Federal and State Update Kris Hathaway, Executive Director May 9, 2017 Virginia Health Insurance Reform Commission Richmond, VA

About AHIP America’s Health Insurance Plans (AHIP) is the national association whose members provide insurance coverage for health care and related services to millions of Americans every day. Through these offerings, we improve and protect the health and financial security of consumers, families, businesses, communities and the nation. We are committed to market-based solutions and public-private partnerships that improve affordability, value, access and well-being for consumers. Accident & Health Business Markets represented by AHIP in the United States: Major Medical Medicaid Medicare Advantage Medicare Supplemental Insurance (Medigap) Supplemental Health Long-Term Care Disability Income Insurance Dental Vision

Today’s Highlights Federal Landscape Current Market ACA & AHCA Timeframe for Reconciliation Efforts Health Care Costs Premium Dollar Drug Pricing State Issues Questions

Health Insurance Markets and Populations Medicaid 64 million (Source: CMS 2015) Individual Market and Exchanges 18 million (Source: HHS, 2016) Employer Sponsored 155 million <65yo (Source: CNBC, 2016) CHIP 8.4 million Children TRICARE 9.4 million (Source: DoD 2015) Medicare 55 million

Federal Update: Current Landscape ACA AHCA Amendments Reconciliation Republican-controlled White House, Senate, and House have promised to repeal and replace much of the ACA

AHIP Reconciliation Stabilization Priorities Funding Commitments CSR payments through transition period Make full 2016 reinsurance payments Affordability Patient & State Stability Fund Recalibrate and reform APTC to strengthen incentives for younger adults to participate Repeal the HIT Support targeted regulatory changes Risk Pool New requirements for individuals to maintain continuous coverage throughout the transition Additional enrollment policies to stabilize risk pool Timing Timeframe for action is now, as well as rate building and filing process

Millions of People are Receiving Cost-Sharing Subsidies Significant numbers are in rural America* Percent Enrollees with CSR 0% 20% 40% 60% 80% 100% November 21, 2016 *Based on CMS 2016 data. FFM states = % CSR-enrolled population by county. SBM states = % CSR-enrolled population by state, county-level data not available. Note: NY and MN operate Basic Health Plans for the same population.

Applies to issuers in FFM states Applies to issuers in all states 2018 Plan Year QHP Key Dates for Filing & Certification Oct. 12 CMS sends final QHP certification notices and countersigned agreements to issuers Jun. 22 – Aug. 16 Review of QHP Applications and proposed rates between CMS and issuers. Aug. 16 Final deadline for issuer changes to QHP application Applies to issuers in FFM states May 10 – June 21 QHP Application submission window Sep. 27 Issuers submit signed QHP Agreements and final plan lists to CMS May May June July August September September October November Jun. 1 Deadline for single risk pool rate filing justifications in States without an Effective Rate Review Program Aug. 1 Target date for CMS to make rate filing information public and for States to post proposed rate increases for single risk pool coverage Applies to issuers in all states Oct. 1. Issuers send 90-day discontinuation notices to enrollees3, 4 Nov. 1 Open Enrollment begins. Deadline to enroll for January 1st coverage is December 15th Issuers send 60-day renewal notices to current enrollees for the 2018 plan year4 Jul. 1 Issuers exiting the individual market in 2018 send notices to current enrollees 4 Jul. 17 Deadline for single risk pool rate filing justifications in States with an Effective Rate Review Program 1 Key Dates for Calendar Year 2017: QHP Certification in the Federally-facilitated Marketplaces; Rate Review; Risk Adjustment and Reinsurance. Revised April 2017 2 Revised Rate Review Bulletin issued April 2017 3 Because final QHP agreements are signed after 10/1, FFM guidance allows issuers to send discontinuation notices by the start of Open Enrollment. However, states may continue to require notices on October 1. 4 Some states could have earlier notice deadlines. This notice timeframe is the HIPAA total market exit.

KFF Analysis of State Premium Increases Virginia: 17%

HHS Market Stabilization Regulations 4.13.17 - Open Enrollment Dates - Special Enrollment Period (SEP) Verification - Modified Interpretation of Guaranteed Availability (Grace Period) - Levels of Coverage (Actuarial Value) - Network Adequacy, Essential Community Providers, State Reviews

Financing

Factors Affecting Health Insurance Premiums https://www.ahip.org/5-factors-that-impact-your-health-insurance-premium/

Where Does Your Premium Dollar Go? Note: Values exceed 100% due to rounding Source: Data sources and methodology are referenced in more detail at http://www.ahip.org/health-care-dollar 2 Medical expenses as identified in this research differs from Medical Loss Ratio as defined by the Affordable Care Act. 1 Prescription drug costs include outpatient, physician- and self-administered medications – but not those administered in inpatient settings 3 Operating costs include consumer-centric activities such as communicating with members, running customer service operations, quality reviews, and data analysis, among other activities.

Drug Spending Recent reports have projected drug spending in the United States to grow to $560 billion – $590 billion by 2020, up from $337 billion in 2015. Much of this growth will be fueled by the growing number of high-priced, specialty drugs coming to the market – an estimated 225 new specialty drugs over the next five years. While specialty drugs account for less than 2 percent of all prescriptions, they make up roughly 30 percent of spending on all prescription drugs. Almost half (47.8 percent) of the specialty drugs included in this analysis cost more than $100,000 per patient per year. A number of ongoing state and federal efforts are developing to address the significant challenges of high- priced drugs; and in support of these measures, this report attempts to quantify the annual per-patient expenditures for an initial sample of 150 specialty medications.  

Prescription Drug Prices: Then & Now

High Cost Drugs: Is It the R&D? Source: Vox, “9 of 10 top drugmakers spend more on marketing than research”, February 27, 2015, http://www.vox.com/2015/2/11/8018691/big-pharma-research-advertising

State Issues AHCA Implementation / Updating ACA Substance Use Disorder / Mental Health Prescription Drug Issues (Biologics) Provider Issues “Right to Shop” Mandates Air Ambulance Third Party Payment

Executive Director, State Affairs Questions? Thank you! Kris Hathaway Executive Director, State Affairs khathaway@ahip.org