2011 ALEC Annual Meeting August 4, 2011 New Orleans, LA Health Insurance Exchanges: States In Charge!

Agenda What States Face in the Wake of PPACA Exchanges: A Look at State Actions HHS’ Proposed Rule on Exchanges Looking Ahead: Critical Decisions and Strategic Imperatives 2

HHS must determine if states have made sufficient progress in developing exchange Jan 1, 2014 Premium tax credits available for enrollees under 400% FPL March 23, 2011 Deadline for HHS Secretary to award Exchange grants Jan 1, 2015 Exchange must be financially self- sustaining Jan - May Non bi- cameral State legislatures convene Jan 1, 2017 Large group Exchange to go live Jan 1, 2014 State Exchanges required to go live July 1, 2010 Healthcare.gov goes live, simulating first Exchange Preliminary insurance regulations take affect Jan 1, 2015 Employer & Individual mandates in effect Jan 1, 2016 States must choose to engage in healthcare Choice Compacts PPACA Timeline

4 Functioning Statewide Health Insurance Exchange Functioning State Exchanges DC Hawaii Alaska Last updated Jul 11, 2011

PPACA Compliance States with PPACA Compliant Exchanges Hawaii Alaska DC Last updated Jul 11, 2011

Federal Funding for Exchanges Planning & Establishment Grant Applied for and Awarded Hawaii Alaska DC Last updated Jul 11, 2011

Early Innovator Grant Recipient Alaska Federal Funding for Exchanges DC Hawaii Last updated Jul 11, 2011

Alaska Federal Funding for Exchanges DC Hawaii Rejected, Returned, Intend to Return, or Intend to Reject PPACA Federal Funds for Exchange Establishment Last updated Jul 11, 2011

Alaska Federal Funding for Exchanges DC Hawaii Level I Round One Grant Recipient Last updated Jul 11, 2011

Hawaii Alaska DC Study Committee Legislation Failed Legislation Pending Alternative Authority No Bill Establishment Legislation State Exchange Implementation Authority Last updated Jul 11, 2011

11 State Actions: A Closer Look (I) California Early out of the gate with legislation Slowing momentum Georgia 2011 legislation dies in the face of opposition Gov. Deal issues Executive Order creating Exchange Study Panel Idaho Gov. Otter issues Executive Order prohibiting state agencies from implementing PPACA provisions Vetoes similar legislative measure, concerned it may prohibit establishment of a state exchange

12 State Actions: A Closer Look (II) Mississippi Legislation fails fourth year in a row DOI uses existing language MS exchange board is now the longest-established board in the country Oklahoma 2011 exchange legislation fails State returns $54.6 million Innovator Grant Not willing to default to the federal model, many state lawmakers remain committed to state established exchange Special Joint Legislative Committee established to study exchange implementation

13 HHS’ Proposed Rule on Exchanges No big surprises HHS is preparing to implement the federal fallback Early mover advantage Emphasis on state flexibility

14 Potential State Positions on Exchanges Fully operational State designs, builds, and operates an exchange complete with all the features specified in PPACA Hybrid model State oversees some functions of the exchange while contacting with HHS for other features Minimalist approach State implements exchange with just enough functionality to get “conditional approval” from HHS Do nothing State defaults into federal exchange; cedes control of all features and functions

Mandated Exchange Functions 15 Portal / Web site Enrollment and Eligibility Interface Enrollment and Eligibility Interface Carrier 1 Carrier 1 Carrier 2 Carrier 2 Carrier 3 Carrier 3 Health Plan #1 Health Plan #1 Plan Comparison Interface Health Plan #2 Health Plan #2 Health Plan #3 Health Plan #3 Administration Interface Communication Interface TREASURY HOME LAND SECURITY HOME LAND SECURITY IRS HHS SOCIAL SECURITY Verify Citizenship Verify Income Tax Credits Verify Residency STATE Medicaid STATE Medicaid Eligibility Reporting Subsidies Cost Reduction CUSTOMER SERVICE Notifications Pay Premiums Employee or Consumer Employee or Consumer Billing or Invoices Employee or Consumer Employee or Consumer Admin, Life Events, etc. Customer Service ONLINE CALCULATOR Display Total Costs ONLINE CALCULATOR Display Total Costs Health Plan #4 Health Plan #4 Carrier 4 Carrier 4 State Insurance Agency Certify, Recertify Decertify Health Plans State Insurance Agency Certify, Recertify Decertify Health Plans Navigator Guidance Data Service Hub Data Service Hub FISCAL AGENT FISCAL AGENT RISK ADJUSTMENT RISK ADJUSTMENT

Core Functions 16 Portal / Web site Enrollment Interface Health Plan #1 Health Plan #1 Plan Comparison Interface Health Plan #2 Health Plan #2 Health Plan #3 Health Plan #3 Health Plan #4 Health Plan #4 Employee or Consumer Carrier 1 Carrier 1 Carrier 2 Carrier 2 Carrier 3 Carrier 3 Administration Interface Carrier 4 Carrier 4 Communication Interface Admin, Life Events, etc. Billing or Invoices Employer

17 Early Decisions for States Exchange Federally Established State Established Selective Contractor Market Facilitator Non-Profit Government Agency Quasi Governmental Government Agency Quasi Governmental Non-Profit

18 Operational Priorities for States Establish guiding principles Develop a general timeline Develop baseline information Engage stakeholders and create feedback mechanism Establish authority and governance

19 Strategic Imperatives for States Retain maximum control at the state level Regulatory Budgetary Lead, rather than follow BY you or TO you Influence federal regulations

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