Rhode Island Exchange Planning March, 2012 Deb Faulkner Faulkner Consulting Group

Agenda Exchange Context Exchange 101 Implications for Employers What is an Exchange? Who will use Rhode Island’s Exchange? RI Exchange Status Implications for Employers Is it really funding basics? Do you mean the schedule and timeline?

Exchange Context Federal reform, post 2014, envisions affordable coverage for virtually all RIers, through the following elements: Individual Mandate requiring that all Rhode Islanders purchase affordable health insurance Medicaid Expansion to all RI citizens under 133% FPL (childless adults) Commercial Market Reforms Making health insurance accessible to all, leveling the playing field Exchange Offering federally subsidized and unsubsidized coverage for individuals and small businesses

RI Health Benefits Exchange Rhode Island Executive Order established the RI Health Benefits Exchange as a division within the Executive Agency Ex-Officio Members Appointed by the Governor Small Business Rep Director of DOA Consumer Rep Director of Health Former Health Insurance Executive Labor Director of Administration Director of Health Consumer Rep Consumer Rep E-Commerce Expert Former US Attorney (with hospital system expertise) Former Delivery Sys Governance Small Business Rep Commissioner of Health Insurance Commissioner of Health Insurance Secretary of EOHHS Small Business Rep Small Business Rep Physician (not currently practicing) Former Insurance Executive Labor

Agenda Exchange Context Exchange 101 Implications for Employers What is an Exchange? Who will use Rhode Island’s Exchange? RI Exchange Status Implications for Employers Is it really funding basics? Do you mean the schedule and timeline?

Why establish an Exchange? Mission The Rhode Island Health Benefits Exchange will serve as a robust resource for Rhode Islanders and Rhode Island businesses to learn about and easily compare the quality and affordability of their health insurance options, enroll in coverage and, if eligible, access subsidies for coverage.

RI Exchange Goals Improve the health of Rhode Islanders Achieve near universal coverage Favorably impact health insurance cost trends Favorably impact health care delivery system effectiveness and efficiency Add value to employer health insurance purchasing

Exchange Web Portal: Massachusetts

Rhode Islanders seeking Health Insurance The RI Health Benefit Exchange A robust marketplace for all Rhode Islanders Rhode Islanders seeking Health Insurance Medicaid eligible individuals Subsidy eligible individuals Individuals (self pay – no subsidy) Employees of Small Employers Employees of Large Employers (1) Web Portal: a robust marketplace for all Rhode Islanders to identify health insurance options and purchase coverage (2) Help Rhode Islanders Choose Health Insurance Display insurance options in an easy to understand, highly interactive web page (3) Enroll Determine eligibility, enroll in coverage, & facilitate subsidy

Post 2014: Exchange Users RI anticipates three categories of Exchange users Shop through Exchange: 901,000 (check affordability, compare prices) Employer-Based Individual Medicaid (1) Use Exchange to Determine Eligibility: 256,000 Ind. Medicaid (1) Employer-based Ind. Enroll through Exchange: 81,000 (1) Medicaid totals do not include 17,000 Medicaid eligibles over 65 who will also use the system. Source: Preliminary estimates of post-2014 volume , modeled using CPS, DHS, OHIC, ACS and MEPS data and estimates of undocumented immigrants.

Exchange Project Status Achieving our mission requires an aggressive change initiative impacting:  Policy: business policy, practices and processes Operations: people, roles & organizational structures Technology: the systems that support the new policies & practices Use Mission

Agenda Exchange Context Exchange 101 Implications for Employers What is an Exchange? Who will use Rhode Island’s Exchange? RI Exchange Status Implications for Employers Is it really funding basics? Do you mean the schedule and timeline?

Implications for Employers Key Elements of ACA: Implications for Employers Individual Mandate Employer Penalties (over 50), Tax Credits (Under 25) Commercial Market Reforms Essential Health Benefits Exchange: SHOP (Small Business Health Options Program) Individual Exchange

Next Steps Less than 18 months from today - need fully operational exchange Fall 2012 “Operational Readiness” January 2013 Achieve certification Summer 2013 Soft Launch October 2013 Open enrollment begins December 2014 Exchange Establishment funding ends December 2015 Medicaid funding (90% federal match) ends Use updated deadlines from Meg – no legislation (we used executive order, in september I believe). Can call Applying for implementation funds October, 2011. Add gate review, technology RFP

Backup

Exchange Principles Exceptional Customer Experience Simplicity Affordability Flexibility Transparency Fiscal Prudence Alignment with other governmental health reform initiatives Catalyst

Small Employer Tax Credits Small employers will need to purchase insurance through the SHOP Exchange to access tax credits. Who is Eligible Employers with <25 employees with average wages of up to $50,000 Amount of Credit Sliding scale up to 50% of the amount they contribute toward insurance premiums SHOP Requirement (after 2014) In order to receive the credit after 2014, small employers must purchase through the state’s SHOP Exchange. Timing Credits are available starting in 2010. Employers may only receive the credit for 2 years after 2013. Source: Health Policy Brief: Small Business Tax Credits, Health Affairs, Jan 14, 2011, Robert Wood Johnson Foundation

Employer Penalties Beginning in 2014, some small businesses may have to pay a penalty if they do not offer affordable coverage. Who Businesses with 51 or more FTEs Penalty $2,000 per employee (excluding the first 30 employees) if they do not offer coverage for employees who average 30+ hours per week.1 Coverage Must cover at least 60% of the actuarial value of the cost of benefits. Affordability Requirement Employee’s premium cannot exceed 9.5% of their household income. If not, employees may purchase insurance on their own through the exchange using tax credits. Employers will either pay $3,000 per employee receiving the tax credit, or $2,000 per employee excluding the first 30 workers (whichever is less). 1 Note that there is no penalty for part-time employees not offered coverage. Source: Kaiser Family Foundation employer penalty flowchart

Individual Mandate Who is exempted from the requirement to purchase insurance? Religiously opposed to acceptance of benefits from a health insurance policy Undocumented immigrants Persons who are incarcerated Members of an Indian tribe Income below the threshold requiring filing a tax return ($9,350 - individual, $18,700 - family) Anyone who has to pay more than 8% of income for health insurance, after taking into account any employer contributions or tax credits. What insurance coverage is acceptable? Medicare/Medicaid/CHIP TRICARE or veteran’s health program A plan offered by an employer Insurance bought directly that is at least at the Bronze level A grandfathered health plan in existence before the health reform law was enacted What is the penalty for not having insurance? 1 2014: $95/adult, $47.50/child ($285 family max) or 1% of family income, whichever is greater 2015: $325/adult, $162.50/child ($975 family max) or 2% of family income, whichever is greater. 2016 and Beyond: $695/adult, $347.50/child ($2,085 family max) or 2.5% of family income, whichever is greater. After 2016, penalty amounts are increased annually by the cost of living. Source: Kaiser Family Foundation individual mandate flowchart 1 The penalty is pro-rated by the number of months without coverage, though there is no penalty for a single gap in coverage of less than 3 months in a year. The penalty cannot be greater than the national average premium for Bronze level coverage in an Exchange .

Context: Commercial Reforms Making health insurance accessible to all, leveling the playing field Young adults on parents’ coverage Pre-existing condition protections New restrictions on rate factors “Essential benefits”

Starting Point Under 65 RI Population: Current Health Insurance Status Total = 901,000 (1) Medicaid total does not include 17,000 eligibles over 65. (2) Chart uninsured total based on ACS 2009 data. ACS data for 2010 shows 126,000 uninsured, mostly at lower incomes. Source: Census Bureau American Community Survey 2009, RI Medicaid, Commercial insurance data as reported to OHIC, Large Group/SI includes both carrier reported data and additional subscribers based on ACS data for total privately insured population.

Work to Date: Policy Populations Served How Best to Serve Individuals How Best to Serve Small Businesses I changed this entirely, if you hate it lets change it back…agree this was super hard and I might have given too much

Work to Date: Operations Detailed workplan for operationalizing RI’s Exchange by 2014 Business requirements Business process design focused on efficiencies across agencies, improved consumer experience

Work to Date: Technology Translating business requirements into technical requirements Technology “Gap Analysis” New England Collaborative – Innovator grant