Galen Benshoof, Senior Program ManagerNovember 2015

Realizing the Promise of the ACA: Implementation of State Health Reform

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Overview

The ACA’s third open enrollment period

Refinement of the marketplaces

Medicaid expansion: current state of play

1332 waivers: what’s the big deal?

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Third open enrollment period

• Began November 1, 2015 and runs through Jan 31, 2016• So far, mostly smooth sailing

Third open enrollment period

• Pre-OEP3, 17.6 million people had gained coverage as ACA took effect

• 10.5 million uninsured are still eligible for Marketplace coverage

Third open enrollment period

Exchange decisions by state

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New HampshireMassachusettsRhode IslandMichigan

California

Nevada

Oregon

Washington

Arizona

Utah

Idaho

Montana

Wyoming

Colorado

New Mexico

MaineVermont

New York

North Carolina

South Carolina

Alabama

Nebraska

Georgia

Mississippi Louisiana

Texas

Oklahoma

Pennsylvania

Wisconsin

Minnesota North Dakota

Ohio

West Virginia

South Dakota

Arkansas

Kansas

Iowa

Illinois Indiana

Alaska

Tennessee

Kentucky Missouri

DelawareNew Jersey

Connecticut

Virginia Maryland

FloridaHawaii

DC

KEY

SBM federal platform

State-based Marketplace (12 + DC)

Defaulted to healthcare.gov

Partnership Marketplace

Insurance marketplaces

• Healthcare.gov has stabilized– Massive gains in some states during first two years

• Will lower enrollment states improve this year?

– Improved customer experience: provider directories, drug formularies, and out-of-pocket cost calculator

Insurance marketplaces

• State exchanges have also stabilized– Most seeing increased plan choice and

competition– On the path to financial sustainability– 2.0: greater focus on health insurance literacy and

decision support tools– California a model for active purchasing?

• But challenges remain– State exchange establishment grants have ended– Some co-op insurance plans have dissolved– Rate increases– Renewals– Tax reconciliation– Hardest to reach population

Insurance marketplaces

• Continued march to full expansion• States are seeing savings in uncompensated care,

behavioral health, criminal justice, and more• Some remaining states will push envelop on

waivers• Possibility of retrenchment in a small number of

states– Michigan, Arizona, Arkansas

Medicaid expansion

Medicaid

California

Nevada

Arizona

Utah

Idaho

Montana

Wyoming

MaineVermont

New York

North Carolina

South Carolina

Alabama

Nebraska

Georgia

Mississippi Louisiana

Texas

Oklahoma

Pennsylvania

Wisconsin

Minnesota North Dakota

Ohio

South Dakota

Kansas

Iowa

Illinois

Tennessee

Missouri

DelawareNew Jersey

Connecticut

Massachusetts

Virginia Maryland

Rhode Island

Hawaii

New Hampshire

Not Expanded Medicaid (20)

Alaska Expanded Medicaid (29 + DC)

West Virginia Colorado

New Mexico

Oregon

Washington

Michigan

Arkansas

Kentucky

Washington, DC

Medicaid expansion decisions as of June 2015. Montana has passed legislation to implement an alternative expansion; waiver is pending with CMS.

Iowa

Alternative Medicaid Expansions (6)

Indiana

Alternative Medicaid expansions

Features of alternative Medicaid expansions

Premiums

Cost Sharing

Health Savings-Like Accounts

Healthy Behavior Incentives

Connecting to Work

Benefits and Coverage

Premium Assistance

1332 waivers

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States may not waive non-discrimination provisions prohibiting carriers from denying coverage or increasing premiums based on medical history. States are precluded from waiving rules that guarantee equal access at fair prices for all enrollees.

• Section 1332 builds on bipartisan ideas in health reform

• 1332 waivers are a way for states to expand and refine their systems of private insurance coverage

• To fund their reforms, states can receive the aggregate amount of federal funds that otherwise would have gone to tax credits and cost-sharing reductions

What can be waived?

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States may request waivers from HHS and the Treasury Department of certain requirements of the Affordable Care Act (ACA), effective 01/01/2017

Individual Mandate1

States can modify or eliminate the tax penalties that the ACA imposes on individuals who fail to maintain health coverage.

Employer Mandate2

States can modify or eliminate the penalties that the ACA imposes on large employers who fail to offer affordable coverage to their full-time employees.

Benefits and Subsidies3

States may modify the rules governing covered benefits and subsidies. States that reallocate premium tax credits and cost-sharing reductions may receive the aggregate value of those subsidies for alternative approaches.

Exchanges and QHPs 4

States can modify or eliminate QHP certification and the Exchanges as the vehicle for determining eligibility for subsidies and enrolling consumers in coverage.

ACA § 1332(a)(2)

What can’t be waived?

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Guaranteed Issue

States may not waive fair play rules

States may not waive non-discrimination provisions prohibiting carriers from denying coverage or increasing premiums based on medical history. States are precluded from waiving rules that guarantee equal access at fair prices for all enrollees.

What are the statutory guardrails?

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A state waiver application must satisfy four criteria to be granted

The waiver must provide coverage to at least as many people as the ACA would provide without the waiver.

Scope of Coverage 1

ACA § 1332(b)(1)

The waiver must provide coverage that is at least as “comprehensive” as coverage offered through the Exchange.

Comprehensive Coverage2

The waiver must provide “coverage and cost sharing protections against excessive out-of-pocket” spending that is at least as “affordable” as Exchange coverage.

Affordability3

The waiver must not increase the federal deficit.

Federal Deficit4

Not a “super waiver”

ACA speaks about a coordinated waiver process that would include 1115 and Medicare waivers in conjunction with 1332. This lead many to refer to Section 1332 as an opportunity for “super waivers.”

HHS has clarified that Section 1332 Waivers are specifically and only for those statutes and related regulations that are expressly waivable under Section 1332. Waivers under Section 1115 and/or CMMI’s Medicare Waiver authority must be separately approved under their own authorities and guidelines.

1332 waiver challenges

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Steps in waiver process

State Consider state goals and

determine if 1332 waiver is desirable

Have sufficient state authority to implement the waiver

Draft waiver application

Hold pre-application hearing

Include in waiver application:o Actuarial/economic analyseso Implementation timeline o Ten-year budget plan

There is no deadline for submitting a waiver application and states may submit prior to 2017

ImplementationHHS and Treasury

Deem the waiver application complete

Conduct federal notice and comment period

Review the application within 180 days of determining it is complete

Approve or reject the waiver application

Waivers implemented in 2017 or later

Quarterly and annual reports submitted to Treasury and HHS

Waiver renewals begin no later than 2022 because the term of waiver may not exceed five years

Stakeholder engagement

The most compelling ideas for innovation may emerge after state officials and key stakeholders come together and forge consensus around the needs of their public programs and commercial insurance markets.

Hawaii’s 1332 taskforce may be a model for other states wanting to ensure all options are considered in a public and transparent way through their engagement of stakeholders in a review of available options.

Sample 1332 implementation timeline

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Start 6 Months Year 1

Consider state goals and policy priorities for 1332 waiver

3 Months60 Days Year 6Year 2

Engage key stakeholders

Hold required pre-application hearing

Submit waiver application to HHS and

Treasury

Application approved by HHS and TreasuryImplementation Begins (if Year 1 falls after January 1, 2017)

Begin submitting quarterly reports

Begin submitting annual reports

Waiver is renewed

Secure state authority early in the process

This assumes a 6 month review &

approval process by HHS & Treasury; some

waivers may take considerably longer

Moving forward with a 1332 waiver

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Identify state goals

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Important to align broad goals and targeted objectives

Lower the uninsured rate?

Does the state want to….

Move to value based purchasing?

Consolidate and integrate various programs?

Address a marketplace glitch?

Identify barriers and strategies

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Eligibility standards differ across programs

Potential barriers

Participating providers change based on program

Large cost sharing increases on small income changes

Disruption to existing state roles/responsibilities

Align eligibility requirements

Strategies for overcoming barriers

Align standards across QHPs and Medicaid MCOs

Smooth the cost sharing continuum

Convene interagency taskforce

States relying on healthcare.gov

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New HampshireMassachusettsRhode IslandMichigan

California

Nevada

Oregon

Washington

Arizona

Utah

Idaho

Montana

Wyoming

Colorado

New Mexico

MaineVermont

New York

North Carolina

South Carolina

Alabama

Nebraska

Georgia

Mississippi Louisiana

Texas

Oklahoma

Pennsylvania

Wisconsin

Minnesota North Dakota

Ohio

West Virginia

South Dakota

Arkansas

Kansas

Iowa

Illinois Indiana

Alaska

Tennessee

Kentucky Missouri

DelawareNew Jersey

Connecticut

Virginia Maryland

FloridaHawaii

DC

KEY

States Relying on HealthCare.Gov (38)

State Based Marketplace (12 + DC)

38 states relying on healthcare.gov face additional challenges and constraints in using 1332

States considering transitioning to HealthCare.Gov should factor in the potential loss of flexibility in developing 1332 waivers for state specific innovation

As the impact on healthcare.gov increases, challenges increase

Healthcare.gov state confines

27These confines represent the current state of HealthCare.Gov, future improvements may

allow for more state flexibility in 2017 and beyond

Feasibility

Impact on healthcare.gov

LOW

HIGH

HIGH

Individual and Employer Mandate

Marketplaces and QHPs

Benefits and Subsidies

Plan design

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A state may modify or eliminate specific features of plan design required by the ACA

Maximum amount of cost-sharing which can be incurred under a plan

Limitations on Cost Sharing1

Limit on deductible for health plans offered on small group market

Limitations on Employer Coverage2

QHPs must be certified, provide EHB, offer at least a silver and gold plan, same rates on and off Exchange, and not include group health plans

Limitations on QHPs3

Catastrophic plans must provide for full EHB coverage once an individual has incurred cost-sharing above the annual limitation

Catastrophic Coverage4

ACA § 1301(a)(1), 1302, (b)(1)(B), 1302(c)(1), (c)(2)

Waiver Examples:•Allow consumers to purchase catastrophic coverage regardless of age or exemption status •Decrease annual maximums on deductibles to reduce cost sharing burdens

Exchange framework

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ACA § 1311(d)(4)

A state may to waive discrete functions of an Exchange, or eliminate the Exchange

Waiver Example: •Replace individual exchange with direct enrollment and web brokers

Small business health options program

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ACA § 1311(B)(1)(B)

Waiver Examples: •Eliminate SHOP and allow tax credits to be used with any licensed insurer•Replace SHOP with private exchange that meets minimum standards

A state may eliminate the SHOP or change the requirements of SHOP to allow more individuals to enroll SHOP coverage

State Exchanges must establish a SHOP for small

employers to enroll employees in coverage

Coverage standards

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A state may tailor their Exchange to the state’s needs through waiving specific standards of the Exchange

Any individual who lives in the Exchange area, is not incarcerated, and is a citizen, or lawfully present may enroll in a QHP

Coverage for qualified individuals1

The Secretary will require an Exchange to provide for an annual open enrollment period and special enrollment periods

Open Enrollment Periods2

Each Exchange rates QHPs on the basis of quality and price and provides rating on their website

QHP Quality3

QHPs will use a standard format to present their health plan’s benefits

Presenting Benefits4

ACA § 1312(f), 1311(c)

Waiver Examples:•Move open enrollment to tax season (*Note: may not be possible outside Exchange)•Revise quality rating standards (could avoid disruption if done before federal program implemented)

Advance payments of the premium tax credit

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Internal Revenue Code § 36B (c)(1)(B), (c)(2), (d)(3)(B)

APTC Amount

Income between 100 – 400 percent FPLNot eligible for Medicaid or other MECIncome below 100% FPL who is ineligible for Medicaid as a result of being an alien lawfully present in the United StatesNot eligible for employer sponsored coverage or eligible for employer sponsored coverage which is not affordable (exceeds 9.5% of household income) or does not meet minimum value (covers less than 60% of cost of benefits).

EligibilityIncome Level Premium as Percent

of Income

Up to 133% FPL 2% of income

133 – 150% FPL 3 – 4% of income

150 – 200% FPL 4 – 6.3% of income

200 – 250% FPL 6.3 – 8.05% of income

250 – 300% FPL 8.05 – 9.5% of income

300 – 400% FPL 9.5% of income

Tax credit is difference between premium of second lowest cost silver plan (SLCSP) available to family and amount described above

Waiver Examples:•Simplify APTC with a full credit up to 200% FPL, medium credit to 300% FPL, and low credit to 400% FPL. •Align update of poverty line for FPL calculations between Medicaid and Exchange. •A state might be able to respond to an adverse King ruling by waiving “Established by the State”

States may also modify the ACA APTC scale and eligibility criteria

Smoothing the cost continuum

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Consumers at the margins of IAP eligibility face significant premium and cost-sharing increases with minimal income increases

0% 100% 200% 300% 400%

CHIPeligibility levels vary by state

Medicaideligibility levels vary by state

Stre

amlin

ed E

ligib

ility

an

d En

rollm

ent S

yste

m Payment and Delivery

System Reform

Basic Health Planat state option

Premium Tax Credits andCost Sharing Reductions

Medicaid to QHP/APTC cliffNew York State

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Medicaid (138% FPL)

QHP (139% FPL)

Difference

Annual Premium

$0 $564 $564

Deductible $0 $0 $0

Prescription $1 - $3 $6 - $30 $5 - $27

Specialty Visit $0 $20 $20

Hospital Stay $25 $100 $75

Maximum Out of Pocket

$200 $1,000 $800

*New York’s Medicaid Program and New York’s Second Lowest Cost Silver Plan (94% AV) for an Individual in New York City in 2015

Medicaid to QHP/APTC cliffArkansas

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Medicaid (138% FPL)

QHP (139% FPL)

Difference

Annual Premium $0 $564 $564

Deductible $0 $150 $150

Prescription $4 - $8 $4 - $8 $0

Specialty Visit $10 $10 $0

Hospital Stay $140 $140 $0

Maximum Out of Pocket $754 $754 $0

*Arkansas’ Private Option/ Second Lowest Cost Silver Plan (94% AV) for an Individual in Little Rock 2015

• Smooth out the cost curve across Medical Assistance (Medicaid), MinnesotaCare (Basic Health Program), and MNsure (state-based exchange)• Current affordability cliffs mean that some families who

experience a small increase in income could see a much larger decrease in their subsidies and increased cost-sharing. •MN wants to implement more gradual, predictable

system• Recently-created Health Care Finance Task Force

currently examining the issue

1332 example: Minnesota

• Trying to balance ACA implementation with keeping the best of what states had pre-ACA•HI has had a popular and effective employer mandate

for 40 years•Now trying to retain comprehensiveness of coverage

under new ACA framework•HI requested to waive SHOP (small business exchange)

and related provisions of the ACA to avoid conflicting requirements and reduce administrative costs• First state to post a 1332 proposal for public comment

1332 example: Hawaii

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WA

OR

CA

NV

ID

MT

WY

UTCO

AZ NM

TX

OK

ND

KS

NE

SD

AR

MO

IA

MN

GA

TN

MS AL

LA

MI

OHINIL

WI

FL

PA

VA

ME

NY

WV

NCKY

SC

AK

NH

VT

NJ

DEMD

HI

CT

MARI

Current 1332 activity

Waiver proposal is public (1)Authorizing legislation passed (5)

Legislature considered bills (3)Public discussion underway (1)

Galen BenshoofSenior Program Manager

RWJF State Health Reform Assistance Networkstatenetwork.org

benshoof@princeton.edu

Thank you!