issues for AI/AN

Need for on-going Tribal consultations by Federal and State governments on Exchange standards and operationsNeed uniform definition of “Indian” to effectively implement the AI/AN cost-sharing protections and the exemption from the requirement to purchase coverageEstablish standards for “qualified” health plans requiring I/T/U inclusion in health plan provider networksEstablish mechanism to permit group payment of premiums by Tribal sponsors to health plans offered through an ExchangeCreate a mechanism (such as an “Indian Addendum”) to inform and enforce Federal requirements specific to Indian Country

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Key AI/AN-specific provisions

Indian-Specific Exchange ProvisionsAI/AN Enrollees: AI/AN at or below 300% FPL will have no cost-sharing under a plan offered through an ExchangeProviders Serving AI/AN: Providers serving AI/AN will receive full payment (including cost-sharing amount) from Exchange-offered plansPlans Serving AI/AN: Health plans serving AI/AN and offered through an Exchange will receive an additional payment from HHS to compensate for the elimination of cost-sharing by AI/AN enrollees

Indian-Specific Provisions under All PlansI/T/U Clients: No cost-sharing by AI/AN clients for services provided by IHS, Tribal or urban Indian program, or CHSI/T/U Providers: All I/T/U providers are able to bill all health plans for reimbursement for services rendered to AI/AN

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Primary Functions of Exchanges

Section 1311(d)(2) of ACA* IN GENERAL.—An Exchange shall make available

qualified health plans to qualified individuals and qualified employers.

Functions of Exchanges Certify health plans that are available through an

Exchange Provide information on health plan options to enrollees Facilitate selection and enrollment in a health plan Determine eligibility for the premium and cost-sharing

assistance for enrollees Conduct risk adjustment function across plans

*ACA refers to the Patient Protection and Affordable Care Act of 2010

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Why is accessing an Exchange important?

As with the general population, under the ACA premium and cost-sharing protections for AI/AN are available only for AI/AN – who are enrolled in the individual market (i.e., non-

employer sponsored coverage) in an Exchange who have household income of not more than 400

percent of the federal poverty levelFor AI/AN with household income of not more than 300 percent of the federal poverty level, “the issuer of the plan shall eliminate any cost-sharing under the plan”Also, Exchanges hold out a potential for greater competition and choice in the health insurance market

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Eligibility Thresholds for Assistance through an Exchange

Federal poverty level thresholds

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Persons in Family 100% FPL 300% FPL 400% FPL

1 $10,830 $32,490 $43,3202 $14,570 $43,710 $58,2803 $18,310 $54,930 $73,2404 $22,050 $66,150 $88,2005 $25,790 $77,370 $103,160

Alaska + 25%Hawaii + 15%

* http://aspe.hhs.gov/poverty/10poverty.shtml

2010 Poverty Guidelines ("Federal Poverty Level")*

Premium Protections through an Exchange

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Income Level

Initial Premium %

in Tier

Final Premium %

in TierUp to 133% 2.0% 2.0%133% - 150% 3.0% 4.0%150% - 200% 4.0% 6.3%200% - 250% 6.3% 8.1%250% - 300% 8.1% 9.5%300% - 400% 9.5% 9.5%401+% no limit no limit

Income Level Single Family (of 3)133% $432 $731150% $650 $1,099200% $1,365 $2,307250% $2,180 $3,685300% $3,087 $5,218350% $3,601 $6,088

Maximum Enrollee Premium Contributions in Exchange (percent of income; 2010 poverty levels)

Maximum Enrollee Premium Contributions in Exchange (dollar amount; 2010 poverty levels)

General enrollee premium protections (annual)

Cost-sharing Protections through an Exchange

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General enrollee cost-sharing protections (annual)

Income LevelActuarial Value

of Coverage Single Family

Maximum out-of-pocket (non-premium) costs*0 - 100% 100% nominal nominal101 - 150% 94% $1,980 $3,960151 - 200% 87% $1,980 $3,960201% - 250% 73% $3,000 $6,000251% - 400% 70% $3,960 $7,920400% + $5,950 $11,900

Average out-of-pocket (non-premium) costs**0 - 100% minimal minimal101 - 150% $282 $807151 - 200% $612 $1,748201% - 250% $1,271 $3,630251% - 400% $1,412 $4,034

* Maximum out-of-pocket costs are 2011 figures which will be increased annually by the average increase in premiums nationally for the prior year.

** Average out-of-pocket costs calculation is extrapolated from the cost of the average employer-sponsored health plan offered in 2010 as reported by the Kaiser Family Foundation.

Cost-Sharing Protections through an Exchange for Persons at or Below 400% of FPL

Value of Premium and Cost-sharing Assistance through an

Exchange

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$0

$2,000

$4,000

$6,000

$8,000

$10,000

$12,000

$14,000

$16,000

Minimum Employer Qualifying Coverage (ACA) Family (of 3) in Exchange at 250%

FPL (ACA)

$5,371 $8,141

$4,349

$3,685

$5,378$3,630

Comparison of Premium and Cost-Sharing Costs: Illustration of Minimum Employer-Sponsored Coverage versus Exchange Coverage

(Family of 3 at 250% FPL)

Enrollee cost-sharing

Employee/enrollee premium

Employer/sponsor premium

Total: $15,098 Total: $15,456

Only “Qualified” Health Plans to be Offered through an Exchange

The Secretary of HHS is to establish criteria for the certification of qualified health plansThree of the requirements for “qualified” health plans to be offered through an Exchange (under ACA Section 1311(c)(1)) are -- (A) meet marketing requirements (B) ensure sufficient choice of providers (C) include within health insurance plan networks those essential

community providers, where available, that serve predominantly low-income medically-underserved individuals

Access to I/T/U (Indian Health Service, Tribes and Tribal Organizations, and urban Indian organization) providers through health plans offered through an Exchange is essential The NIHB recommends that health plans be required as a condition of

being certified as a “qualified” health plan to include I/T/U providers in networks

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Access to an Exchange by “Qualified” Individuals

Individuals without access to “affordable” employer-sponsored coverage may enroll in an Exchange “Unaffordable” is defined as requiring an individual to spend more

than 9.5% of income on premiums for employer-sponsored coverage

– Employer-sponsored health plan to have at least a 60 percent actuarial value (i.e., plan covers at least 60 percent of average health care costs)

These individuals would be eligible for premium and cost-sharing assistance through an Exchange

Wyden Provision: Individuals with income below 400% of poverty level can enroll through an Exchange if they would have to spend more than 8% of income on premiums for an employer-sponsored plan These individuals would NOT be eligible for premium and cost-

sharing assistance in Exchange

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“Qualified” Employers Can Purchase Coverage for Employees

through an Exchange

Access to the Exchanges is phased-in for employers, beginning with employers with up to 100 employees (or 50 employees at state option) in 2014

States may operate a separate “SHOP” Exchange for employers or combine it with the individual market

For Tribal employers, the new Section 409 of the Indian Health Care Improvement Act provides a pre-2014 Exchange-like option through the Federal Employees Health Benefits Program

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Requirements on Employers

Tribal governments are NOT exempt from the employer requirements Most of the employer requirements take effect Jan. 1,

2014

Employers with fewer than 50 full-time equivalent (FTE) employees are exempt from most requirementsEmployers with more than 50 FTE are required to either -- Offer “affordable” coverage or Make per employee payments to an Exchange

– No payments are required for part-time employees (average < 30 hours per week)

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Employer’s Decision Impacts an Individuals Access to an

Exchange

For employers subject to employer requirements (50+ FTE) –

Employer offers “affordable” coverage Plan covers at least 60% of expected costs (60% actuarial value) Employee’s share of premium is not more than 9.5% of income

Employer does not offer coverage Pays $2,000 to Exchange for every full-time employee beyond the

first 30 full-time employees

Employer offers coverage deemed “unaffordable” to some Plan does not cover 60% of expected costs and/or employee’s

share of premium is more than 9.5% of income Employer pays $3,000 per employee enrolling through Exchange

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Exchange is Anticipated to Play a Central Role in Reducing Number

of Uninsured

Nationally, number of uninsured to drop by more than half

change netMedicaid & CHIP 40 17 57Employer 150 -3 147Nongroup & Other 27 -5 22Exchanges -- 21 21Uninsured 50 -30 20Total 267 0 267

* Source: Congressional Budget Offi ce letter to Speaker Pelosi, dated March 20, 2010.

20162010

Source of Coverage

Projected Impact on Health Insurance Coverage under ACA*(millions of non-elederly people)

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For AI/AN today, roughly 1/3 do not have comprehensive health

insurance coverage

For AI/AN, 16% have no insurance and another 16% have only IHS

41%

28%

16%

16%

Source of Health Insurance Coverage for Nonelderly American Indians and Alaska Natives, 2006-2007*

Employer

Medicaid and Other Public

IHS

Uninsured

* Source: Race, Ethnicity and Health Care, “A Profile of American Indians and Alaska Natives and Their Health Coverage”, Kaiser Family Foundation, September 2009. Figures may exceed 100% due to rounding.

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Most Uninsured AI/AN to Benefit from Premium and Cost-Sharing

Protections

Uninsured AI/AN are primarily lower-income

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0

100,000

200,000

300,000

400,000

500,000

600,000

Total = 527,000

231,880 / 44%

73,780 / 14%

57,970 / 11%

126,480 / 24%

36,890 / 7%

Nonelderly American Indians and Alaska Natives Who Are Uninsured or Only Have IHS by Poverty Level, 2006-2007*

400%+

200 - 399%

150 - 199%

100 - 149%

< 100%

* Source: Race, Ethnicity and Health Care, “A Profile of American Indians and Alaska Natives and Their Health Coverage”, Kaiser Family Foundation, September 2009