ACA impact on Puerto Rico small groups (PYMES) Presented by: Luis O. Maldonado, FSA, MAAA Consulting Actuary
Agenda Key Elements of Health Care Reform ACA Insurance Market provisions ACA impact for Puerto Rico s Commercial market Puerto Rico Insurance market update 1
Key Elements of Healthcare Reform Health insurance market reforms Health insurance exchange (not applicable to PR) Subsidies for premium and cost share (not applicable to PR) Expansion of public programs (Medicaid) Individual mandate (not applicable to PR) Employer requirements and incentives (not applicable to PR) http://kff.org/health-reform/slide/key-elements-of-the-health-reform-law/ 2
ACA Insurance Market Provisions 3
Summary of ACA Market Rules Establishes single risk pool requirement (small group/individual or merged) Insurers establish Index Rate based on total combined claim cost for providing EHB within a single risk pool Limited number of permitted adjustments to Index Rate Limited number of allowable rating factors by plan Guaranteed availability of coverage 4
Summary of ACA EHB & AV Essential Health Benefits: Coverage of 10 statutory EHB categories Each state establishes a state benchmark plan Actuarial Value: Applies to all non-grandfathered business in the small group and individual market Actuarial Value Calculator developed by HHS and must be used by all plans to certify AV s of plans 5
What is an Exchange? Internet based marketplace to help individual and small businesses shop for coverage. Allow easy comparison of available plan options based on price, benefits and services, and quality. Assist eligible individuals to receive premium tax credits or coverage http://cciio.cms.gov/resources/files/guidance_to_states_on_exchanges_.html 6
US Insurer Participation Plans filed in Puerto Rico (five carriers) Metal Level Platinum 6 Gold 5 Silver 3 Bronze 4 No. of plans http://kff.org/health-reform/issue-brief/an-early-look-at-premiums-and-insurer-participationin-health-insurance-marketplaces-2014 7
Federal Premium Subsidies Based on 2013 Federal Poverty Level (FPL) of $11,490 Income Level Upper Income Range Premium as % of Income Maximum Monthly Contribution Up to 133% $15,282 2% $19.15 $25.47 133 150% $17,235 3-4% $38.20 $57.45 150 200% $22,980 4-6.3% $57.45 $120.65 200 250% $28,725 6.3 8.05% $120.65 $192.70 250 300% $34,470 8.05 9.5% $192.70 $272.89 300-400% $45,960 9.5% $272.89 $363.85 8
ACA Impact for Puerto Rico 9
Commercial Guaranteed Issue for Individual Market Market stability No mandates or subsidies Short term upward pressure on rates due to benefit changes and additional administrative burdens Longer term impacts can lower premium due to loss ratio minimums, administrative efficiencies and additional competition. 10
Insurance Market Provisions 80/20 Rule Insurance companies must spend generally at least 80/85 percent of premium dollars on health care and quality improvements. Rebates for 2012 58,648 residents with private insurance will benefit from $5.5 million in rebates (average of $225 per family). http://www.hhs.gov/healthcare/facts/bystate/pr.html http://www.cms.gov/cciio/resources/data-resources/mlr.html 11
Puerto Rico Insurance Market Update 12
2012 Puerto Rico Healthcare Market** Segment Membership Dollars (in thousands) (in millions) PMPM % Total Reforma (Mi Salud) 1,420 $2,100 $123 20% Commercial 1,300 $2,330 $149 22% Medicare Advantage 490 $4,750 $808 45% Medicare* 210 $1,360 $540 13% Uninsured 280 $0 Total 3,700 $10,540 * Based on 2012 estimated fee for service cost and average Part D cost ** Figures based on National Association of Insurance Commissioners (NAIC) financial reports, published reports and Milliman estimates 13
2012 Market Premiums and Claims Medical Market Covered Total Premium Loss Lives Premium PMPM Ratio Individual 113,017 $162,730,054 $122.64 88.4% Small Group 135,776 $279,842,732 $172.95 78.1% Large Group 497,946 $884,748,508 $167.66 88.9% Source: CMS Medical Loss Ratio Data and System Resources http://www.cms.gov/cciio/resources/data-resources/mlr.html 14
Puerto Rico Healthcare Market Enrollment trends** Segment 2010* 2011* % 2012* % Reforma (Mi Salud) 1,300 1,370 5.4% 1,420 3.6% Commercial 1,450 1,380-4.8% 1,300-5.8% Medicare Advantage 440 460 4.5% 490 6.5% Medicare 220 210-4.5% 210 0% * Number are presented in thousands. ** Figures based on National Association of Insurance Commissioners (NAIC) financial reports, published reports and Milliman estimates 15
http://ocs.gobierno.pr 16
2014 Individual Market Premium Rates by Metal Levels Plan Minimum Individual Rate Maximum Individual Rate Average Individual Rate Platinum $112.34 $189.32 $158.79 Gold $90.97 $153.72 $130.51 Silver $119.28 $133.17 $125.03 Bronze $60.62 $119.74 $98.15 http://ocs.gobierno.pr/ocspr/ 17
Additional Questions? Luis O. Maldonado is a consulting actuary with the San Juan office of Milliman. He can be reached at luis.maldonado@milliman.com or 787.793.4480. Milliman is an independent consulting firm which provides actuarial and related products and services. For more on Milliman s healthcare reform perspective Visit our reform library at www.milliman.com/hcr Visit our blog at www.healthcaretownhall.com Or follow us on Twitter at www.twitter.com/millimanhealth The materials in this document represent the opinion of the authors and are not representative of the views of Milliman, Inc. Milliman does not certify the information, nor does it guarantee the accuracy and completeness of such information. Use of such information is voluntary and should not be relied upon unless an independent review of its accuracy and completeness has been performed. Materials may not be reproduced without the express consent of Milliman. Copyright 2013 Milliman, Inc. 18