State Responses to the Evolving Individual Health Insurance Market

12:00 p.m. – 12:10 p.m.          Welcome and Opening Remarks

• Mary Ella Payne, R.N., MSPH, acting president and chief executive officer, Alliance for Health Policy (@AllHealthPolicy)
• Sara Collins, Ph.D., vice president, Health Care Coverage and Access, The Commonwealth Fund (@commonwealthfnd)

12:10 p.m. – 12:50 p.m.          Presentations

• Sabrina Corlette, J.D., research professor, Center on Health Insurance Reforms, Georgetown University Health Policy Institute (@SabrinaCorlette)
• Brian Webb, MPA, assistant director, Health Policy, National Association of Insurance Commissioners
• Mike Kreidler, O.D., MPH, insurance commissioner, Washington State (@WA_OIC)
• Robert Morrow, J.D., associate commissioner, Life and Health, Maryland Insurance Administration
• Jeanette Thornton, MPA, senior vice president, Product, Employer, and Commercial Policy, America’s Health Insurance Plans (AHIP) (@AHIPcoverage)

12:50 p.m. – 1:30 p.m.           Question and Answer Session

Note: This is an unedited transcript. For direct quotes, please see video:  http://allh.us/GApT   MARY ELLA PAYNE:   Hello, good afternoon everyone. Nice that everyone just quieted down, so I figure we’ll go ahead and get started, even though I think we’re a minute early. But good afternoon everyone, and thank you for joining us here today for a briefing on State Responses to the Evolving Individual Health Insurance Market. My name is Mary Ella Payne, and I am the acting President and CEO of the Alliance for Health Policy. For those of you who are not familiar with the Alliance, we are a non-partisan organization dedicated to advancing knowledge and understanding of health policy issues. We will be live tweeting during this event. You can join today’s conversation on Twitter, using the #allhealthlive, and feel free to submit questions via Twitter. You also will have green cards in your packets that will allow you to ask questions. You can write them down and just flag them, and someone will pick them up, and we’ll, at that portion of today’s meeting, we’ll submit those to our moderator.   I also want to welcome to all of those who are watching live from C-SPAN, happy to have the coverage today. Another little, small note, is that you also have blue evaluation forms, and we’d love for you to fill those out before you leave today. It really helps us with our programming, and we’d love to get your suggestions on how we can improve, and also, topics.   So going right to the meeting today, our briefing. Over the last two years, there’s been a number of changes made to the individual health insurance market. These changes include repealing the individual mandate, suspending cost-sharing and reductions, expanding access to plans that do not comply with the original standards set up by the Affordable Care Act, and most recently, freezing payments to the risk adjustment program. Together, these decisions have contributed to the uncertainty about the stability and affordability of state exchanges, and the individual insurance market. As insurers file and negotiate premiums with state regulators for fiscal year 2019. This briefing will unpack the current landscape of the individual health insurance market, as well as state responses to stabilize their market.   We have an incredible panel here today, I think you are going to learn a lot. But before we get started, I would like to thank the Commonwealth Fund for making today’s briefing possible, and I’d also like to introduce Sara Collins, Vice President of Health Care Coverage and Access, at the Commonwealth Fund, who will be moderating today’s panel. You have all of their full bios in your packet, so we are not going to spend a lot of time on bios today, but you do have that if you want to look further for that.   So now I’m going to turn it over to Sara to introduce our speakers, and to moderate today’s panel. Thanks, Sara.   SARA COLLINS:   Thank you, Mary Ella, and behalf of the Commonwealth Fund, I’d like to thank the Alliance and also thank the panelists and the audience for joining us today to talk about state responses to the evolving individual insurance market. Some of you may be familiar with the Commonwealth Fund’s state scorecard on health system performance, where we use federal data to compare state performance on a large number of healthcare indicators. The scorecard has shown, over time, that there has long been considerable variation across states, on key indicators of healthcare access, quality of care, and healthcare cost. But we’ve also found in recent years that the ACA has narrowed state differences on access measures like the percentage of uninsured in each state, and the percentage of people who report not being able to get care because of cost.   This is because the Affordable Care Act set federal standards for health insurance such as services and health plans have to cover, and also banning insurers from charging people more, or denying them coverage on the basis of pre-existing conditions. The Affordable Care Act also provided substantial amounts of federal funding to states for subsidies in the individual market, the Medicaid expansion, and activities like establishing marketplaces and funding navigator programs to help people choose plans. But the scorecard also finds that there still is considerable state variation across states in the areas of access. For example, the percentage of people who are uninsured ranges from a low of about three and a half percent in Massachusetts, to nearly 21 percent in Texas. It is very possible that recent Congressional and Executive Branch actions that Mary Ella just listed regarding the individual market, as well as state responses to those changes, will widen state differences in people’s ability to get health insurance, and get healthcare. The focus of our discussion today, is how our state is responding to these actions, and what are their likely implications? This first slide shows the first page of a new interactive tool on the Commonwealth Fund’s website. This shows how states are addressing these federal actions. Sabrina Corlette, who is here with us today, developed this tool with her colleagues at Georgetown, and as you can see, nearly half the states have taken up stabilization strategies like establishing reinsurance programs, increasing oversight of plans that don’t comply with the Affordable Care Act, and creating financial incentives for people to maintain coverage like passing legislation to establish an individual mandate in their states, or adding subsidies to the premium tax credits.  Georgetown and the Commonwealth Fund will be updating this tool as more states make changes in their markets. Also out today is a new report by the Urban Institute, which is also on the Commonwealth Fund’s website, where you can look and see what would happen to premiums and insurance coverage in your state, if it opted to implement an individual mandate.   We have a really distinguished panel of experts with us today to talk about these issues. Their complete bios, as Mary Ella mentioned, are in your folders. Leading off the panel is Sabrina Corlette. She is Research Professor, Center on Health Insurance Reforms at Georgetown University’s Health Policy Institute. She is the author of numerous reports on many of the recent federal actions that we’ll be discussing today. Brian Webb is the Assistant Director for Health Policy and Legislation at the National Association of Insurance Commissioners. The NIAC represents the insurance regulators in all 50 states, and D.C.  Mike Kreidler is Washington State’s Insurance Commissioner. He was first elected in 200, and was re-elected to his 5^th term in 2016, and is currently the longest serving commissioner in the country. Robert Morrow is Associate Commissioner of Life and Health at the Maryland Insurance Administration. He was appointed to this position by Maryland’s current Insurance Commissioner, Al Redmer. Jeanette Thornton is a Senior Vice President for Health Plan Operations and Strategy at AHIP. She leads AHIP’s activities on the health insurance marketplaces, and is the lead liaison between the federal government and private insurers. We’ll start with Sabrina Corlette.   SABRINA CORLETTE:  Thank you, Sara, and thank you to the Commonwealth Fund, and the Alliance for health policy, for having me here today. It is a real privilege and pleasure to be with all of you and to talk about the individual market. And I’m coming to appreciate, after several years now of working in this area, that there is no such thing as a calm and restful summer when it comes to individual market policy. It seems like we’re always having to deal with one fire drill after another. I’m going to talk a little bit about what is driving premium rates and insurer participation in the individual market around the country, and in particular, states. So first, just in general, if you could imagine a normal year for the individual market, which may be hard to imagine, but if you imagine just sort of a typical year, what would insurance companies be thinking about as they develop premium rates for their customers? This slide gives you a picture of sort of, what are the factors that go into a premium, right?  And some of it is pretty obvious, right?  They are looking at what kind of health services their enrollees are using, and how many of those are likely to renew their policy. They are looking at market wide trends, and what physicians and hospitals and drug companies are charging for their prices, for their services and goods, and as well as market wide trends in the use of healthcare services.  They’ll be looking at the effect of state or federal regulatory or policy changes, so if a state passes a new benefit mandate, or if there is some shift in federal policy, that will be taken into account. And they are looking at things like the status of Affordable Care Act subsidies, like of course the cost-sharing reduction subsidy that compensates insurers for the cost of low deductible, low cost-sharing plans that they are required to provide to low income enrollees.  They will be looking at things like the premium stabilization programs that were part of the Affordable Care Act, the one that is in existence today is the risk adjustment program, so they may be making projections — do I think I’m going to have to pay into that program because I’m attracting healthier than average risk?  Or am I going to actually receive money under that program because I’m attracting sicker than average risk? So those are things that the insurance companies have to sort of project forward as they propose their premiums. They also may be making changes to the benefit design. To the kinds of benefits that they cover, as well as the cost sharing that the enrollees face. So if they increase the deductible a little bit, the premium might come down.  If they eliminate a particular kind of service, that would also lower the premium. Same as if they add services. They may be expanding or contracting the service areas, or their networks. Those things will all feed into the premium that the policy holder pays. Then of course, there is also just the costs of administering the plan, federal and state taxes, and any fees. And then last, but most definitely not least for most insurance companies, is profits and contribution to surplus. So you may see a range there, you know some companies are looking at a two percent profit, some companies four percent or five percent, it really just depends on the company.   What are we looking at for 2019? We are in the middle of the rate filing, and rate review season for the individual market, so I think insurance is a somewhat unique field in that the insurance companies have to submit proposed premiums in the spring, and they get reviewed over the summer, but they actually don’t go into effect until January 2019, so there is a long, long lead time. But what we’re seeing in the early prosed rates, anyway, is that driving rates up this year is the repeal of the individual mandate penalty, which is effective January 1, 2019. The President’s decision last October to cut off the cost-sharing reduction subsidy, that’s that compensation for those low cost sharing plans to low income folks. Then a number of insurers are saying they are going to have to raise rates, because they are predicting that the promotion of short term and association health plans is going to siphon away healthy people from the individual market to these cheaper, but also skimpier insurance policies. Moderating those rate increases are the delay, and the health insurer tax, which was a tax in the ACA that Congress has delayed for I believe, one more year. The federal income tax cuts that were in the tax cuts and jobs act, some insurers are, applied to them, passing those on to policy holders. And then benefit design changes, seeing a number of insurers shifting costs a little bit to higher deductibles and cost sharing, and that is lowering premiums a modest amount.   What about participation? It’s been an interesting story. Those of you who have been following the individual market may remember about a year ago at this time, there were a number of areas of the country that were facing the prospect of no insurer at all participating, leaving many consumers high and dry. So we saw that in Iowa, Nevada, Ohio, Oklahoma, Tennessee, and other states. And it was sort an unheralded, but remarkable effort on the part of many state insurance departments, insurance companies, policy makers at the state level, to really sort of, through political persuasion, regulatory changes, and sort of by hook or by crook, making sure that every county in the country was covered. So that’s the good news, is that in 2018, every country is covered. The not so good news is that about a quarter of enrollees only have one insurance company to choose from. So in a lot of parts of the country, there is just not a lot of choice.   Going into 2019, we’re seeing some notable expansions. Companies that sat out last year, or were only in a small of the state, now expanding to more counties in the state, and so it’s a somewhat brighter picture going into 2019, perhaps a number of companies feeling that they’ve sort of weathered the worst of the ACA storms. There are some wild cards there, most notably the decision last week, or two weeks ago now, I guess, of the administration to freeze the risk adjustment transfers. This is a really critical program to the market stability, and that sort of injected a fair amount of uncertainty. I’m hopeful that will get resolved quickly, but it sort of heightened some anxiety among, I think, a number of carriers about this administration’s competence and good faith in operating the marketplace.   I’m running out of time, and I know we’re going to talk more about state actions, but I just want to note that we are going to see some divergence among states in terms of premiums, enrollment, insurer participation. Because state policy decisions really matter. So this slide just shows some states that have really taken up, or are leaning in to preserve and stabilize their markets with individual mandates, short term and association plan limits, so they are not as attractive an option as a substitute for ACA coverage. Reinsurance, shifting to maybe operating their own marketplace to give themselves more flexibility, but on the flip side, we are also seeing states really embrace the opportunity to deregulate. To reduce regulation on health plans, such as in Iowa, Idaho, and potentially North Dakota. So with that, I will pass it to Brian. Tell us all about insurance regulation.   BRIAN WEBB:  Thank you very much. First I would like to start with, who knows who your Insurance Commissioner is? Anybody from Washington? This is him, right here. Get to know your Insurance Commissioner, get to know your Department of Insurance, because insurance remains a state-based product. Each market is very different, so if you really want to know what’s going on in your state, talk to your Department of Insurance to find out what’s happening.   I was asked to come talk about how regulation is done, kind of coordination between federal and state, and some of the decisions states have under the ACA, and as we’re moving forward, some of the things you’re looking at.  So just to kind of give a little bit of a history lesson, under the McCarran-Ferguson Act, states are the clear regulators of insurance, all insurance. State regulated, not federal. But then in 1972, ARISA was passed, which brought federal government into group insurance.  Basically federal government is in that relationship between employer and employee for benefits, including, at the last second, health was brought into that.  But what that means is, still if that group goes and buys insurance, the insurance is still regulated by whom? States. But if they self-insure, then it’s regulated by the federal government. So we kind of had the federal government getting into the insurance area. Then of course with HIPAA, they stepped a little further in, where they started getting into small group in particular, with regard to portability and individual as well, but that was mostly on access. They really didn’t look at benefits or rates or things like that. But they were stepping, again, into an area where states historically have been, and they created a pre-emption standard. And the standard is, prevents the application of. So if the state has a law of any kind that prevents the application of the federal law, then that law is pre-empted, federal law takes precedent. So then that’s something that was then brought forward to the Affordable Care Act in 2010. And this was where basically the federal government filled the field in many different areas — in the individual market as well as the small group market and the large group market, where you now had federal standards for benefits, for access, for rates, and those kinds of things. But the standard was still the same. States can still regulate as long as their laws do not prevent the application of the federal law. So that’s where we are at right now. And states had to make some real key decisions when it came to how they were going to regulate. Just looking at the key areas of regulation. One is licensure and solvency. That is still 100% states. Nobody can sell a product in a state unless they have permission from the state to sell that product. That is just the way it is. Nothing in the ACA changed that. Solvency is still up to the states. If a state feels like they are insolvent, they can shut them down. Plan management though, that’s where we need more state/federal coordination. So when it comes to rate and form filing, form — think of that contract. What are the benefits? Who is going to make sure that they meet all of the essentials of benefits? They do all the disclosures, they follow all the rating rules, and do all that kind of thing. Well, that now becomes a state and federal coordination. Now again, state can step up and say, “I will enforce, I will enforce state and federal laws, I have laws that do not prevent the application. I’m going to do it. Federal government, more and more, including with the Obama Administration, now into the Trump Administration, has said, “We’ll let the states do it.” Well, what if a state says, I don’t want to do it? Well, then you have something called Texas, Oklahoma and Wyoming, where the federal government does it. So carriers have to basically work with two regulators in that case. And when it comes to qualified health plan certification, what plans can be sold on exchange? Again, federal government filled the field, but a state can say, I will partner with you, I will do that job. I will make sure. I will run the tools. I will do all that. And again, with this administration, we see it even going more and more toward the state, where the state can play that role.   And then the deadlines. Feds now are setting kind of the broad deadlines, the key deadlines, but states can set their own deadlines as well. So its kind of a coordination. Network adequacy is going more and more toward the states. Federal government for a while there was starting to get involved. That’s where we ended up with notices going to companies saying they did not have enough providers in the middle of Lake Michigan, which nobody does. So we’ve got to tighten that up a little bit. So states are kind of more and more involved there. And then when it comes to enforcement, who takes the complaints? And basically if you’re a federal exchange, your state is the federal exchange. If they have a problem with subsidies, they have a problem with the system, they have a problem with the exchange itself, those complaints go to the federal government, federal government takes care of them. But if it’s something about the insurance company, that’s turned around, goes to the states. So we have good coordination there.   So what are some of the state options? First option is:  Who is going to enforce? You can be a state that says, I will not enforce these, and force the federal government to do it. That happened with HIPAA too, two states said, “I’m not going to enforce.” Who were they?  California and Missouri. So we are not going to do it, federal government had to do it for a while. Same here. Type of exchange:  States can be a state-based exchange like these two states here. And that gives you a lot more flexibility, you can kind of keep the money in your state that you’re collecting, you can run your things, but most states aren’t doing that. Instead they are using a federal exchange, and you can do that as well. Some now are doing the state-based exchange with a federal platform, where they are using Healthcare.gov, but they are running it. So those are some of the options that the states can make. The role in plan management, do they want to be a partner, or do they want the federal government to take a larger role? And they have taken a larger role in some of the things like quality, and some of those things, but most states are saying, “I’ll do the rate informed filing, I will do network adequacy, I will do those kinds of things.” Then of course we have Section 1332 waivers. The ACA, from the beginning, recognized the states need to play a major role. One size does not fit all. So we need to give some flexibility to the states. States are doing things like re-insurance right now. We have three states with re-insurance, four more have requested re-insurance waivers, but states are going to start looking more broadly now, and saying, okay, what else can I do? And there is a tremendous amount of things they can do.  So they need to figure out how far do they want to take this, and what kind of changes they need to make.   Essential benefits is a rather new one; under the new rules, states can change them every year if they want to, and they can change specific sections of the essential benefits.  So they have more flexibility now. In fact, two states, Illinois’ and Alabama, are changing theirs, or requesting to change for 2020.   Risk adjustment. How many people here know that if you are state-based exchange, you can do your own risk adjustment program? And how many are doing it? Zero. But the latest things, maybe more people will be thinking about it. But under the new rules they can though, even if they use the federal risk adjustment, they can request some modifications to the formula for their state. Those are due August 1^st, so we’ll see how many states take them up on that.   Transition plans. These are the ones that were sold between 2019 and 2014. They cannot be sold after 2014, but they can continue to be renewed. If who allows it?  The state. And some states have not allowed it. Other ones have said, we will allow it, and those have continued, at least through 2019 for now.   Regulation health plans. This is a big deal, AHPs.  Who regulates AHPs? States. I know it’s under ARISA, but there was an earlier borne amendment that said all multiple employer Welfare arrangements are regulated one hundred percent by the state, whether fully insured, which means they are buying insurance, or whether they are self-insured. One hundred percent states. So all states now have to decide, what am I going to do with these new rules? How am I going to apply those?  Short term limited duration plans? Who regulates them? States. So states will have to decide what they want to do. And then there is also other areas. Medicaid expansion. States had to decide there. And now I think overall what states are looking at — it doesn’t matter what color they are, blue and red, I mean, they are all saying, okay, how can I make this work better for the unsubsidized population? I’ve got my exchange population. We will call them the sick and subsidized. They are over there. What can I do to stabilize that? Reinsurance, things like that, I can stabilize that. But what about the other?  We will call them the healthier, wealthier. What about them? It’s too expensive. Unsubsidized is too expensive. Family of four can’t afford it. How can I do that? That’s where states are going to start to look at this other. How can I use 1332 waivers? How can I use other methods? How can I get coverage more affordable to them? So that’s what we’re looking to, that’s where the states are headed.   Now, let’s turn to the states.   SARA COLLINS:  One point of clarification:  People may not know the difference between association health plans and multiple employer Welfare arrangements. Maybe you might just quick —   BRIAN WEBB:   Well if I could do a diagram — going back to school. All association health plans are multiple employer Welfare arrangements, so it doesn’t matter. Association health plans are all multiple employer Welfare arrangements, because they all involve multiple employers, got it? But not all multiple employer Welfare arrangements are association health plans. There are other kinds of entities that are also multiple employer Welfare arrangements. And the final rule, out of DOL made it very clear:  Everything they talked about in the final rule, every new plan, everything they said could be created, are all multiple employer Welfare arrangements. So states regulated.   MIKE KREIDLER:  Thank you very much for the invitation to join you here today. I’m not sure which button I’m supposed to push on there. I didn’t push hard enough, that was my problem.   What you can see from this first graph, is we have about 270,000 people that are insured through the individual market in the state of Washington, it’s a relatively small number, about 4 percent of the state’s population. Small segment of the population, but a very vulnerable one from the standpoint that they have to pay their own premiums, they don’t have an employer that assists them in paying those premiums, so if there is a problem in the individual market, it’s one that comes home to roost and you read about it in the evening newspaper, but more likely on the evening news, you watch it on television, with some very personal cases of individuals who are being disadvantaged. We are down about 30,000 over what we had previously. That, we believe, is driven by cost, as opposed to stronger employment picture, and again it’s something that we worry about going forward. We have 11 insurers inside the exchange. Excuse me, 11 insurers offering individual products, seven of them off it outside of the exchange, and seven inside, and some offer the same product inside and outside, hence the overlap. And 74 plans overall are going to be offered. Again, we were talking about 2019 projections.   Every county in the state of Washington is going to have choices. Last year, we had a couple counties during rate filings that were left bare without any insurers, we don’t have that problem this time around, but it’s still one where you have 14 counties that have only one insurer in it that tend to be rural counties, much more isolated, much more challenged. 2019, we are looking at approximately nineteen percent in the way of requests that have come in from the insurers. Going forward we had 36 percent rate increase last year. These decisions are under review. We will be making our final decision in mid-September. We know that that number can be somewhat volatile, given the fact that we still don’t have a distinct answer, a complete answer to risk adjustment payments, is to how they will be applied for the state of Washington, and across this country of ours, going forward. We’ve been doing just about everything we possibly can right now to try to stabilize the market. We’re quick to approve the expansion of the Medicaid program in the state of Washington, we have, as was pointed out earlier, have our own state-based health insurance exchange. Didn’t allow cancelled policies to continue. It’s not rocket science. Those tend to be the healthier people who don’t need health insurance as much at the time, but if they get sick, they obviously want to go over to the ACA compliant plans. So we didn’t allow them to essentially water down the risk pool, and cause rates to be higher.   We also did something that was the pace setter for the country, we adopted clear network adequacy standards, and those standards are ones to make sure that all carriers have the same requirements here as to how many doctors and hospitals availability of providers in their network. We are down to under six percent right now from the standpoint of the uninsured rate in the state of Washington. The rate increases that we looked at for the first three years when we had the federal reinsurance program was under ten percent per year. That obviously has changed now, as you can see. And you have choices in every county.   The next graph here, before the administration’s actions, premium increases were stabilizing. That’s not true today. Before the ACA the plans were ones that invariably did not cover pharmaceuticals, or were extremely limited in their coverage of pharmaceuticals. Didn’t cover routinely maternity, which meant that the plans were weak and inadequate, so we want to make sure that everybody meets the same standard here, so that they are available to the people who really need it. And that means we need to continue to see what can do to stabilize the increases. We face deliberate acts to undermine what we saw as a stabilizing market in the state of Washington. We observed that our insurers start to get nervous, and nervous insurers is not a good thing, because they tend to want to charge more rates to cover their anxiety. Fifty percent of the people enrolled in Washington State, through the individual market, receive subsidies. Forty percent inside the exchange do not receive subsidies. So sixty percent of the people inside the exchange are receiving subsidies. They are counting on us to protect them going forward. I would be the first to say that the ACA is far from perfect. I’ve had the opportunity to be involved with insurance regulation before the ACA, and now obviously, afterwards. And as a consequence, we are taking very deliberate action right now to help try to stabilize the market, that which is not being properly addressed, if we’re ending the individual mandate, defunding CSRs, suspending risk adjustment payments, cutting advertising, and now navigator funds, the advantage Washington has, we have our own exchange, so we pay for it independently. Not defending the pre-existing condition requirement in the Texas case right now by the administration, obviously makes us very nervous, because all of a sudden you could wind up with carriers potentially, if that were to be carried out, insuring people who did not have protection of a pre-existing condition.  We are doing what we can right now to protect the market so it isn’t further segregated. Such things as short term medical. We very strictly limit that. We are in the process of adopting rules around it. The same applies for association health plans, both of which only fragment the market that much more.   Additional steps that Washington is taking legislatively; we wound up with — to make sure that we don’t have a bare county in the future, is to have a requirement for insurers that participate in certain state insurance programs, that if they participate in that program, they have to offer silver and gold exchange plans if there are no insurers in that particular county; a way again, of trying to keep the market stable. We tried to have a state based re-insurance program, coming up with a funding mechanism for some $200 million, proved to be quite a challenge, and it’s one that we may revisit, but it’s proved very difficult for us, again, trying to hold down rates, particularly for those individuals who do not receive subsidies. We also had legislation introduced to establish an individual mandate to make up for the federal one that went away, but it’s very difficult when you’re from a state that does not have a state income tax, it’s very problematic to try to find an alternative that would be available. Rural areas are a real challenge for all of us — they tend to be much more expensive, and harder to