Update on Massachusetts Health Care Reform

Transcription

1 Update on Massachusetts Health Care Reform Environment for Enactment Timeline for implementation Key Provisions Enrollment Update Brian M. Quigley America's Health Insurance Plans

2 Historical Context Potential loss of MA Medicaid Waiver- $385 million a year in federal funds. CMS said that they wanted to fund coverage, not uncompensated care. Proposed health care constitutional amendment-an obligation and duty on the state legislature and executive officials to implement laws that will ensure that no Massachusetts resident lacks comprehensive, affordable, equitably financed health insurance coverage for all medically necessary preventive, acute and chronic health care and mental health care services, prescription drugs and devices

3 POLITICAL ENVIRONMENT: Massachusetts has been considering approaches to covering the uninsured for many years Including the Dukakis employer mandate passed before he ran for President in Never implemented. In 2005, a number of factors came together to create a Perfect Storm for action: The pending Constitutional amendment that would guarantee the right to health insurance. It had already passed the legislature once and needed only one more vote to go on the Ballot. It would force the legislature to act and ultimately cede the issue to the Courts. ( See Forced busing) several Citizen ballot initiatives were circulating that would impose employer mandates and create universal coverage. CMS says that MA will lose $385 million in Federal money unless it has a coverage plan in place by 7/1/06

4 REGULATORY ENVIRONMENT PRE-REFORM MA has an Uncompensated Care Pool, funded each year by a $160 million assessment on payers and a $160 million assessment on the hospitals. These funds then go to hospitals to reimburse for Uncompensated Care. This was a critical factor for the vast majority of businesses, who already provided coverage and were paying this assessment, supporting the employees of competitors who did not provide coverage. A matter of fairness when they were asked to support the bill s assessment on non-providing employers. MA already had guaranteed issue and tight adjusted community rating in both non-group and small group markets. Made the individual mandate and the merger of markets less dramatic than in less regulated states.

5 Timeline to passage CMS tells Romney administration to create a coverage plan or lose the money, by 7/1/06 Early Romney introduces his bill, with an individual mandate, the connector, merger of non-group and small group and significant product flexibility Mid The Senate President introduces his bill, with no individual mandate, with product flexibility and a mild surcharge on employers who do not provide coverage Later in The Speaker introduces his bill, with an individual mandate, the connector, merger of non-group and small group and very little product flexibility. He adds a much stronger employer mandate. November, Both houses pass their bills and they fight in conference until March, With the CMS deadline looming, they finally pass a bill, much closer to the House version, with a lower employer penalty. April, Romney signs the bill, vetoing the employer assessment and is overridden.

6 Chapter 58 Implementation 4/12/06- Enactment 10/1/06- Phase I: Commonwealth Care- Enrollment for full subsidy began 12/31/06- NonGroup/Small Group Merger Report 1/1/07- Phase II: Commonwealth Care- Enrollment for partial subsidy began 1/16/07-Commonwealth Choice Filings- Carriers respond to RFP 3/8/07- Connector Board chooses 6 carriers to offer Commonwealth Choice Decisions 5/1/07- Open Enrollment begins on Commonwealth Choice products 6/5/07- Connector Board approves Minimum Creditable Coverage and Affordability Regulations 7/1/07- Individual Mandate and merger of nongroup and small group markets goes into effect

7 Major Provisions 1. Connector 2. Commonwealth Care 3. Medicaid Expansion 4. Commonwealth Choice 5. Individual Mandate 6. Small/Non-Group Merger 7. Quality and Cost Council

8 Commonwealth Care Subsidized Coverage 0 150% FPL Opened October 2006 $0 Premium Limited co-pays 150%+ 300% FPL Opened January 2007 Sliding scale subsidies Varying co-pays & premiums

9 Commonwealth Choice Commercial coverage No subsidies Six domestic carriers selected

10 Minimum Creditable Coverage Minimum coverage level to satisfy the Individual Mandate Criteria: No annual or per-sickness benefit maximum allowed No benefits can be based on an indemnity fee schedule Annual deductibles are capped at $2,000 for an individual and $4,000 for a family All products with upfront deductibles are required to cover a certain number of preventive care visits prior to the deductible (min. of 3 for individuals policies, 6 for family coverage) Maximum out-of-pocket spending for in-network services is capped at $5,000 individual and $10,000 family per year Any out-of-pocket maximum must include the upfront deductible, most coinsurance, and any service that requires a co-payment of $100 or more Must include coverage for prescription drugs; may include a separate deductible not to exceed $250 for individual coverage and $500 for family coverage

11 Affordability Standards Determines who is subject to the Individual Mandate Criteria: Individuals eligible for Commonwealth Care are deemed to be able to afford health insurance Affordable premiums for individuals up to 300% FPL consistent with Commonwealth Care Individuals with annual income over $50,000, married couples without children with annual income over $80,000, and families with annual income over $110,000 are deemed to be able to afford health insurance All others will be deemed to be able to afford health insurance if they are eligible to purchase insurance though employer for an amount not exceeding levels in the Affordability Schedule

12 Individual Mandate Effective July 1, 2007 All MA residents are must have creditable coverage, unless they get a waiver 2007: Loss of state personal income tax exemption 2008: Excise of 50% of the minimum premium Waivers available based on the Connector s Affordability standards

13 Merger of Small and Non Group Markets Consultant study mandated by the law estimated 1% - 1.5% increase for small group rates in December, 2006 Insurers consultant study done prior to passage estimated as much as an 8% increase for small group rates Estimated 15% decrease for nongroup rates Much will depend on the numbers who still chose to not buy or get a waiver from the mandate, as to the level of anti-selection against the small group market State Study done in December, 2006 but the affordability standards to determine the waivers was not done until 6 months later.

14 Enrollment Next Steps Implementation of the Individual Mandate Medicaid Waiver Renewal Health Care Safety Net Fund Changes COST, COST, COST

15 Key Dates May 1- Open enrollment began on commercial products for July 1 effective dates July 1- The Individual Mandate went into effect, as well as the merger of the individual and small group markets January 1, All plans must satisfy the minimum creditable coverage standards to qualify under the mandate

16 Enrollment Update- There are 57,000 new Medicaid enrollees newly eligible under the law. To date, about 105,000 people have been enrolled in Commonwealth Care, the subsidized program. Those newly insured without subsidies grew by an estimated 27,000 in the period leading up to the July 1 implementation of the reform law of those purchased through the Connector. About 355,000 Massachusetts residents remain without insurance, a 10% decrease from the prior year. 5.7% of the population is uninsured

17 Lessons from Massachusetts and Beyond It takes a long time to reach political consensus Without a catastrophic event like the loss of federal funds, consensus may be impossible on such sweeping reform No state has come close to enacting as comprehensive an approach since MA passed in April of last year Implementation of such a complex program takes even longer Subsidies work. 105,000 newly insured in Commonwealth Care in less than a year. In states without the political and regulatory factors that existed in MA, risk pools remain a very viable option.

18 Differences in Individual Market Regulation Clear Impact on Affordability Individual market/average annual premium (2004) MA (GI,CR) CT (No GI or CR, risk pool) Single $ 5,257 (US $2,268) Single $2,963 Family $10,126 (US $4,424) Family $5,660

19 Access Proposals in the States At least 25 States have proposals Approaches: Exchanges/Connectors Premium Subsidy Programs High Risk Pools/Reinsurance Mechanisms Medicaid/SCHIP Expansion Merger of Individual and Small Group Markets Expansion of Dependent Coverage Purchase into State Health Plan Rating Restrictions

20 AHIP POSITION ON HIGH RISK POOLS Give individuals without coverage access to the high risk pool. The purpose of a high risk pool is to provide coverage of last resort to individuals, who, due to their health status, could not otherwise purchase health insurance. Only cover individuals without other coverage. Individuals who would be eligible for coverage under an employer s plan should not be referred to a high risk pool. Appropriate safeguards should be incorporated into the high risk pool s eligibility requirements to guard against dumping from employer plans.

21 Use proven private sector techniques to control costs and ensure quality of care. Greater use of managed care is critical to keeping high risk pool costs under control. Reflect benefits offered in the private individual health insurance market. Subsidize pool losses using a broad base. Therefore, states should subsidize high risk pool losses either from state general revenue or from an earmarked tax unrelated to health insurance coverage. Another broad-based approach to subsidizing pools would place assessments on health care services or providers. Under this approach, both employers who self-fund their employees health coverage and those who purchase health insurance for their employees would help fund coverage for the pool participants.

22 Issues for Consideration: Funding- Can self insured plans be assessed for Pool losses? Policy design, controlling cost- Statutory Reimbursement rate to providers. CT Special Health Care Plan example of 75% of Medicare reimbursement. This year the legislature increased eligibility for this plan from 200%FPL to 300% FPL.