Julie Barnes Vice President, Federal Strategy Federal Health Policy Update Julie Barnes Vice President, Federal Strategy October 19, 2017 Presentation Prepared For © 2014 Cambia Health Solutions, Inc.

OVERVIEW Health Reform – what happened and what is still happening Trump Executive Order and CSR decision New HHS Secretary Tax Reform Update Drug Pricing Debate

What Happened TODAY Alexander-Murray bipartisan health reform bill introduced with 22 co-sponsors (11 from each party) TWO BIG PROVISIONS CSR Funding for Plan Years 2017, 2018 and 2019 State Flexibility in the 1332 Waiver Process. POLITICS: President Trump is wavering, as is conservative Republican support House Speaker Ryan is NOT supportive © 2014 Cambia Health Solutions, Inc.

ACA Repeal & Replace 2017 TIMELINE March June September July 2010 ACA Passed 2012 President Obama 2nd Term 2015 House Speaker Paul Ryan 2016 Repeal & Replace Passed - VETOED Skinny Repeal July 2016 – Trump elected, ACA Repeal bill possible © 2014 Cambia Health Solutions, Inc.

54 Republicans 44 Dems UNDERLYING TRUTH 2 Independents (Angus King and Bernie Sanders) Slim Majority Reconciliation process allows expedited passage of certain budgetary legislation on spending, revenues, and the federal debt limit with a simple majority vote in the Senate (51 votes).

JULY Skinny Repeal Repeal individual and employer mandate 1332 waivers – improve process © 2014 Cambia Health Solutions, Inc.

Skinny Repeal © 2014 Cambia Health Solutions, Inc.

Graham-Cassidy September Repeals Medicaid expansion, the individual and employer mandates and ACA’s premium subsidies. Takes $ from those programs and turns it into block grants for each state to set up its own health care system. No guarantee of coverage for people with pre-existing conditions. Each state that accepts federal block grant funding could waive the ACA’s rules for covering the 10 essential health benefits and other consumer protections. Insurers could take health status into account and raise rates for people with pre-existing conditions in those states. September © 2014 Cambia Health Solutions, Inc.

Alexander-Murray Bridge Alexander-Murray bipartisan health reform bill is being billed as the “bridge” to Graham-Cassidy TIMELINE IS LIKELY END OF THE YEAR © 2014 Cambia Health Solutions, Inc.

WHAT’S ELSE IS GOING ON? LAST THURSDAY!!! EXECUTIVE ORDER: October 14, 2017 LAST THURSDAY!!! EXECUTIVE ORDER: “Promoting Healthcare Choice and Competition Across the United States” © 2014 Cambia Health Solutions, Inc.

TRUMP EXECUTIVE ORDER 10/14/17 NO IMMEDIATE EFFECT Instructs HHS, Treasury and Labor to consider drafting rules to accomplish three goals: Broaden availability of Association Health Plans Expand definition of short-term limited duration insurance policies Change Health Reimbursement Arrangements © 2014 Cambia Health Solutions, Inc.

TRUMP EXECUTIVE ORDER 10/14/17 Association Health Plans (AHPs) AHPs are health plans purchased by groups of small businesses to pool purchasing power for their employees. Under ACA, AHPs have the same rules as the small group market (i.e., offer essential health benefits, maintain certain actuarial value requirements, etc.). EO allows AHPs to be larger and sell plans across state lines. Because those plans won't have the same minimum coverage requirements as Obamacare, the premiums may be cheaper. © 2014 Cambia Health Solutions, Inc.

TRUMP EXECUTIVE ORDER 10/14/17 Short-Term Limited Duration Insurance Short-term coverage helps individuals when they are between jobs or some other temporary situation. Currently can last 3 months. Exempt from ACA Rules -- no guaranteed issue or renewal, no essential health benefits or actuarial value requirements, and no ACA-mandated consumer protections. EO directs the agencies to consider allowing these short- term policies to last for as long as one year and be renewable by the consumer. © 2014 Cambia Health Solutions, Inc.

TRUMP EXECUTIVE ORDER 10/14/17 Health Reimbursement Arrangements (HRAs) EO directs the agencies to consider modifications to HRAs to allow employers to cover more out-of-pocket health care expenses. This may include using employer-contributed, non-taxable funds toward individual market premiums. Using HRA funds to purchase individual coverage might make certain consumers ineligible for subsidies, costing them more than if their employer simply didn’t offer coverage. © 2014 Cambia Health Solutions, Inc.

NO MORE Cost-Sharing Reduction Payments THAT SAME DAY – October 14, 2017 NO MORE Cost-Sharing Reduction Payments © 2014 Cambia Health Solutions, Inc.

Alexander-Murray Bridge Alexander-Murray bipartisan health reform bill is being billed as the “bridge” to Graham-Cassidy TIMELINE IS LIKELY END OF THE YEAR © 2014 Cambia Health Solutions, Inc.

CHANGES IN LEADERSHIP © 2014 Cambia Health Solutions, Inc.

HHS Secretary Tom Price Resigned Eric Hargan Acting Secretary October 11, 2017 September 29, 2017 (when repeal and replace failed) © 2014 Cambia Health Solutions, Inc.

The HHS Planet © 2014 Cambia Health Solutions, Inc.

Who Will Be HHS Secretary? © 2014 Cambia Health Solutions, Inc.

What’s Next? Lowers top tax rate for corporations to 20% and repeals corporate alternative tax (AMT). Lowers top tax rate on certain income of “small businesses” to 25%. Not expected to include repeal of ACA taxes, including the Cadillac tax and health insurance tax. © 2014 Cambia Health Solutions, Inc.

Drug Price Debate and Opioid Abuse Solutions What’s Next? Drug Price Debate and Opioid Abuse Solutions © 2014 Cambia Health Solutions, Inc.

Q&A