Implementing the Affordable Care Act: Avoiding Adverse Selection

Transcription

1 Implementing the Affordable Care Act: Avoiding Adverse Selection Health Insurance Exchange Summit May 2, 2013 Kevin Lucia, JD, MHP

2 Avoiding Adverse Selection Against the Exchange What role can states play in ensuring a level playing field? State Actor Insurance regulators (e.g., DOI, HIX) Action Meaningful enforcement of the market reforms (inside and outside the exchange) Legislators Limit potential regulatory exemptions to avoid potential game-playing by issuers and consumers Limit potential regulatory exemptions to avoid potential game-playing by issuers and consumers

3 #1 Meaningful Enforcement

4 Enforcement Framework States are the primary regulators of health insurance for consumers in the individual and small group markets. Congress adopted a cooperative approach in 1996 when it passed HIPAA for shared regulation between the federal government and the states. When does the federal government enforce? State reports that it is not enforcing. HHS determination that state has failed to substantially enforce.

5 Where are we now? ACA implementation has been mixed, with significant variation in: Which areas of reform that states have chosen to address; How states are using their authority to implement the law; and What decisions states are making on health insurance exchanges. Examples from our work, supported by The Commonwealth Fund (issue briefs and interactive maps are available on the Fund s website): Early market reforms: 49 states, DC required or encouraged compliance market reforms: 11 states, DC implemented at least one reform. Mixed implementation could complicate enforcement.

6 Why does enforcement matter? Without meaningful enforcement, consumers may not receive the benefits promised. Most stakeholders want the states to implement federal law, including the ACA. States typically want to regulate their insurers. Insurers typically want to be regulated by the state. Federal enforcement may be challenging.

7 CCIIO Approach to Enforcement Guidance in March 2013 (for more, see our post on The Commonwealth Fund Blog) HHS will work closely with state regulators to ensure compliance but will enforce if a state does not do so. To date, HHS has identified 6 states that will not enforce the ACA: Arizona (group PPO plans), Alabama, Missouri, Oklahoma, Texas, Wyoming. HHS allows collaborative arrangement with states. State regulators use existing regulatory tools to ensure ACA compliance. State tries to obtain voluntary compliance and can refer violations to HHS for federal enforcement.

8 Outstanding Issues on Adverse Selection and Enforcement Will states pass legislation in 2013 to implement the 2014 market reforms? And, even if a state passes new legislation, will regulators substantially enforce these reforms in practice? Will the federal government play a significant role in enforcing these reforms? And will this enforcement be meaningful enough to limit adverse selection? What impact will the reforms have on the availability, affordability, and adequacy of coverage in the outside market, compared to the inside market?

9 #2 Limit Regulatory Exemptions

10 What s so bad about exemptions? Traditional concerns regulatory exemptions from state and federal insurance law. Emerging concerns issues that could undercut the ACA s promise of access, affordability, and adequacy by segregating healthy risk from less healthy risk. Future concerns that we don t yet know about?

11 Examples of Regulatory Exemptions Traditional concerns products exempted from state and/or federal insurance law Association health plans (AHPs) Health care sharing ministries Limited benefit plans

12 Examples of Emerging Trends Emerging trends issues that could undercut the ACA s protections Early renewals Grandfathered coverage Stop loss insurance Future concerns that we don t yet know about?

13 What role do states play? State regulators can: Monitor the market for emerging issues. Collect data on unique products, such as stop loss insurance. Clarify standards regarding exempt products. State legislators can: Eliminate or limit exemptions through legislation; or Create or sanction exemptions through legislation.

14 Thank you! Kevin Lucia, JD, MHP Research Professor and Project Director Katie Keith, JD, MPH Assistant Research Professor