Peter Newell United Hospital Fund April 23, 2010 Playing the Hand We’re Dealt: New York State and the Federal Interim High Risk Pool Peter Newell United Hospital Fund April 23, 2010

New York and the Interim High Risk Pool A fine kettle of fish New mechanism is aptly named – plenty of risk to go around for President and Congress, HHS, NYS, health plans, and consumers Tight time frame Short yardage situation or going deep? Dry run/prepare the ground for full HCR implementation? Opportunities to provide affordable products, relief for current Direct Pay enrollees, improve risk profile of standardized market? Do IHRP decisions affect future decisions as we prepare for “the Bronze Age?”

Federal High Risk Pool Requirements – More Guidance to Come, Significant Discretion for HHS and States Uninsured for six months previous to enrollment Pre-existing condition Current citizen, national or lawfully present Enrollees to pay a “standard rate for a standard population” Maximum OOP of $5,950/$11,900 (HSAs) HHS guidance on floor set of benefits that “take into account benefit lists used by existing state high risk pools” 65 percent minimum actuarial value Maximum of 4:1 age rating, and 1.5:1 tobacco rating MOE requirements for states, anti-dumping provisions

Federal IHRP Funding and U.S. High Risk Pool Experience in 2008 Funding of $5B nationally (42 months) with HHS authority to make “adjustments” due to funding shortfalls S-CHIP-like formula (uninsured and state costs) with reallocation of unspent funds after two years; 2008 HRP spending of $1.991B (enrollee premiums and subsidies) for 200,000 enrollees (only 13,000 dependents) in 35 states (GAO -09-730R) Current HRP eligibles (uninsured with chronic conditions) estimated at 3.9 million in just 35 states: 1 million enrollment = subsidy of $120 PMPM for 42 months 400,000 enrollment in Year 1 = $300 PMPM Current U.S. HRP Enrollees: One-half unemployed, average age 49 Average household income $41,000 Average PPO single premium $485 PPO product most common, average deductible $1,593, 63 percent paying over $1,000 Average claim $9,437

New York’s High Risk Pool Eligibles? Enrollment will be driven by benefits, price, and pre-existing condition definition Source: Estimates of uninsured are from Holahan, Cook, Lawton, Health Insurance Coverage in New York, 2006-2008: A Snapshot, United Hospital Fund, February 2010; estimates of chronic condition prevalence are from AHRQ MEPS Statistical Brief #243, April 2009; estimates of uninsured undocumented noncitizens are based on data from Holahan and Cook, Characteristics and Health Insurance Coverage of New York’s Noncitizens, United Hospital Fund, 2009, and Passel and Cohn, A Portrait of Unauthorized Immigrants in the United States, Pew Hispanic Center, April 2009.   

New York Interim High Risk Pool Funding NY IHRP Eligibles: 75,000 to 360,000 New York estimated funding in the $50M - $80M range (NY uninsured as percent of U.S., NY adult non-elderly uninsured as percent of U.S., S-CHIP formula, etc.) Take-up of 30,000 enrollees = $140 PMPM ($50M) to $220 PMPM ($80M) Direct Pay stop-loss: $39.2M paid 9 percent of claims in 2008 and estimated 10 percent of claims for 2009 (SID) Healthy NY stop-loss: 2009 premium subsidy estimated at $96 PMPM for CY 2009, $82 PMPM for 2008 (SID); 28.5 percent premium subsidy in 2006 (Merging the Markets, Gorman Actuarial/UHF)

Primary Design Issues Standard rate in a guaranteed-issue state? Proxy (DP with full stop-loss, MEPS-IC Small Group ($408 in 2008), Healthy NY with benefit adjustments, FHP with commercial payor adjustment, etc.); or Start from scratch (Reg. 146, stop-loss claims data bases) and back into a number based on assumptions about available funding, benefits, morbidity, take-up Pre-existing conditions New York Law: “conditions for which medical advice ...”; or List w/doctor’s note One vendor, regional vendors, or multiple plans all regions Enrollment Benefits and cost sharing

Operational Issues Citizenship verification Policy form submissions by plans or standardized form promulgated by state Statewide rate (NYSHIP), regional rates (MMC/FHP), rate submissions by plans with SID guidance, plan filed rates Appeal process How will new insureds be pooled? Exceptions to crowd-out provisions Subsidy mechanism: stop-loss/reinsurance, flat PMPM payments, other? Segregation of federal and state funds

New York Assets Statewide commercial HMO coverage Mandatory participation by HMOs in Standardized Direct Pay, Healthy NY programs, and option for other insurers Superintendent’s discretion to promulgate additional benefit packages in Direct Pay and Healthy NY Existing stop-loss programs in Direct Pay and Healthy NY, and Regulation 146 risk adjustment mechanisms for Direct Pay/Small Group, Timothy’s Law, and regulatory discretion on stop-loss corridors (Healthy NY) Existing vendor for stop-loss, risk adjustment administration Extensive claims database for stop-loss programs, Reg. 146 Statewide Family Health Plus availability through PHSPs and HMOS Statewide non-managed care networks (e.g., United and Empire for NYSHIP) Three former BCBS insurers of last resort

Conclusion Short yardage situation or going deep? Will HHS grant New York discretion to build on existing mechanisms for high-risk populations? Navigating the shoals on funding issues Timing may limit available options Statute vs. regulation, procurement Equity issues