State Innovation Waiver Policy Forum: Preliminary Policy Options for Further Consideration AUDREY MORSE GASTEIER Director of Policy and Outreach EMILY BRICE Senior Policy Advisor on State Innovation Waivers November 25, 2015
Goals for Today’s Discussion Reminder of policy evaluation framework Preliminary policy options for further consideration Proposed next steps Discussion and open public comment 2
Policy Evaluation Framework 3
Stakeholder Feedback on Sec. 1332 Themes included: Feedback ck − Desire for greater simplification for individuals, employers, Opportu tunit nities issuers, and Commonwealth 5 public − Remaining concerns about affordability for individuals and meetings employers Open call for comments – − Interest in a period of stability before undertaking additional received and systemic reforms posted 5 comments Greatest interest in policy solutions to: Inter-agency − Simplify the experience for individuals and families, including and intra- Health Connector alignment with MassHealth and agency addressing dual individual mandates dialogue − Addressing emerging affordability pressures, including rising costs in employer-sponsored insurance − Stabilizing the small group market 4
Stakeholder Policy Areas of Interest Issue sue Initi tial al Policy cy Areas for Further her Explor orat ation on Individual and • Streamline the federal individual mandate to address redundancy with state individual Employer Mandates mandate • Streamline employer reporting of employee Minimum Essential Coverage Metallic Tiers • Develop state approach to components of metallic tiers and actuarial value requirements, such as flexibility in permitted de minimus variation Small Employer • Refine the choices available for employers and employees in the Small Business Health Coverage Options Options Program (SHOP) Small Group Rating Timing • Maintain quarterly rate filing for small group plans in merged market Individual Eligibility • Streamline eligibility and income rules between MassHealth and the Health Connector Subsidy Mechanism • Modify subsidy mechanism to buffer enrollees from complexities of premium tax credits and reconciliation, while maintaining same subsidy level Family Affordability • Measure “affordability” of employer -sponsored insurance in a manner that incorporates total cost of family coverage Continuity of Coverage • Modify approach to “grace period” for enrollees receiving premium tax credits to prevent retroactive terminations of coverage 5
Framework for Policy Analysis Element Description Affordability of Coverage Creating a consumer-centric approach to ensuring that all Massachusetts residents avail themselves of available health insurance subsidies to make health care affordable to as many people as possible Appropriateness of Coverage Offering appropriate health insurance coverage to eligible individuals and employers by defining both the populations affected and the health benefits that meet their needs Continuity of Coverage Focusing on simplicity and continuity of coverage for members by streamlining coverage types, State-Based Principles thereby making noticing and explanation of benefits more understandable, and also minimizing disruptions in coverage Integrated Eligibility Creating a single, integrated process to determine eligibility for the full range of health insurance programs, including Medicaid, CHIP, and premium tax credits and cost-sharing subsidies State Fiscal Responsibility Working within state fiscal realities, and making effective use of available federal funding Administrative Efficiency Creating an efficient administrative infrastructure that leverages technology and eliminates administrative duplication Health Systems Transformation Creating opportunities to achieve payment and delivery system reforms that ensure continued coverage, access and cost containment and improve the overall health of the populations served Building off the lessons learned since passage of Chapter 58 and ACA implementation to date, Precedent & Stability mindful of multiple years of implementation and transition for consumers and stakeholders Scope of Coverage Providing coverage to at least a comparable number of its residents as under Title I of the ACA ACA 1332 Comprehensiveness of Coverage Providing coverage that is at least as comprehensive as the coverage defined in Section 1302(b) of the ACA and offered through Exchanges Affordability of Coverage Providing coverage and cost-sharing protections against excessive out-of-pocket spending that are at least as affordable as under Title I of the ACA Federal Deficit Neutrality Will not increase the federal deficit 6
Timing Considerations Using evaluation framework, sorted policy issues by possible timing: Issues for Phase 1 waiver application, possibly spring 2016: − Enjoy broad consensus; − Could be analyzed fully within a relatively brief timeframe − Do not require extensive implementation planning prior to application Issues for Phase 2 waiver application, after spring 2016: − Require lengthier and more detailed stakeholder feedback; − Require extensive analysis; or − Require complex implementation planning prior to application For some policy issues, additional analysis is needed to determine whether a Phase 1 strategy may be viable Not aware of any federal limit on multiple waiver applications 7
Preliminary Policy Options for Further Consideration 8
# 1: Small Group Quarterly Rating Should MA seek a waiver to maintain quarterly rating for small groups? Element nt Description Context • In states with a single risk pool for the small group market, issuers may file index rates: (1) annually, (2) annually with quarterly trend updates, or (3) annually and quarterly. Issuers may enroll groups on a rolling basis throughout the year. • In states with a merged market, issues may only file index rates: (1) annually, or (2) annually with quarterly trend updates. Issuers may only enroll groups on a calendar year basis. • MA is one of 3 merged markets (MA, VT, DC). • Premium rates have been relatively stable, but recent upward trend (and possible changes to cost-sharing) Issue • Starting in 2018, issuers of small group plans can no longer file quarterly rates and sell small group plans on a rolling basis. This issue is unique to MA and other merged market states. • The change could disrupt the small group market, including: (1) higher premiums as issuers rate more cautiously, and (2) fewer choices for employers during the year. Scope • There were ~ 487,367 covered lives in small group plans in March 2015 (Source: CHIA). Waivab vable le • 42 USC § 18032, which permits states to merge their non-group and small group markets. provis isions ions Possible Po le • Seek a waiver to make a limited modification to the definition of the merged market, such that MA could approac oach maintain a single risk pool for the merged market while maintaining select features unique to the small group market: quarterly rating and rolling enrollment. 9
(cont’d) Small Group Quarterly Rating Element nt Description Framework Factors Opportunities tunities • Could contribute to rate stability at a time when other items are in flux – • Precedent & stability e.g., transition to ACA-compliance rating factors, implementation of the • Affordability of coverage “Cadillac tax,” end of risk corridors and reinsurance • Could minimize coverage disruptions, e.g., shortened plan years for • Continuity of coverage groups with mid-year anniversary dates • Could be implemented with relatively little administrative burden or cost • State fiscal responsibility to state, issuers, or employers. • Administrative efficiency Challe lleng nges es • Could contribute to rate volatility if issuers adjust rates frequently based • Affordability of coverage on market competition, new costs (e.g., Rx), etc. Key Areas as for • Confirm ability to craft waiver within permissible 1332 legal boundaries Further her • Analyze historical volatility in small group costs (including cost-sharing design) Analy alysis is • Model likelihood of further volatility in small group costs, with and without waiver • Model impact of waiver on state budget (e.g., premium tax) and federal budget (e.g., expected take-up of non-group insurance with subsidies) Possibility for Discussion: Pursue for Phase 1 consideration, pending further analysis. 10
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