June 2011 Health Benefit Exchanges and ACA Updates Dave Woodmansee Erin Reidy

Exchange State Legislation Overview Provide an overview of state legislative activity regarding exchanges Examine specific variations in governance structure, Medicaid integration, financing and other exchange activities Provide an update on PCIP changes, MLR and expected regulations.

Exchange State Legislation Overview Vast majority of states have considered one or more legislative proposals for state exchanges To date, 8 states have passed an exchange law, 4 states have passed laws to study the creation of an exchange, and 4 states are moving forward on exchanges through executive order There is a great deal of variety in the governance, financing and other activities of the proposed and established exchanges.

Exchanges- Governance Board Composition Ranges in size from 6 to 20 Expertise, Representative, Hybrid Most included both the Insurance Commissioner and the Medicaid Director as non-voting members Conflict of Interest Ranges from strong barring of industry to allowing industry with weak or no recusal requirements Open meetings Most subject to state open meeting laws Especially important in those legislative proposals where the Exchange functions as a non-profit vs. state agency

Exchanges- Adverse Selection Most state legislation had no attempt to address adverse selection Beneficial provision addressing adverse selection –Prohibiting insurers from specializing in bronze/catastrophic in the outside market –Commissioned studies –Requirements to produce a plan Concerning provisions that would favor the outside market –Requiring exchange plans to sell in the outside market

Exchanges- Medicaid Integration Most states recognized the need to involve the Medicaid Department in the planning and implementation process –Medicaid Director on the Board as non-voting member –Allowing Medicaid department to allocate staff and resources to the exchange –Explicitly state that the exchange will enroll people into Medicaid Other favorable provisions –Require streamlined applications for both the exchange and Medicaid

Exchanges- Financing Good financing models –Broad-based fees –Funds are separate from general funds Concerning financing models –Only on Exchange participants –Hierarchy of fees (larger plans charged less per person) However, many legislative proposals punted on a financing model

Brokers/Agents Exchanges –Guaranteed commissions –Referrals for enrollment –Navigators MLR –3 states (ME, NV, NH) have been granted waivers, 9 states (DE, FL, GA, IN, IA, KA, KY, LA, ND) have applied for waivers and 3 states (IA, KY, ND) have had applications certified as complete –NAIC study of impact in removing broker commissions from the calculation –Modify/repeal bills

PCIP Enrollment now tops 20,000 as of April 2011 Reduced premium rates for 23 states beginning July 1 No longer need show denial from insurance company

Expected Regulations Exchange regulations----soon! Essential benefits package---late this year or early next year –ACS CAN is conducting stakeholder interviews with cancer patients, survivors, caregivers, physicians, nurses, and others –findings along with other efforts to identify critical coverage issues for cancer patients, will be used to inform response to the draft regulation

Conclusion We saw a range of proposals from very consumer friendly to very pro-insurers Although there was a lot of activity, many states will still have to pass legislation in the 2012 session Other ACA insurance implementation activities continue and we expect two of the most significant regulations to come out within the next 6 months