Blog & News
December 5th Webinar: Impact of Medicaid vs. Marketplace Coverage on Out-of-Pocket Spending for Near-Poor Adults
March 08, 2019:SHADAC will host a coffee-break webinar on December 5th at 12:00 p.m. Central featuring Urban Institute's Dr. Fred Blavin, whose SHARE-funded research asks how medical spending burdens for near-poor families in non-expansion states would change if the states were to expand Medicaid.
EVENT DETAILS | ||||
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Medicaid vs. Marketplace Coverage for Near-Poor Adults: Impact on Out-of-Pocket Spending | ||||
Presenter: Fred Blavin, PhD |
In states that chose to expand Medicaid under the ACA, adults between 100% and 138% of the federal poverty level (i.e., the "near-poor") are Medicaid-eligible and typically face minimal or no premiums or cost-sharing for medical expenses. In states that have chosen not to expand Medicaid, this population cannot enroll in Medicaid but may quality for tax credits to purchase marketplace health insurance plans that entail out-of-pocket (OOP) premiums and cost-sharing. Dr. Blavin's analysis uses data years 2013 to 2015 from the Current Population Survey and state Medicaid expansion decisions as a natural experiment to estimate the impact of access to the Medicaid expansion on OOP health expenses, compared with access to subsidized marketplace coverage.
Dr. Blavin will answer questions from attendees after the presentation.
Blog & News
State Implementation of the ACA’s Medicaid Smoking Cessation Provisions: SHARE Findings at Dissemination & Implementation Conference
December 01, 2017:Dr. Sara McMenamin of University of California, San Diego, will present results from her SHARE-funded research at the 10th Annual Conference on the Science of Dissemination and Implementation in Health.
Presentation At-a-Glance
Dr. McMenamin’s SHARE research examined state progress in implementing the ACA’s four provisions regarding Medicaid coverage for smoking cessation treatments. These provisions address: (1) coverage for pregnant women; (2) coverage for all enrollees through an increased federal match incentive; (3) coverage for all enrollees through Medicaid formulary requirements; and (4) coverage for Medicaid expansion enrollees.
From January through June 2017, Dr. McMenamin and her team studied Medicaid programs in all 50 states and the District of Columbia and found that 46 Medicaid programs had increased coverage for smoking cessation treatments by executing one or more of the four provisions. The most commonly implemented provision was coverage of comprehensive treatments for pregnant women without cost-sharing, which 27 Medicaid programs had in place. In all, only 11 state programs had implemented all four smoking cessation treatment provisions in the ACA.
Access the full presentation abstract.
Logistics
The D&I Conference is co-hosted by the National Institutes of Health and AcademyHealth and will take place December 4th through 6th in Arlington, VA.
Dr. McMenamin’s presentation is on December 4th at 2:50 p.m. at the Crystal Gateway Marriott, Salon B.
Blog & News
Oregon Joins States Hoping to Stabilize Individual Market through Reinsurance Using 1332 Waivers
September 15, 2017:Update September 15, 2017: On August 31, Oregon submitted a 1332 Waiver Application to seek pass-through funding for its reinsurance proposal. $90 million in annual state funding for reinsurance plan is paid for through a 0.3% assessment levied on major medical premiums and through excess fund balances in two state programs. The state is seeking more than $30 million annually in federal pass-through funding. The reinsurance plan has a coinsurance rate of 50% and a cap of $1 million. The attachment point is to be determined.
On August 16, Oklahoma submitted its 1332 reinsurance proposal, called the Oklahoma Individual Health Insurance Market Stabilization Program (OMSP). The OMSP will have a broad corridor of $15,000 – $400,000 and will be largely funded with federal pass-through funding, with a smaller portion coming from a state assessment on health insurers.
UPDATE August 3, 2017: Minnesota’s Department of Commerce has released preliminary individual market premium increases with and without reinsurance. With state reinsurance, plans expect that 2018 premiums could be modestly higher (largest increase 11.4%) to modestly lower (largest decrease 14.5%) than 2017 premiums. Without state reinsurance, plans project much larger increases in 2018 premiums.
In addition, Oklahoma and New Hampshire recently released draft 1332 Waiver Applications to seek pass-through funding for state reinsurance proposals. Oklahoma’s 1332 waiver proposal includes reinsurance along with broader reforms to its individual market. The state is awaiting further actuarial analysis before determining its reinsurance plan’s corridor, coinsurance rate, and level of pass-through funding. Both Oklahoma’s and New Hampshire’s proposals are traditional reinsurance plans funded by assessments on health insurers. The table and text below has been updated accordingly.
UPDATE July 9, 2017: HHS approved Alaska's 1332 Waiver on July 7, 2017. The state was awarded $48.3 million in federal pass-through funding in 2018, and a total of $322 million over five years. The table below has been updated to reflect this development.
June 29, 2017: Minnesota, Alaska, and Iowa have each submitted 1332 State Innovation Waivers seeking federal funding of their state-based reinsurance proposals. Minnesota and Alaska, each of which entered their most recent legislative sessions with a budget surplus, have passed bipartisan legislation and provided initial state funding for their reinsurance plans; Iowa, which faced a budget shortfall of nearly $100 million, has not passed legislation or established state funding but submitted a 1332 waiver request that seeks federal funding for reinsurance along with significant changes to the state's Marketplace subsidy levels and eligibility.
The following table highlights key elements of the three 1332 reinsurance proposals along with the details of awarded funding, where applicable.
1332 STATE INNOVATION WAIVERS FOR STATE-BASED REINSURANCE
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Alaska Comprehensive Health Insurance Fund | Minnesota Premium Security Plan | Iowa 1332 Waiver Reinsurance Plan | Oklahoma Individual Health Insurance Market Stabilization Act | New Hampshire 1332 Waiver Reinsurance Plan | Oregon Reinsurance Program (ORP) | |
REINSURANCE PROPOSAL | ||||||
Reinsurance Type | Condition-specific reinsurance | Traditional reinsurance | Traditional reinsurance | Traditional reinsurance | Traditional reinsurance | Traditional reinsurance |
Reinsurance Corridor | All claims from policyholders with one of 33 specific medical conditions | $50,000 – $250,000 | $100,000 – $300,000 | $15,000-$400,000 | $45,000 – $250,000 | TBD – $1,000,000 |
Coinsurance Rate | 100% | 80% / 20% | 85% / 15% (Claims > $3 Million: 100%) |
80%/ 20^ | 40% / 60% | 50% / 50% |
Legislation Enacted | HB 374, November 7, 2016 | HF 5, April 4, 2017 | No applicable state legislation |
HB 2406 |
HB 469 July 10, 2017 |
HB 2391 July 5, 2017 |
1332 STATE INNOVATION WAIVER | ||||||
Approval Status |
Submitted December 29, 2016 |
Submitted May 5, 2017 | Submitted June 12, 2017 | Submitted August 16, 2017 | Draft waiver released for public comment July 19, 2017 | Submitted August 31, 2017 |
State Funding | $55 million annually (51.6% of total) |
$271 million annually (61.9% - 66.3% of total) |
$0 (0% of total) |
$16 million in 2018 $230 million over five years (14.2% of total) |
$32 million annually (71.4% of total) | $90 milion in 2018 $1.1 billion over ten years (68.5% of total) |
1332 Funding Request | $51.6 million in pass-through funding (48.4% of total) |
$138 - $167 million in pass-through funding (33.7% - 38.1% of total) |
$80 million in pass-through funding for reinsurance (100% of total) |
$309 million in pass-through funding in 2018 $1,395 million over five years (85.8% of total) |
$12.8 million in pass-through funding for reinsurance (28.6% of total) | $35.66 million in 2018 $356.6 million over ten years (31.5% of total) |
1332 Funding Received | $48.3 million (2018) $332 million (2018-2022) |
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INDIVIDUAL MARKET | ||||||
Marketplace Type 1 | Federally-facilitated Marketplace | State-based Marketplace | State-partnership Marketplace | Federally-facilitated Marketplace | Federally-facilitated Marketplace | State-based Marketplace with Federal Platform |
Medicaid Expansion Status | Expanded Medicaid 2 | Expanded Medicaid 3 | Expanded Medicaid 4 | Did not expand Medicaid | Expanded Medicaid5 | Expanded Medicaid |
The reinsurance programs proposed in the 1332 Waivers are of two different designs. Iowa and Minnesota’s proposals are traditional reinsurance programs where claims in a specified corridor (e.g. $50,000–$250,000) are paid, minus a coinsurance rate; Alaska’s program is condition specific, with the state paying all claims for individuals with one or more of 33 specific conditions. Iowa’s proposal to cover 100 percent of claims above $3 million appears to be targeted at helping insurers pay the claims of an individual market enrollee whose treatment for a severe genetic disorder routinely generates more than $1 million per month in claims.
The letter from Secretary Price to state Governors earlier this spring suggested that states pursue reinsurance, and these are the first states out of the block. We will add details as the review process moves along. A key outcome will be whether CMS enforces their requirement that 1332 Waivers be authorized by state legislation as specified in the 1332 Waiver checklist issued May 11, 2017. (As noted above, Iowa’s 1332 Waiver was submitted by the state’s insurance commissioner and is not associated with any state legislation.)
1Kaiser Family Foundation. "State Health Insurance Marketplace Types, 2017."
2Expanded Medicaid September 1, 2015
3Minnesota also has MinnesotaCare, the Basic Health Program (BHP) for individuals 138-200% FPL.
4Expanded Medicaid with Section 1115 Waiver
5Expanded Medicaid with Section 1115 Waiver
Blog & News
Minnesota's 2018 Preliminary Individual Market Premium Rate Filings in Context: News Is Good but Challenges Remain
August 21, 2017:From the Desk of Lynn Blewett
Minnesota insurance companies filed their preliminary premium rates for plans sold on the individual health insurance market. The rate increases for 2018 are much lower than the rate increases seen last year when premiums increases were as high as 50 to 67 percent. This blog provides my initial impressions on the preliminary rate increases for 2018 and additional context to understand the dynamics of a rapidly evolving health insurance market.
Minnesota’s individual health insurance market is in a state of flux with the implementation of the Affordable Care Act (ACA). Individuals without access to employer-sponsored insurance and without access to the premium subsidies offered through MNsure faced exorbitant, and for some, unaffordable, health insurance premiums in 2016. This crisis prompted the Minnesota legislature to pass two pieces of significant legislation last session. The Health Insurance Premium Relief bill provided enrollees with rebates to health plans, with the requirement that quoted premium prices would be reduced by 25%. The Premium Security Plan established a reinsurance plan to provide additional premium relief and stabilize the premiums in the individual market. Together, the legislature authorized nearly $1 billion in support of the individual health insurance market.
Rate Increases with and without Reinsurance
The rate increases for 2018 are presented in the table below. Rate increases with reinsurance ranged from a 14.5 percent decrease in premiums submitted by UCare to an 11.4 percent increase in rates submitted by Blue Plus. Without reinsurance, the rate increases ranged from a 3.3 percent increase in rates submitted by Group Health to a 31.7 percent increase submitted by Blue Plus.
Proposed 2018 Individual Market Health Insurance Rates for Minnesota | |||||||||||
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Insurer |
Proposed Average Change with Reinsurance |
Proposed Average Change without Reinsurance |
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Blue Plus | -1.5% | to | +11.4% | +16.4% | to | +31.7% | |||||
Group Health* | -14.5% | to | -13.4% | +3.3% | to | +4.6% | |||||
Medica Insurance Company* | -5.3% | to | +5.3% | +15.4% | to | +29.4% | |||||
PreferredOne Insurance Company^ | -40.8% | to | -36.8% | -25.5% | to | -20.6% | |||||
UCare | -14.5% | +9.4% | |||||||||
*Current HealthPartners Insurance Company enrollees will default renew into Group Health, and current Medica Health Plans of Wisconsin enrollees will default renew into Medica Insurance Company. A consumer is not required to accept the default renewal plan and may select any plan from any insurer during open enrollment. | |||||||||||
^PreferredOne Insurance Compnay left the Minnesota individual market in 2015 and is not offering new insurance products. | |||||||||||
Source: 2018 Proposed Health Insurance Rates,” Minnesota Department of Commerce, July 31, 2017. |
State 1332 Innovation Waivers | ||
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Section 1332 of the Affordable Care Act provides the opportunity for states to propose innovative strategies around the access expansions included in the ACA—including the Medicaid expansion and the premium subsidies provided through tax credit for those buying on the exchange within certain income limits. The plans must be approved by both the Secretary of Health and Human Services and by the Department of the Treasury; must provide at least the level of coverage provided under the ACA; and may not increase the federal deficit. The waivers are approved for five-year periods. State-based reinsurance represents one of the first policy strategies being implemented to stabilize the individual market. Reinsurance also represents a key policy strategy of interest to CMS as evidenced by a March 13, 2017 communication from HHS Secretary Price, sent to each Governor, encouraging states to consider using the 1332 waiver opportunity to implement reinsurance programs and making specific reference to the Alaska reinsurance approach. Alaska's Reinsurance Approach Alaska’s 1332 waiver proposal to establish a reinsurance program was recently approved by the federal government. Alaska’s reinsurance plan is financed through assessments on private health insurers with additional federal funding of $332 million over a five-year period. Alaska uses a condition-specific reinsurance approach that provides 100 percent of the cost of all claims for policyholders that have one of 33 pre-existing conditions. Pass-Through Funding Alaska's waiver, and Minnesota's waiver proposal, uses “pass through” federal dollars—funding that otherwise would be used for the subsidies offered on the Health Insurance Marketplace, namely the Advanced Premium Tax Credits (APTC) and the Consumer Cost-Sharing Reductions (CSRs). Because premiums are expected to go down under reinsurance, the subsidies required to fund the APTCs and the CSRs would be reduced, and the amount of savings from reduced subsidies would be “passed through” to the state to help fund its reinsurance program. Each state must estimate the amount of federal savings achieved through reinsurance and include this in its waiver application. |
Minnesota’s Reinsurance Proposal
Insurance companies buy reinsurance to reduce the volatility in their costs and provide stability to premiums. Reinsurance is basically insurance for insurance companies and is standard practice for different types of insurance products, not just health care. There are different models of reinsurance, and Minnesota is one of five states with current reinsurance proposals for health insurance offered in the individual market.
Minnesota proposed a publicly-funded reinsurance program using a claims corridor approach. The reinsurance company will reimburse insurers at an 80%/20% coinsurance rate for claims that fall between $50,000 and $250,000. Instead of the insurers covering the costs of reinsurance, the state has proposed public financing with an appropriation of $271 million per year for two years—a total of $542 million for the biennium.
The legislatively-created Minnesota Comprehensive Health Association would serve as the administrator of the reinsurance product, using state funds appropriated to the commissioner of commerce. The legislative language authorizing the reinsurance program requires federal approval of a State Innovation Waiver (a 1332 waiver), which was submitted on May 5, 2017. Under this waiver, Minnesota has proposed that the federal government pay about a third of the cost of the reinsurance program, with tthe federal government contributing between $138 million and $167 million toward the $270 million total cost of the program each year.
My Initial Thoughts
In general, the 2018 preliminary insurance rate filings are great news. Minnesota’s individual market is relatively small (about 300,000 pre-ACA and 170,000 in 2017), and implementing insurance reforms was difficult. The premiums in the individual market started low but over time had to catch up with increases in costs. Many of the premiums filed last year increased by more than 50% from 2016. The first look at the preliminary 2018 rates with limited increases, and in some cases decreases, was welcome.
There is also some hope that Secretary Price will approve Minnesota’s 1332 State Innovation Waiver. He recently approved the waiver proposal submitted by the state of Alaska, and the Minnesota approach to reinsurance is relatively straightforward. Governor Dayton recently met with Secretary Price, and the meeting reportedly went well.
However, there continues to be uncertainty at the federal level in terms of conflicting messaging around federal funding of CSRs and enforcement of the individual mandate, and the broader political debate about the ACA’s future has further escalated insurers’ concerns. These factors, in turn, have led to the exit of insurers from local markets or entire states, exceedingly high increases in premiums, and fewer plan choices for consumers.
Here are a few of my initial concerns.
- The legislature funded reinsurance for just two years, and reinsurance is likely to be an ongoing need. The state appropriated funding for just two years using funds from the Health Care Access Fund. If state-based reinsurance will be an ongoing need, and I suspect it will, a new source of funds will need to be found.
- Financing of reinsurance uses funding from Minnesota's Health Care Access Fund (HCAF), which may soon be needed to support the state's safety net. Typically, reinsurance is funded by assessments on private insurers to cede a portion of their risk to another insurance company. The temporary reinsurance program provided in the ACA and the more recent Alaska reinsurance program were both funded with assessments on the insurance carriers.
The HCAF comes from a two percent fee on most health care providers’ bills. The HCAF was initially established to fund MinnesotaCare, which was designed to support health insurance coverage for Minnesotans whose incomes fell just above the Medicaid income limits. The target population was Minnesota families working in low-wage jobs with no access to employer-based health insurance. MinnesotaCare provided needed coverage and limited premiums based on income, and providers who once provided care without payment now received reimbursement for their services.
Minnesota was fortunate to move into the 2017 legislative session with a $1.6 billion dollar surplus, allowing the legislature to fund different programs including the premium rebates described above. Yet given the uncertainty at the federal level and discussions of cuts to safety net programs such as Medicaid, the HCAF may be needed in the near future to support the safety net in Minnesota as initially intended. For long-term funding of reinsurance, alternative financing should be considered, including fees assessed on the insurance carriers.
- The 105,000 people purchasing coverage on MNsure who got a 25 percent rebate on their premiums this year will likely see some increase in their premiums next year, even with reinsurance. The premium increases cited in the table above are based on last year’s base premiums without the 25 percent premium rebate adjustment. For example, a person facing a $1,000 a month premium in 2017 received a 25 percent rebate, bringing their 2017 premium to $750. But even with no premium increase for 2018, the individual would be back to the $1,000 premium, which represents a 33% increase.
In general, rates will remain flat for most people who purchase coverage on Minnesota's health insurance exchange, MNsure: Premium increases will not be felt by the 85 percent of people who are income-eligible (i.e., with an income of $24,000 to $48,680 annually for a family of four) for Advanced Premium Tax Credit subsidies to bring down the cost of their monthly premiums: Because the amount of the subsidy is based on household income, such that no individual will pay more than 9.6 percent of income on health insurance premiums, premium rate increases are absorbed by the premium subsidy. However, broad premium decreases for this segment of the MNsure population won't happen, either.
- We still do not know if every Minnesota county will have options to purchase coverage in the individual market. And we do not know what the provider networks look like. Last year, the networks were tighter, and some of the pairings of hospitals and clinics did not facilitate the best geographical access. So, we still need to see what the plans look like and if all counties are covered.
- The PreferredOne products with the largest declines in premiums are not offered on Minnesota's individual market for new enrollees. These are the products that have retained enrollees since PreferredOne abruptly left the individual market in 2015. They are not offering new products.Technically, PreferredOne should not be included on this list because its products are not currently offered on the individual market.
States like Minnesota and Alaska are forging ahead and making decisions to assure that people have access to affordable coverage. We are out in front of the pack but still have work to do.
Blog & News
HHS Approves Alaska's 1332 State Innovation Waiver for State-Based Reinsurance
July 12, 2017:On July 7, 2017, the U.S. Department of Human Services, along with the Department of the Treasury, approved Alaska's 1332 Waiver proposal seeking federal funding of its state-based reinsurance proposal. The state was awarded $48.3 million in federal pass-through funding in 2018 and a total of $322 million over five years. This is the first such waiver that has been approved to date, with two more--from Minneosta and Iowa--under review.
SHADAC is tracking state reinsurance proposals as they are submitted and reviewed by HHS, and we have updated our blog with details that reflect this newest development.