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Remy Trupin, Executive Director Kim Justice, Policy Analyst Andy Nicholas, Senior Fiscal Analyst December 2, 2012 TITLE

What Opportunities Does the Exchange Offer Washington? Emily Brice, Northwest Health Law AdvocatesDecember 2012

Easier Plan Comparisons Qualified Health Plans  Available to individual and small group in Exchange  Must meet certification criteria  Will have metallic tiers indicating actuarial value  Goal: Make value clearer to consumers  Calculation: In-network, Essential Health Benefits  Tiers: Bronze – Platinum, plus limited catastrophic (if under 30 or exempt from minimum essential coverage)

Richer Benefits Essential Health Benefits  Must cover 10 categories of services  Must be one of benchmark plans: Regence Innova (largest small group)  Must cover preventive services without cost-sharing  Based on U.S. Preventive Services Task Force A & B recommendations:  This aspect largely already in effect AmbulatoryRehabilitative & habilitative EmergencyLaboratory HospitalizationPreventive, Wellness, & Chronic Disease Management Maternity & NewbornPediatric (including oral & vision) Prescription DrugsMental health & substance use disorder (including behavioral health)

Greater Affordability Sliding Scale Subsidies & Cost Reductions  Eligibility:  Under 400% FPL  Not undocumented  Not eligible for Medicaid, Medicare, CHIP, TriCare, etc.  Not offered “affordable” coverage of “minimum value” through employer  Not actually enrolled in coverage through employer

Greater Affordability Premium Tax Credits Cost-Sharing Reductions Income LevelMaximum Premium Up to 133% FPL2% of income % FPL3-4% of income % FPL4-6.3% of income % FPL % of income % FPL % of income % FPL9.5% of income Income LevelReduction in OOP Costs (compare to 70% silver) %94% AV %87% AV %73% AV Select any AV tier except catastrophic Receive monthly in advance (paid directly to plan) or at close of tax year Possibility of reconciliation Select silver only! Only applies to in-network, in-EHB Plus: For those under 400% FPL, additional caps on maximum OOP spending

What Can Washington Do to Maximize the Exchange Opportunity?

Promote Affordability  Above 400% FPL:  Much still unknown about pricing...  Under 200% FPL:  Even with subsidies, Exchange may be unaffordable for 162,000 WA residents in this income bracket due to heightened price sensitivity.  Outcome: Many will remain uninsured, or enroll and then drop coverage.

Promote Affordability: Basic Health Option Source: Urban Institute, “Using the Basic Health Program to Make Coverage More Affordable to Low-Income Households” (2012) Average Annual Costs for Adults Nationally with Incomes Between % FPL: BHP vs. Subsidized Coverage in the Exchange

Consumer Education Trade-off: Plan Selection v. Cost-sharing  Ex: 30-year old Ana earns 150% FPL.  Unsubsidized age-adjusted monthly premium for the second-lowest cost silver- level plan estimated at ~ $3,440 per member annually.  Based on her household size and income, Ana will pay a maximum of 4% of her income toward coverage – about $690 annually, or 20% of the total premium. She can receive a tax credit for the remaining 80% of the premium, $2,750.  Which plan will she choose? Silver Reference PlanBronze Plan Net premium (annual after credit) $690Under $690 Cost-sharing Reduction Yes ( 70% increases to 94%) No (60%) OOP MaximumYes ($2,084)Yes ($2,083) Source of estimates: Kaiser Subsidy Calculator

Maintain Sustainable Exchange Funding Exchange Operations?  Insurance Premium Assessment  Starting 1/2014: Premium tax assessment totaling 0.5% of all premiums and prepayments for health care services received.  Starting 1/2015: Premium tax would rise to 1% of same.  Repurpose Existing Assessment (Hybrid)  Starting 1/2014: Authorize and apportion to the Exchange the premium tax collected on all premiums and prepayments for health care services attributable to the Exchange-generated premiums received.  Any funding shortfalls augmented by assessing a service charge payable by QHPs in the Exchange.  QHP Issuer-Based Revenue Model  Starting 1/2014: Assess a service charge payable solely by QHPs in the Exchange.

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