1. Peter Newell United Hospital Fund April 23, 2010
Playing the Hand We’re Dealt: New York State and the Federal Interim High Risk Pool
Peter Newell
United Hospital Fund
April 23, 2010

2. New York and the Interim High Risk Pool
A fine kettle of fish
New mechanism is aptly named – plenty of risk to go around for President and Congress, HHS, NYS, health plans, and consumers
Tight time frame
Short yardage situation or going deep?
Dry run/prepare the ground for full HCR implementation?
Opportunities to provide affordable products, relief for current Direct Pay enrollees, improve risk profile of standardized market?
Do IHRP decisions affect future decisions as we prepare for “the Bronze Age?”

3. Federal High Risk Pool Requirements – More Guidance to Come, Significant Discretion for HHS and States
Uninsured for six months previous to enrollment
Pre-existing condition
Current citizen, national or lawfully present
Enrollees to pay a “standard rate for a standard population”
Maximum OOP of $5,950/$11,900 (HSAs)
HHS guidance on floor set of benefits that “take into account benefit lists used by existing state high risk pools”
65 percent minimum actuarial value
Maximum of 4:1 age rating, and 1.5:1 tobacco rating
MOE requirements for states, anti-dumping provisions

4. Federal IHRP Funding and U.S. High Risk Pool Experience in 2008
Funding of $5B nationally (42 months) with HHS authority to make “adjustments” due to funding shortfalls
S-CHIP-like formula (uninsured and state costs) with reallocation of unspent funds after two years;
2008 HRP spending of $1.991B (enrollee premiums and subsidies) for 200,000 enrollees (only 13,000 dependents) in 35 states (GAO R)
Current HRP eligibles (uninsured with chronic conditions) estimated at 3.9 million in just 35 states:
1 million enrollment = subsidy of $120 PMPM for 42 months
400,000 enrollment in Year 1 = $300 PMPM
Current U.S. HRP Enrollees:
One-half unemployed, average age 49
Average household income $41,000
Average PPO single premium $485
PPO product most common, average deductible $1,593, 63 percent paying over $1,000
Average claim $9,437

5. New York’s High Risk Pool Eligibles?
Enrollment will be driven by benefits, price, and pre-existing condition definition
Source: Estimates of uninsured are from Holahan, Cook, Lawton, Health Insurance Coverage in New York, : A Snapshot, United Hospital Fund, February 2010; estimates of chronic condition prevalence are from AHRQ MEPS Statistical Brief #243, April 2009; estimates of uninsured undocumented noncitizens are based on data from Holahan and Cook, Characteristics and Health Insurance Coverage of New York’s Noncitizens, United Hospital Fund, 2009, and Passel and Cohn, A Portrait of Unauthorized Immigrants in the United States, Pew Hispanic Center, April 2009. 

6. New York Interim High Risk Pool Funding
NY IHRP Eligibles: 75,000 to 360,000
New York estimated funding in the $50M - $80M range (NY uninsured as percent of U.S., NY adult non-elderly uninsured as percent of U.S., S-CHIP formula, etc.)
Take-up of 30,000 enrollees = $140 PMPM ($50M) to $220 PMPM ($80M)
Direct Pay stop-loss: $39.2M paid 9 percent of claims in and estimated 10 percent of claims for 2009 (SID)
Healthy NY stop-loss: 2009 premium subsidy estimated at $96 PMPM for CY 2009, $82 PMPM for 2008 (SID); percent premium subsidy in 2006 (Merging the Markets, Gorman Actuarial/UHF)

7. Primary Design Issues Standard rate in a guaranteed-issue state?
Proxy (DP with full stop-loss, MEPS-IC Small Group ($408 in 2008), Healthy NY with benefit adjustments, FHP with commercial payor adjustment, etc.); or
Start from scratch (Reg. 146, stop-loss claims data bases) and back into a number based on assumptions about available funding, benefits, morbidity, take-up
Pre-existing conditions
New York Law: “conditions for which medical advice ...”; or
List w/doctor’s note
One vendor, regional vendors, or multiple plans all regions
Enrollment
Benefits and cost sharing

8. Operational Issues Citizenship verification
Policy form submissions by plans or standardized form promulgated by state
Statewide rate (NYSHIP), regional rates (MMC/FHP), rate submissions by plans with SID guidance, plan filed rates
Appeal process
How will new insureds be pooled?
Exceptions to crowd-out provisions
Subsidy mechanism: stop-loss/reinsurance, flat PMPM payments, other?
Segregation of federal and state funds

9. New York Assets Statewide commercial HMO coverage
Mandatory participation by HMOs in Standardized Direct Pay, Healthy NY programs, and option for other insurers
Superintendent’s discretion to promulgate additional benefit packages in Direct Pay and Healthy NY
Existing stop-loss programs in Direct Pay and Healthy NY, and Regulation 146 risk adjustment mechanisms for Direct Pay/Small Group, Timothy’s Law, and regulatory discretion on stop-loss corridors (Healthy NY)
Existing vendor for stop-loss, risk adjustment administration
Extensive claims database for stop-loss programs, Reg. 146
Statewide Family Health Plus availability through PHSPs and HMOS
Statewide non-managed care networks (e.g., United and Empire for NYSHIP)
Three former BCBS insurers of last resort

10. Conclusion Short yardage situation or going deep?
Will HHS grant New York discretion to build on existing mechanisms for high-risk populations?
Navigating the shoals on funding issues
Timing may limit available options
Statute vs. regulation, procurement
Equity issues