ILLINOIS DEPARTMENT OF INSURANCE APRIL 27, 2011 Health Insurance Reform and The Affordable Care Act Health Insurance Reform and The Affordable Care Act Affordable Care Act Implementation in Illinois: Year One

Overview of Presentation Illinois Department of Insurance – April 20, Overview of the Affordable Care Act (ACA) Benefits to Illinois Families and Employers Implementation of the ACA in Illinois

Overview of Affordable Care Act Illinois Department of Insurance – April 20, Affordable Care Act (ACA) reforms will benefit Illinoisans in every coverage situation:  For the currently insured, additional safeguards and reforms to strengthen existing coverage.  For the currently uninsured, new coverage options and subsidies to ensure access to affordable care.  For small business owners, tax credits to lower the cost of providing coverage to employees.  For Medicare recipients, improved coverage for prescriptions drugs and better access to preventive care. Many ACA reforms will not take effect until 2014, but immediate benefits are already being implemented.

Overview of Affordable Care Act New consumer protections, including:  Prohibitions on preexisting condition exclusions, rescissions  Free preventive services  Restrictions on lifetime and annual dollar limits  Expanded appeal rights Coverage for individuals with preexisting conditions 2011 Premium value, protections against rate increases Illinois Department of Insurance –April 20, 2011

Overview of Affordable Care Act Illinois Department of Insurance –April 20, Transparent online marketplace (“Exchange”)  Including online Medicaid eligibility and enrollment Additional market reforms  Prohibition against discrimination based on health status, gender  Coverage for essential health benefits, limits on cost-sharing For detailed information about ACA reforms: insurance.illinois.gov/HIRIC healthcare.gov

Benefits to Illinois Families - Highlights Illinois Department of Insurance –April 20, Issue: Rescissions Prior to the ACA, Illinois law allowed rescissions for any “material” reason, regardless of intent  From , Illinois led the nation in overall number of rescissions, with 40% more than California.  One teenager’s coverage was rescinded due to failure to disclose a “congenital deformity” – she wore braces. The ACA prohibits rescissions except in cases of fraud or intentional misrepresentation.

Benefits to Illinois Families - Highlights Illinois Department of Insurance –April 20, Issue: Preexisting Condition Exclusions Prior to the ACA, Illinois law allowed insurers to deny coverage for any reason other than “race, color, religion or national origin,” and to exclude coverage based on the presence of a “preexisting condition.”  Coverage is denied to children who were sick, are sick, or might become sick. Under the ACA, insurers cannot impose preexisting condition exclusions—including denials of coverage— to children under 19.  Beginning in 2014, preexisting condition exclusions are prohibited entirely.

Benefits to Illinois Families - Highlights Illinois Department of Insurance –April 20, Preexisting Condition Exclusions (continued) The ACA established federally-funded “high risk pools” to provide transitional coverage for uninsured individuals with preexisting conditions in each state.  Most frequent ICHIP premiums: $12,000-$16,000 Illinois Preexisting Condition Insurance Plan (IPXP) Premiums and coverage details are available at: insurance.illinois.gov/IPXP. insurance.illinois.gov/IPXP  More than 1,200 Illinois residents have already enrolled.

Benefits to Illinois Families - Highlights Illinois Department of Insurance –April 20, Issue: Premium Value Prior to the ACA, Illinois law did not require health insurers to expend on health care a defined percentage of hard-earned premium dollars paid by families and employers.  Illinois has an exclusively for-profit health insurance market. The ACA requires insurers to spend at least 80% of each premium dollar on health care for individual/family and small employer plans, and 85% for large employer plans.  Insurers that fail to meet these requirements must provide rebates to policyholders in 2012.

Benefits to Illinois Families - Highlights Illinois Department of Insurance –April 20, Issue: Annual and Lifetime Dollar Limits Prior to the ACA, Illinois law allowed non-HMO plans to establish annual and lifetime dollar limits.  Individuals with chronic or costly health conditions have been forced to forego needed care or pay out-of-pocket. The ACA prohibits annual and lifetime dollar limits for essential health benefits.  Prior to 2014, health insurers can establish restricted annual dollar limits ($750,000 in 2011, $1.25 million in 2012, and $2 million in 2013).

Benefits to Illinois Families - Highlights Illinois Department of Insurance –April 20, Issue: Free Preventive Care Prior to the ACA, Illinois law did not require health insurers to provide coverage for important preventive benefits such as physicals, immunizations, and cancer screenings. The ACA requires insurers to provide coverage for preventive services without cost to the policyholder.  The full list of preventive services is available at mmendations.html. mmendations.html

Benefits to Illinois Families - Highlights Illinois Department of Insurance –April 20, Issue: Coverage for Young Adult Dependents The ACA expands on existing State law allowing parents to add coverage for young adults up to the age of 26. Improving on the State law, the ACA:  Applies to “self-insured” plans; and  Allows coverage for married young adults and those no longer living at the same permanent address as a parent.

Benefits to Illinois Families - Highlights Illinois Department of Insurance – April 20, Issue: Direct Access to OB-GYNs The ACA expands on existing State law allowing women to visit OB-GYNs without the need for a referral or prior authorization. Improving on the State law, the ACA:  Applies to “self-insured” plans;  Does not require women to designate a “primary” provider, instead allowing women to visit any in-network OB-GYN.

Benefits to Illinois Families - Highlights Illinois Department of Insurance –April 20, Issue: Prescription Drug Coverage for Seniors Prior to the ACA, Illinois seniors were required to pay 100% of prescription drug costs that fell in the Medicare Part D coverage gap, or “donut hole.” Under the ACA, more than 100,000 seniors who reached the coverage gap in 2010 received a $250 rebate check.  The coverage gap will be eliminated entirely by  Beginning in 2011, seniors will receive a 50% discount on covered brand-name drugs.

Benefits to Illinois Families - Highlights Illinois Department of Insurance –April 20, A complete list of ACA insurance market reforms, effective dates, and applicability to “grandfathered” and self-insured plans is available at:

ACA Implementation in Illinois – To Date Illinois Department of Insurance –April 20, Illinois Preexisting Condition Insurance Plan (IPXP)  Federal Implementation Grants  Premium Review - $1 million  Exchange Planning - $1 million  Consumer Assistance - $1.45 million Education  Health Insurance Reform Implementation Center:  Webinars

ACA Implementation in Illinois – To Date Illinois Department of Insurance –April 20, Enforcement  State Legislation  Rate Review Web Portal, ACA “Endorsement Template” National Participation through NAIC  Model legislation – Health Insurance Exchanges  Guidance/recommendations to HHS Illinois Health Reform Implementation Council 

ACA Implementation in Illinois – Future Milestones and Continued Efforts 18 Rate Review – HB 1501 (Rep. Greg Harris)  Leading health insurers have accumulated a combined 2010 surplus of $28,353,715,566, even while individuals and families in Illinois have paid a cumulative average rate increase of 181.8% since  Public hearings to be scheduled for this Spring. Health Insurance Exchange  State must demonstrate sufficient progress to ensure continued federal funding.  Exchange will add efficiency to Medicaid program, support small employers in purchase of health care. Illinois Department of Insurance –April 20, 2011

ACA Implementation in Illinois – Future Milestones and Continued Efforts Illinois Department of Insurance – April 20, DOI-Led Working Groups  Agents/Brokers  Healthcare providers  Insurance Companies  Employers  Patient and Family Advocates Public meetings; details available at