Health Insurance Exchange Summit Mini Summit X Efforts to Avoid Adverse Selection Against Health Insurance Exchanges May 2, 2013

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1 Health Insurance Exchange Summit Mini Summit X Efforts to Avoid Adverse Selection Against Health Insurance Exchanges May 2, 2013 A service of the Maryland Health Benefit Exchange

2 What is a Health Insurance Exchange? The Patient Protection and Affordable Care Act requires each state to establish a health insurance exchange by An exchange is a marketplace where individuals, families and small businesses can: Compare health insurance options Calculate total out-of-pocket costs based on eligible subsidies or tax credits Enroll in the health plan that s best suited for their needs States had a choice on how they would meet this requirement: State-based exchange Federally-facilitated exchange Partnership exchange Maryland is implementing a state-based exchange called Maryland Health Connection. 2

3 Why It s Important to Maryland Expands access to health insurance for 730,000 Marylanders (13% of Maryland) currently without health insurance Gives individuals access to primary care physicians, preventive services Provides federal subsidies for individuals up to 400% of FPL to pay for health insurance premiums Infuses $600 million in federal subsidies into the State of Maryland by 2015 NEW funds in health care system Lowers uncompensated care costs in the healthcare system

4 Avoiding Adverse Selection What is Adverse Selection? Adverse selection refers to the disproportionate enrollment of high-risk, high-cost individuals, resulting in a rise in costs and premiums. 1 Maryland s approach to avoiding adverse selection against the state-based exchange includes input received from stakeholders that has been incorporated into State legislation. 1 The Commonwealth Fund. State Roles in Selecting Health Plans and Avoiding Adverse Selection 4

5 Stakeholder Input Policy decisions were made through an open, transparent process with over 60 stakeholders representing Maryland s diversity from across the state (Fall 2011) Four Advisory Committees studied six topics: Navigator and Consumer Assistance / Advertising Market Rules and Risk Selection / Operating Model SHOP Exchange Financing the Exchange Stakeholder representation included: health insurance industry, providers and associations, community members, advocates, community-based organizations, academia, business owners and leaders, local government officials, consumers, consultants

6 Enabling Legislation Maryland is in its third year of exchange legislation for the state-based exchange 2011 Governance model Advisory Council process 2012 Operating Model Market Rules 2013 (Proposed) Financing Model Maryland Health Insurance Plan (MHIP) Transition Reinsurance 6

7 Avoiding Adverse Selection Maryland considered key topics to avoid adverse selection: Carrier participation requirement Product offering Financing model MHIP Transition Reinsurance Outreach & Education 7

8 Avoiding Adverse Selection Carrier Participation Requirement Requires carriers with over $20M in aggregated premium revenue in the small group, and $10M in individual, to participate inside the state-based exchange 8

9 Avoiding Adverse Selection Product Offering Carriers must offer at least one qualified plan at the silver level and one qualified plan at the gold level inside and outside the state-based exchange. Carriers must offer at least one qualified health plan at the silver level and one qualified plan at the gold level in the small group market outside the SHOP if the carrier participates in the SHOP. Carriers must charge the same premium rate for the same plans regardless of whether that qualified health plan is offered through the state-based exchange, through a producer outside or directly from the carrier. Carriers must offer catastrophic plans inside and outside of the statebased exchange if catastrophic plans are offered by the carrier. 9

10 Avoiding Adverse Selection Financing Model Annual distribution to MHBE from existing premium tax on health insurers sufficient to fund MHBE 10

11 Avoiding Adverse Selection MHIP Transition Gradual transition of MHIP enrollees into Maryland Health Connection Closed to new enrollees Jan 1, 2014; Transition of existing enrollees between January 1, 2014 and January 1, 2020; Required notice of options to members; and Annual report on MHIP transition, State reinsurance program, and use of funds. 11

12 Avoiding Adverse Selection Reinsurance The State has the authority to implement a state-based reinsurance wrap around program to supplement the federal reinsurance program. MHIP funds may be used beginning CY 14 for State reinsurance program to mitigate rate impact of high-risk enrollees in individual market inside and outside Exchange MHIP and MHBE Boards will determine timing and amount of funds to be used for reinsurance program from amount left after MHIP operations are funded and claims paid for enrollees remaining in the plan. 12

13 Avoiding Adverse Selection Outreach & Education An aggressive outreach campaign will be developed to encourage healthy Marylanders to get covered. 13

14 Ways to Get More Information! 14

15 Online Resources MarylandHealthConnection.gov Sign Up for Updates Sign Up for Text Updates: Text Connected to Get information on insurance resources available to help now Link to details on meetings and reports MarylandHBE.com Meeting Information RFP Announcements Job Information 15

16 Thank you! For questions on the information contained in this presentation, please contact: Tequila Terry Director, Plan & Partner Management Maryland Health Benefit Exchange 16