MARKET STABILITY WORKGROUP. Tuesday, May 30, :00 10:00 a.m. The Institute for the Study & Practice of Non-Violence

Transcription

1 MARKET STABILITY WORKGROUP Tuesday, May 30, :00 10:00 a.m. The Institute for the Study & Practice of Non-Violence

2 ADDRESSING FEEDBACK FROM PREVIOUS SESSIONS Draft Report was shared Analysis (corrected doc) was shared concerning the impact of reinsurance on low-income, subsidized enrollees. Any questions on what was sent? 2

3 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: the carrot approach Meeting 5 Policy Deep-Dive: the stick approach Meeting 6 Regroup on Package of Policy Options + Begin Discussion of Recommendations Meeting 7 Overview of Factors Influencing Premiums + Moving Towards 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 3

4 TODAY S AGENDA Purpose of Today s Meeting Provide an initial look at 2019 proposed rates, including market context over time and impact to customers Review the draft report and address open questions Gauge consensus on recommendations and identify pathway to finalization Today, we ask that you Answer or confirm particular items in the draft report Offer any other feedback about the draft report Keep in mind that due to rate hearing rules, specifics of rate filings cannot be discussed when Commissioner Ganim is in the room 4

5 TODAY S AGENDA Initial Rate Filings overview 2. Review of Draft Recommendations 5

6 PRELIMINARY 2019 RATE REQUESTS Presentation May 29, 2018 Cory King, Principal Policy Associate Office of the Health Insurance Commissioner

7 A Few Preliminary Remarks 1. The rate filing information presented today reflects proposed rates to be charged in OHIC will review the proposals and determine whether to approve, modify, or reject them. 2. OHIC s final approval will be announced by August 1 st. 3. Pursuant to RIGL & the BCBSRI individual market rate filing will be subject to an hearing under the APA. 7

8 Standards of Rate Review OHIC evaluates whether an insurer s proposed rates are consistent with the proper conduct of its business and with the interest of the public based on three key standards: 1. Solvency and actuarial soundness are rates sufficient to ensure the solvency of the insurer and based on sound actuarial principles? 2. Consumer protection Would consumers receive adequate contractual benefit in exchange for the proposed premium? 3. Health insurer policies to improve affordability, quality and accessibility of medical care. 8

9 Millions of Dollars Reviewing Commercial Health Insurance Rates - Consumer Savings $70.0 $60.0 $50.0 DIFFERENCES BETWEEN REQUESTED AND APPROVED RATES, (Review Year) Since 2012, OHIC s rate review has saved Rhode Island consumers $235.7 million $40.0 $30.0 $20.0 $10.0 $ Year The RI commercial market comprises about 220,000 enrollees. 9

10 Claims Trends & Rate Increases CY 2017 Data & Trends May 15, 2018 Filing1 Jan 1, 2019 Rates1 Rate review is a largely prospective exercise. There is a significant lag between data and rate effective date (2 years). For rates effective 1/1/2019, we review CY 2017 claims data and prior. 10

11 Individual Market Rate Changes 2016 Approved 2017 Approved 2018 Approved Overall Weighted Average Change 2019 Proposed BCBSRI 3.8% 5.9% 12.1% 10.7% NHP 5.8% -5.9% 5.0% 8.7% UHC 2.7% Market Weighted Average 4.5% 1.6% 9.4% 9.7% EHB Base Rate Change BCBSRI 10.4% 4.7% 10.6% 14.2% NHP 8.0% -9.8% 2.4% 14.6% UHC 4.1% Market Weighted Average 9.3% -0.6% 7.5% 14.4% The Overall Weighted Average Rate Change represents adjustments to reflect the benefits in plans, including modifications to prior year benefits and pricing and it includes terminated plans. This weighted average rate increase represents the average rate that consumers will experience. It does not include the effect of changes in age. The EHB base rate is used by OHIC to compare premiums across insurers and years and represents the monthly average rate for a hypothetical plan with no cost-sharing for a 21-year old for a given insurer in a given market. Essential Health Benefits are a set of benefits that must be covered by plans, as called for in the Affordable Care Act rate increases shown above do not include the effect of the Trump Administration s decision to stop cost sharing reduction (CSR) payments. 11

12 Impact of Individual Mandate Penalty Repeal (Carrier Proposed) Exchange Average Full Premium pmpm (as Proposed) Neighborhood Health Plan (NHP) 8.8% Exchange enrollment-weighted increase Includes a 1.9% premium increase due to repeal of mandate penalty. $600 $550 $500 $450 $400 $350 $300 $250 $200 $370 $ % ($7) for mandate repeal +6.9% ($26) $550 $500 $450 $400 $350 $300 $250 $200 Blue Cross & Blue Shield RI (BCBSRI) 11.1% Exchange enrollment-weighted increase Includes no adjustment for repeal of the mandate penalty. $590 $600 $ % ($59) Repeal of the mandate penalty will result in approximately 1.9% increase of premiums, assuming healthy individuals will no longer purchase health insurance. NHP Filings BCBSRI is not including an adjustment to reflect any potential change to the overall morbidity of the Individual population resulting from the elimination of penalties. - BCBSRI Filings 12

13 Small Group Market Rate Changes 2016 Approved 2017 Approved 2018 Approved 2019 Proposed BCBSRI 2.3% 3.6% 7.3% 5.7% NHP 1.9% -3.1% 6.3% 0.0% Tufts HMO 3.3% 0.8% 6.0% 10.9% Tufts PPO 3.7% 1.0% 6.5% 10.1% UHC HMO 7.2% 0.4% 8.1% 3.4% UHC PPO 7.2% 0.1% 8.1% -0.6% Market Weighted Average 3.3% 2.9% 7.3% 5.7% The Overall Weighted Average Rate Change represents adjustments to reflect the benefits in plans, including modifications to prior year benefits and pricing and it includes terminated plans. This weighted average rate increase represents the average rate that consumers will experience. It does not include the effect of changes in age. 13

14 Large Group Market Rate Changes 2016 Approved 2017 Approved 2018 Approved 2019 Proposed BCBSRI 5.1% 7.0% 10.5% 10.6% Tufts HMO 6.1% 4.8% 9.8% 10.3% Tufts PPO 6.6% 4.3% 10.4% 10.2% UHC 4.4% 3.6% 8.0% 9.1% Market Weighted Average 5.1% 6.3% 10.1% 10.3% The Expected Overall Average Premium Increase represents the average expected percentage change in premiums from one year to the next, holding benefits constant, across all employers that are up for renewal within a given market. It is weighted by employer size. This average expected premium increase is comprised of rate factors that are applied to the employer s existing experience. 14

15 Market Stabilization Workgroup Meeting 7: Underlying Trends and Customer impact May 29,

16 2019 Rate Filings Analysis 1. Early Warning Signals Are there signs of market destabilization so far - in the rate filings as proposed by the carriers? 2. Customer Impacts What are the implications of these rate increases for specific subgroups and populations? 16

17 Base Data: Signs of Individual Market Destabilization? Individual Market Member Months (NHP and BCBS Combined) 412, , , ,619 Individual Market PMPM Costs (Allowed, includes member cost sharing, NHP and BCBS Combined) $425 $395 $413 $449 CY 2014 CY 2015 CY 2016 CY 2017 Change: 17% 9% -3% First post-aca decline May indicate risk pool degradation Source: 2019 OHIC Individual Rate Review Template Part 1, Tables A2 and A3 CY 2014 CY 2015 CY 2016 CY 2017 Change: -7% 4% 9% Troubling increase in underlying trend Key Drivers: hospital (+12%), Rx (+12%) Projected population risk morbidity 17

18 Base Data: Signs of Small Group Market Destabilization? Small Group Market Member Months (NHP, BCBS, Tufts and United Combined) 854, , , ,575 Small Group Market PMPM Costs (Allowed, includes member cost sharing, NHP, BCBS, Tufts and United Combined) $451 $461 $485 $437 CY 2014 CY 2015 CY 2016 CY 2017 Change: -12% -7% -5% Continued and troubling decline Increasing destabilization CY 2014 CY 2015 CY 2016 CY 2017 Change: 3% 2% 5% Modest underlying cost trends Source: 2019 OHIC Small Group Rate Review Template Part 1, Table A2 & A3 18

19 Individual Market Impact Unsubsidized Enrollment 40% 17,803 Subsidized Enrollment 60% 26,769 BCBS Off Exchange 12,504 BCBS On Exch 2,065 NHP On Exch 3,234 BCBS On Exchange 6,969 NHP On Exchange 19,800 *Calculated using age 48 for each plan. Younger ages will see more moderate decreases/increases, older ages will see more dramatic decreases/increases Inclusive of below categories. I.e. Greater than $5 includes Greater than $20. Plan Categories by Rate Increase for 48 year old* % of HSRI Customers in these plans Rate Decrease 11.0% $0-$5 53.5% Greater than $5 31.9% Greater than $ % Greater than $35 8.8% Greater than $50 4.6% 19

20 Customer Scenarios Customer Most Popular Plans Proposed Monthly Annual Monthly Annual (1) Unsubsidized Family of four* $100K HH income 407% FPL Neighborhood PLUS (Gold) $1,407 $16,884 $1,518 (+7.9%) Blue Solutions for HSA Direct 6000/12000 (Bronze) $1,294 $15,526 $1,418 (+9.6%) $18,220 (+7.9%) $17,017 (+9.6%) (2) Subsidized Family of four* $65K HH Income 265% FPL Neighborhood COMMUNITY (Silver) Blue Solutions for HSA Direct 4100/8200 (Silver) $371 $4,446 $762 $9,148 $390 (+5.2%) $867 (+13.7%) $4,675 (+5.2%) $10,400 (+13.7%) (3) Subsidized Couple** $23.5K HH income 145% FPL Neighborhood COMMUNITY (Silver) Blue Solutions for HSA Direct 4100/8200 (Silver) $3 $39 $7 (+112.8%) $313 $3,761 $391 (+24.7%) $83 (+112.8%) $4,689 (+24.7%) * Example based on a household with 4 members, ages: 56, 50, 23, and 17 ** Example based on a household with 2 members, ages: 56, and 50 20

21 DISCUSSION 21

22 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, state-based policy options for RI that will be in service to those Principles. 22

23 SHARED RESPONSIBILITY REQUIREMENT In meeting 5, there was consensus that a state-based shared responsibility requirement is consistent with the guiding principles of the Workgroup. Does the Workgroup support this recommendation? Consider alternative text here: should mirror the federal structure. A state-based shared responsibility requirement : To mitigate the impact of the federal health insurance mandate penalty repeal, Rhode Island should implement a state-level shared responsibility requirement. For the sake of continuity and simplicity, a requirement should be implemented as soon as practicable and with broad-based support and should use the federal structure as a basis. Any funds raised through the implementation of a shared responsibility requirement should be primarily designated for initiatives aimed at protecting the affordability of health coverage. -MSW Draft Report.5_25_18 p2 23

24 FURTHER ACTION In addition to the above policy recommendations, the Workgroup acknowledges that further work remains. The Workgroup therefore recommends the following: Future action required: Rhode Island should focus next on how to fund a state reinsurance program and how to best design and implement a shared responsibility requirement. Additionally, further efforts must be made to address the particulars of the aforementioned affordability initiatives, including the impact of recommendations on low-income Rhode Islanders and whether any further action is necessary to address this population. The Workgroup notes that while time is of the essence, carriers setting rates for the 2020 coverage year can still consider actions taken during the 2019 legislative session. This work should begin without delay and should be undertaken with participation from the legislative and executive branch. -MSW Draft Report.5_25_18 p2 In meeting 6, the Workgroup was in general agreement that further work remains and that it needs to be discussed and deliberated on prior to 2020 rate setting. Does this Workgroup support this recommendation? 24

25 REINSURANCE VIA 1332 WAIVER A 1332 Waiver under the ACA to implement a reinsurance program: The state should be authorized to submit a 1332 waiver request as provided for under the ACA to implement a state reinsurance program. The state reinsurance program should be designed to mitigate premium increases in the year 2020 and beyond. The Workgroup acknowledges that 1332 waiver applications require a stakeholder review process and notes that any state funding necessary to operate a reinsurance program would require future legislative action. -MSW Draft Report.5_25_18 p1 In meeting 6, the group largely supported this recommendation. Does this language accurately reflect the recommendation of the group? 25

26 SHORT-TERM LIMITED DURATION PLANS State authority to regulate Short-Term Limited Duration (STLD) health plans : OHIC should be provided with regulatory oversight authority of STLD plans to ensure such plans are subject to the same consumer protections that apply to all other private health insurance coverage offered for sale in the state. -MSW Draft Report.5_25_18 p1 In meeting 6, the Workgroup voted to provide unanimous support for this recommendation. Does this language accurately reflect the recommendation of the group? 26

27 OTHER RECOMMENDATIONS OR COMMENTS? Are there any other recommendations not included that should be considered today for inclusion in this package? Are there any comments on the Discussion and Findings section? Comments on the Discussion and Findings section can also be ed to by end of day on Thursday, May 30 27

28 PACKAGE OF RECOMMENDATIONS Does the Workgroup Support the package as it stands? 28

29 PUBLIC COMMENT? 29

30 THANK YOU

31 APPENDIX 31

32 PRELIMINARY 2019 RATE REQUESTS - APPENDIX Presentation May 29, 2018 Cory King, Principal Policy Associate Office of the Health Insurance Commissioner

33 WEIGHTED AVERAGE RATE ICHANGE 14.0% 12.0% 10.0% INDIVIDUAL MARKET WEIGHTED AVERAGE RATE CHANGE 12.1% Proposed Increase 10.7% 8.7% 8.0% 6.0% 5.8% 5.9% 5.0% 4.0% 3.8% 2.0% 2.7% 0.0% -2.0% -4.0% -5.9% -6.0% -8.0% BCBS 3.8% 5.9% 12.1% 10.7% NHP 5.8% -5.9% 5.0% 8.7% UHC 2.7% 33

34 EHB BASE RATE CHANGE INDIVIDUAL MARKET EHB BASE RATE CHANGE Proposed Increase 20.0% 15.0% 14.2% 10.4% 10.6% 14.6% 10.0% 5.0% 8.0% 4.7% 0.0% 4.1% 2.4% -5.0% -10.0% -9.8% -15.0% BCBS 10.4% 4.7% 10.6% 14.2% NHP 8.0% -9.8% 2.4% 14.6% UHC 4.1% 34

35 WEIGHTED AVERAGE RATE ICHANGE 12.0% SMALL GROUP MARKET WEIGHTED AVERAGE RATE CHANGE Proposed Change 10.0% 8.0% 6.0% 4.0% 2.0% 0.0% -2.0% -4.0% BCBS 5.2% 2.3% 3.6% 7.3% 5.7% NHP -1.8% 1.9% -3.1% 6.3% 0.0% UHC HMO 9.6% 7.2% 0.4% 8.1% 3.4% UHC PPO 9.6% 7.2% 0.1% 8.1% -0.6% Tufts HMO 4.5% 3.3% 0.8% 6.0% 10.9% Tufts PPO 4.7% 3.7% 1.0% 6.5% 10.1% 35

36 EXPECTED AVERAGE RATE CHANGE LARGE GROUP MARKET EXPECTED OVERALL AVERAGE RATE CHANGE Proposed Increase 12.0% 10.0% 8.0% 6.0% 4.0% 2.0% 0.0% BCBS 5.1% 7.0% 10.5% 10.6% Tufts HMO 6.1% 4.8% 9.8% 10.3% Tufts PPO 6.6% 4.3% 10.4% 10.2% UHC 4.4% 3.6% 8.0% 9.1% 36

37 Market Stabilization Workgroup Meeting 7: Underlying Trends and Customer impact May 29, 2018 APPENDIX 37

38 Individual Market Trends Projection Adjustment Factors for 2019 Rate Filings (NHP and BCBS Combined) 9.3% 6.9% 6.8% 6.6% 4.8% 5.3% Pop Risk Morbidity Inpatient Hospital Outpatient Hospital Primary Care Other Medical/Surgical Prescription Drug Source: 2019 OHIC Individual Rate Review Template Part 2 Rate Development 38

39 Individual Market Trend Detail Increase in PMPM Costs (Allowed, includes member cost sharing, NHP and BCBS Combined) $460 $440 $420 $400 $380 $360 $340 $320 $413 $10 $7 $11 $8 $449 9% increase in claims costs in the individual market from Almost 1/3 of the increase was due to increased inpatient costs $300 CY 2016 Total Claims Percent Increase : Inpatient Hospital Outpatient Hospital Prescription Drugs Other Med/Surg* CY 2017 Total Claims 12% 7% 12% 7% 9% *Other Med/Surg also includes Primary Care and claims not otherwise categorized. Source: 2019 OHIC Individual Rate Review Template Part 1, Table A2 & A3. 39

40 Exchange Enrollment Details Exchange Unsubsidized Enrollments (5,299 Total, 17%) Exchange Subsidized Enrollments (26,769 Total, 83%) Enrollment by plan and carrier, sorted most to least enrollments Enrollment by plan and carrier, sorted most to least enrollments Sort by Enrollment NHP 2018 Individual Market Plans Neighborhood PLUS Neighborhood INNOVATION Neighborhood ECONOMY Neighborhood PRINCIPAL Neighborhood COMMUNITY Neighborhood VALUE Un-subsidized Enrollment Total 3,234 Un-subsidized Enrollment BlueSolutions for HSA Direct 6000/12000 WPD 565 VantageBlue Direct 1325/ BasicBlue Direct 6450/1290 WPD 324 BlueSolutions for HSA Direct 1400/ BasicBlue Direct 2750/ BlueSolutions for HSA Direct 4100/8200 WPD 93 BlueCHiP Direct Advance2300/ VantageBlue Direct 4850/9700 WPD 72 BasicBlue Direct 4900/9800 WPD 41 BlueCHiP Direct 2300/ BlueCHiP Direct 4800/9600 WPD 33 Total 2,065 BCBS 2018 Individual Market Plans Metal Level Gold Bronze Bronze Gold Silver Silver Metal Level Bronze Gold Bronze Gold Gold Silver Gold Silver Silver Gold Silver Total Subsidized Enrollment 7,713 5,646 3,002 1, ,800 BlueSolutions for HSA Direct 4100/8200 WPD BlueSolutions for HSA Direct 6000/12000 WPD BlueCHiP Direct 4800/9600 WPD BasicBlue Direct 6450/1290 WPD VantageBlue Direct 4850/9700 WPD VantageBlue Direct 1325/2650 BasicBlue Direct 4900/9800 WPD BasicBlue Direct 2750/5500 BlueCHiP Direct Advance2300/4600 BlueSolutions for HSA Direct 1400/2800 BlueCHiP Direct 2300/4600 Total Subsidized Enrollment 1, , ,969 NHP 2018 Individual Market Plans Neighborhood COMMUNITY Neighborhood VALUE Neighborhood PLUS Neighborhood INNOVATION Neighborhood ECONOMY Neighborhood PRINCIPAL BCBS 2018 Individual Market Plans Metal Level Silver Silver Gold Bronze Bronze Gold Metal Level Silver Bronze Silver Bronze Silver Gold Silver Gold Gold Gold Gold 40

41 Member Impact: Scenario 1: Unsubsidized Family of Four Household Income $100,000 per year Blue Solutions for HSA Direct 6000/12000 (Bronze) 2018 Premium Max OOP $15,526 $13,100 HH Income: $100,000 Medical Expense 9.6% vs. HH Income 2.5% 2019 Medical Expenses: % HH Income Premium Only: 17% Premium + Max OOP: 31% 2019 $17,017 $14,358 HH Income: $102,500 Neighborhood PLUS (Gold) 2018 Premium Max OOP $16,884 $10,300 HH Income: $100,000 Medical Expense 7.9% vs. HH Income 2.5% 2019 Medical Expenses: % HH Income Premium Only: 18% Premium + Max OOP: 29% 2019 $18,220 $11,114 HH Income: $102,500 41

42 Member Impact: Scenario 2: Subsidized Family of Four Household Income $65,000 per year Blue Solutions for HSA Direct 4100/8200 (Silver) 2018 Premium Max OOP $9,148 $9,200 HH Income: $65,000 Medical Expense 13.2% vs. HH Income 0%* 2019 Medical Expenses: % HH Income Premium Only: 16% Premium + Max OOP: 32% 2019 $10,400 $10,368 HH Income: $65,000 Neighborhood COMMUNITY (Silver) 2018 Premium Max OOP $4,446 $13,100 HH Income: $65,000 Medical Expense 8.5% vs. HH Income 0%* 2019 Medical Expenses: % HH Income Premium Only: 7% Premium + Max OOP: 29% 2019 $4,675 $14,358 HH Income: $65,000 *Note: The subsidized customer scenarios shown assume no increase in household income year over year due to the impact of household income on subsidy eligibility subsidized customers with increased income would see little impact to medical expenses as % of income due to the corresponding decrease in subsidy 42

43 Member Impact: Scenario 3: Subsidized Couple Household Income $23,500 per year Blue Solutions for HSA Direct 4100/8200 (Silver) 2018 Premium Max OOP $313 $1,150 HH Income: $23,500 Medical Expense 15.3% vs. HH Income 0%* 2019 Medical Expenses: % HH Income Premium Only: 2% Premium + Max OOP: 7% 2019 $391 $1,296 HH Income: $23,500 Neighborhood COMMUNITY (Silver) Premium Max OOP $ $4,500 HH Income: $23,500 Medical Expense 10.5% vs. HH Income 0%* 2019 Medical Expenses: % HH Income Premium Only: 1% Premium + Max OOP: 38% 2019 $83 $4,932 HH Income: $23,500 *Note: The subsidized customer scenarios shown assume no increase in household income year over year due to the impact of household income on subsidy eligibility subsidized customers with increased income would see little impact to medical expenses as % of income due to the corresponding decrease in subsidy 43

44 Reinsurance Impact to Subsidized Enrollees 44

45 Tax Credits (APTCs) Are Based on Premium Costs APTC = $300 Customer pays Total SLCSP Premium = $500 Affordable Amount = $200 Affordable amount is determined by income and family size The Second-Lowest Cost Silver Plan (SLCSP) is used as the benchmark for APTC calculation APTC covers the difference between them 45

46 Increased Premiums on the SLCSP Create Dollar-for-Dollar Increases in APTC Customer pays the same amount after APTC, assuming same household and income This year APTC = $300 Total SLCSP Premium = $500 Next year APTC = $400 Total SLCSP Premium = $600 Customer pays Affordable Amount = $200 Customer pays Affordable Amount = $200 46

47 Premiums Vary Across Plans APTCs can be used to help buy any plan If all plans increase by the same percentage: Cheaper plans (mostly Silver or Bronze) increase by fewer dollars than the SLCSP and the APTC More expensive plans (mostly Gold or Silver) increase by more dollars than the SLCSP and the APTC The spread of costs across all plans gets larger Customer costs after APTC remain steady for the SLCSP, but vary for other plans Generally increase for more expensive plans, reduce for less expensive plans 47

48 Reinsurance Impact on Subsidized Enrollees If a new reinsurance program partially or wholly offsets premium increases across all plans: Both the increases and decreases for other plans are partially or wholly offset Those in more expensive plans will see a moderated year-to-year increase Those in less expensive plans will see a moderated year-to-year decrease Reinsurance is unlikely to increase anyone s costs, year-to-year, but may moderate what would otherwise be a large reduction in costs See attached document for numbers using RI plans 48