Market Stabilization Workgroup Meeting 2: What has been accomplished and what is at risk? April 25, 2018

Transcription

1 Market Stabilization Workgroup Meeting 2: What has been accomplished and what is at risk? April 25,

2 RI Market Stability Workgroup: Eight Week Syllabus Topic(s) for Discussion Meeting 1 Introductions + Setting the Stage Meeting 2 What has been accomplished + What is at risk in RI Meeting 3 National Survey of State Actions + Considerations Meeting 4 Policy Deep-Dive 1: the stick approach Meeting 5 Policy Deep Dive 2 : the carrot approach Meeting 6 Overview of Factors Influencing Premiums Meeting 7 Moving Toward Final Recommendations Meeting 8 Reaching Final Recommendations Meeting Date Wednesday, April 18 Wednesday, April 25 Tuesday, May 1 Tuesday, May 8 Tuesday, May 15 Tuesday, May 22 Tuesday, May 29 Tuesday, June 5 2

3 Today s Agenda Purpose of Today s Meeting Create a common understanding of where we are today how have the markets changed over time and what is the status of market stability? Establish a uniform set of facts as we move forward into policy discussions. Today, we ask that you Engage in the data: what do we know? Are the facts clear? What else do we need to know to be able to assess proposals against a solid starting point? Agenda for Today Overview of RI Insurance Markets: Pre & Post ACA Starting Point: Current Market Stability Recent Federal Action: Implications for Insurance Markets and Potential Impact Timeline 3

4 Rhode Island Insurance Market Overview RI Insurance Market Overview Uninsured 4% RI Private Insurance Market Medicaid 27% Medicare 15% Private Insurance 53% Small Group 56,205 9% Large Group 120,463 20% Individual Market 43,545 7% Self Insured 384,066 64% Source: RI HIS 2016 Source: OHIC All Carriers Enrollment Report, As of April 2017, RI Business, regardless of employee residence 4

5 ACA Impacts RI Insurance Market Enrollment: Pre and Post ACA Pre-ACA (2012) ACA Implementation Post-ACA (2016) 574,863 Private Insurance: 57% 553, ,036 Private Insurance: 53% 264, ,363 Medicaid: 18% 182, , , ,162 Medicare: 14% 112,774 49,591 43,609 Uninsured: 11% Source: RI HIS 2012, 2015, 2016 Medicaid: 27% Medicare: 16% Uninsured: 4% 5

6 ACA Impact: Private Insurance Enrollment Trends RI Private Insurance Enrollment: Annual Growth Rate: -8.1% (Group), -7.8% (Total Private) ACA Implementation Annual Growth Rate: -0.8% (Group), +0.4% (Total Private) 2017 Private Insurance: 604, ,929 Self-Insured 384,066 Self-Insured: 64% 173,546 89,318 Large Group Individual Small Group 120,463 56,205 14,817 43,545 TOTAL Group 685, , , , , , ,734 Private 700, , , , , , ,279 Large Group: 20% Small Group: 9% Individual: 7% Source: OHIC All Carriers Enrollment Report, As of April 2017, RI Business, regardless of employee residence Medicaid lives are by fiscal year, not calendar year, from RI Medicaid Monthly Managed Care Report, 3/2018 6

7 ACA Impact: RI Individual Market Enrollment ( ) Pre-ACA Regulation Medical Underwriting (Basic + Preferred Pool) Age + Gender Rating Cross subsidization Single carrier Post -ACA Carrot + Stick: Mandate + Subsidy Single Pool (no medical underwriting) Age Rating Carrier Choice 42,550 47,033 43,545 45,059 32,247 NHP 2% NHP 51% 14,817 15,809 BCBS 100% 16,318 BCBS 98% BCBS 49% Source: OHIC All Carriers Enrollment Report, As of April 2017, RI Business, regardless of employee residence 2018 enrollment to date based on Off Exchange April 2017 data plus On Exchange data from HSRI Legislature Report, March

8 Individual Market Overview Total 2018 Enrollments: 45,059 (7% of Private Insured) Off Exchange 12,981 29% On Exchange 32,078 71% 71% On Exchange 29% Off Exchange Unsubsidized 18,434 41% Subsidized 26,625 59% 59% Subsidized 41% Unsubsidized BCBS 22,192 49% NHP 22,867 51% 51% NHP 49% BCBS Source: (1) Off Exchange: OHIC All Carriers Enrollment Report, April 2017; (2) On Exchange: HSRI Legislature Report, March

9 For Discussion Does everything we have discussed thus far make sense - are any clarifications needed? Do you agree with what is represented here? Do you have any thoughts on the shift of lives across coverage categories that we should address? 9

10 Starting Point: Are the Markets Stable? Members Access and choice Affordability protections and cost-sharing Benefits Employers Premiums Employee participation Benefits Providers Payment rates Uncompensated care Carriers Carrier participation Financial stability 10

11 Small Group Market Stability: Moderate Premiums Average annual premium increase : 4.9% Enrollment Enrollment has shown continuous declines and needs to be watched, though declines pre-dated the ACA Member Choice Provider Stability Carrier Stability Four carriers in RI s small group market Variety of plan/benefit structure options available Decline in uninsured => reduction in uncompensated care Rising member cost sharing, bad debt Provider payment rates under pressure: Medicaid Expansion, commercial rate regulation RI s commercial carriers all experienced positive net margins in 2017 Sources: Premium increase average based on OHIC annual rate summary; carrier averages are enrollment weighted by year based on enrollment distribution by carrier from 2018 rate filing submissions, and evenly averaged for the multi-year period Average Individual Market MLR, (NHP and BCBSRI average, evenly weighted); Individual Market Rate Filings 2017, OHIC website. Rate Template Part 1, Section A2 Completed and Incurred 11

12 Individual Market Stability: Precarious Premiums Average annual premium increase : 4% Study of 21 states: RI saw the lowest average annual % change in the cost of its benchmark silver plan Enrollment Member Choice Provider Stability Carrier Stability Enrollment grew substantially in 2014, then stable High annual turnover (~30%) Federal actions more directly threaten the Individual Market Two carriers offering plans on the Exchange Decline in uninsured => reduction in uncompensated care Rising member cost sharing, bad debt Provider payment rates under pressure: Medicaid Expansion, commercial rate regulation Average Individual Market MLR for NHP and BCBS combined was 77% in 2014, 85% in 2015 and 2016 Compares favorably to national Individual Market MLR averages (86% in 2014, 92% in 2015, and 93% in 2016) Varies considerably by carrier Sources: Premium increase average based on OHIC annual rate summary; carrier averages are enrollment weighted by year based on enrollment distribution by carrier from 2018 rate filing submissions, and evenly averaged for the multi-year period KFF Study: An early look at 2018 premium changes and insurer participation on ACA Exchanges, August 10, 2017 Turnover: In 2017, roughly 30% of Exchange users churned on or off of coverage over the course of the year Average Individual Market MLR, (NHP and BCBSRI average, evenly weighted); Individual Market Rate Filings 2017, OHIC website National Individual Market MLR: CMS, Summary of 2016 Medical Loss Ratio Results 12

13 What Might Happen: If Healthy People Leave As healthier people leave the market, premiums rise, causing more people to leave the market and triggering a feedback loop Source: Washington Post, Wonkblog Analysis, 6/23/17 13

14 Insurance Fundamentals Where does your premium dollar go? 80% Medical Expenses 18% Operating Costs 3% Net Margin Why does population mix matter? % % Enrollment, 20% % Cost, 83% A small share of the population is responsible for a large share of health care spending. Source: Premium Dollar AHIP, Where Does Your Premium Dollar Go?, March 2, 2017 Population mix - KFF, How do health expenditures vary across the population?, December 1, 2017 (contribution to total health expenditures by individuals, 2015) 14

15 Who is Impacted? Premium increases resulting from adverse selection will most significantly impact the roughly 40% of Rhode Island s Individual Market that is unsubsidized. Subsidized individuals do not feel the full impact of rate increases as subsidies increase with rising premiums Advanced premium tax credit (APTC) tied to benchmark plan benchmark plan => subsidy amount Subsidized individuals have an increased subsidy as a result of an increase in the benchmark plan premium and thus do not feel the full impact of rate increases RI Individual Market (2018)* Total Enrollments: 45,059 Subsidized Enrollments 26,625 59% Unsubsidized Enrollments 18,434 41% There is no mechanism protecting unsubsidized individuals from the impact of rate increases these individuals experience the full effect of rate increases. Note: The second lowest cost silver plan (SLCSP) functions as the benchmark plan in calculating subsidy eligibility Source: *Off Exchange: OHIC All Carriers Enrollment Report, April 2017; On Exchange: HSRI Legislature Report, March

16 Member Impact: Unsubsidized family of four in SLCSP* Based on CBO/JCT estimates of the impact of individual mandate repeal, premiums in the Individual Market will increase by 27% relative to 2018 premiums by Max. Premium OOP $14,700 $11,950 $15,217 $18,719 HH Income: $100,000 Medical Expense 27% vs. HH Income 8% HH Income: $107, Medical Expenses: % HH Income Premium Only: 14% Premium + Max OOP: 32% *Based on a household with four members, ages 40, 35, 15, & 12 with annual 2018 HH income of $100,000 (w/ 2.5% annual COLA to 2021); assumes family is enrolled in the second lowest cost silver plan (SLCSP). Note: CBO/JCT projections estimate that, due to the individual mandate penalty repeal, premiums in the non-group market will be 10% greater than the baseline premium estimate in most years of the decade nationally. Other changes that increase premiums would be in addition. A standard 5% annual medical trend has been applied in generating baseline premiums Maximum Out of Pocket amount for the SLCSP has been increased according to the same method. 16

17 Timeline Correcting a destabilized market takes time it is easier to protect a stable market than it is to fix a destabilized market. May 2018 Carriers file 2019 rates The timeline for action is short and is limited by the rate filing and legislative calendars Waiver Submission 30 day public comment period Up to 6 month CMS review May 2019 Carriers file 2020 rates June 2018 Legislative Session Closes January 2019 Individual Mandate Penalty repeal effective 17

18 For Discussion From your vantage point, what are your biggest concerns? In light of the charge of this workgroup, what do you view as the most imperative actions/interventions needed to stabilize the market? Which market segments or populations are you most concerned about? Next Step: Are there policy options that come to mind that you would want to learn more about as we move further into the syllabus? 18

19 Appendix: The Charge to the Workgroup Rhode Island has been here before. In response to the passage of the ACA, our state pulled together a coalition of experts. Those efforts resulted in providing access to high-quality, affordable health coverage to more Rhode Islanders than ever before. In 2018, continued efforts are needed to protect that success for Rhode Island s individuals, families and business community. Guiding Principles: 1. Sustain a balanced risk pool; 2. Maintain a market that is attractive to carriers, consumers and providers; and 3. Protect coverage gains achieved under the ACA. Goal: Identify and propose sensible, statebased policy options for RI that will be in service to those Principles. 19

20 Appendix: Federal Actions Impacting the ACA Open Enrollment Period shortened by half + other actions aimed at reducing awareness Cost Sharing Reduction Payments (CSRs) defunded Instead of having 90 days to renew customers and enroll new ones, exchanges now have just 45 days Payments no longer made to carriers, however carriers must continue to make CSR plans available to consumers (lower out-of-pocket expenses). Decision comes just weeks before OEP. Congress repeals the penalty for failing to have health insurance The ACA s requirement to have coverage is intact, but penalty for ignoring it gets reduced to $0 beginning in 2019 Rules propose permitting the sale of non-aca compliant plans in 2019 Groups with lose affiliations may band together to purchase Association Health Plans that do not include all ACA benefits Short Term Limited Duration Plans may extend to 12 months 20

21 Appendix: Key Concerns Unbalanced Risk Pool without a penalty, younger/healthier populations are likely to drop coverage, leaving older/sicker enrollees in the market Premium Increases as riskier, costlier populations remain enrolled, nongroup and small business coverage costs are likely to increase Loss of Coverage coverage gains will erode as young/healthy drop coverage and others begin to get priced out of the market; rates of uncompensated care will creep up as insured rates decline Erosion of key consumer protections & essential benefits new proposed rules will usher in new, non-aca compliant plans that attract young/healthy enrollees and further compromise non-group/small business risk pools 21

22 Appendix: Impact on Premium in Rhode Island Most experts have expressed significant concern about the impact of federal action on premiums in the Individual Market. RI Individual Market Premium Projections ( ) $700 $600 $500 $400 $300 $200 $100 $0 $418 Urban Institute (Multiple Factors) $ Baseline Covered CA: Low Estimate Urban Institute (Multiple Factors) Premium Growth Projections CBO: 10% increase over baseline premium estimate (expected in most years of the decade ) nationally Covered CA: Provides a range around estimated impact of individual mandate repeal Low Estimate: 7% rate increase in 2019, and 2.5% rate increase in 2020 and 2021 High Estimate: 15% rate increase in 2019, and 10% rate increase in 2020 and 2021 Urban Institute: Projects the combined effect of individual mandate repeal and STLD policies for RI to be a 20.7% rate increase in 2019 Baseline: standard annual medical trend rate increase of 5% a year While many experts have commented on the potential impact of federal actions, few have offered specific projections available data has been used to estimate premium growth in RI. $663 $541 $532 $484 CBO Covered CA: High Estimate Covered CA (High) Covered CA (Low) CBO Baseline 22

23 Appendix: RI Private Insurance Market Premium Trends Individual market premiums have oscillated year to year, with average premium rate decreases in 2 of the last 4 renewal years. Premiums in the small and large group markets have shown moderate but steady growth in recent years RI Private Insurance: Average Annual Premium Trend Individual Small Group Large Group 6.0% 8.5% 9.5% 6.2% 5.1% 3.1% 3.0% 7.5% 7.3% 10.1% -0.1% % Individual Market Annual Premium Trend Average -0.1% 9.5% -0.8% 7.5% Minimum -7.3% 4.1% -9.8% 2.4% Maximum 4.5% 10.4% 4.7% 10.6% Small Group Annual Premium Trend Average 6.0% 3.1% 3.0% 7.3% Minimum -1.8% 1.9% -3.1% 6.0% Maximum 9.6% 7.2% 3.6% 8.1% Large Group Annual Premium Trend Average 8.5% 5.1% 6.2% 10.1% Minimum 5.0% 4.4% 3.6% 8.0% Maximum 11.0% 6.6% 7.0% 10.5% Note: Avg. premium trend is based on the average premium increase by carrier, enrollment weighted by the distribution of members by carrier (min and max represent the lowest and highest carrier average); 2018 rates weighted by 2017 enrollment Sources: OHIC, Requested and Approved Summary for Rates in the Individual, Small Group, and Large Group Markets, annual reports Enrollment by year from OHIC 2018 Rate Template small and large group submissions by carrier 23