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Reinsurance and rating area rule update
Health Benefit Exchange Board Meeting Jane Beyer, Senior Health Policy Advisor February 2, 2018
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Washington Reinsurance Program
Reduces the trend in health plan premiums for all people who purchase in the individual market. Lowered premiums result in increased enrollment. Seamless to consumers. Helps avoid bare counties and increase plan choices. Can be implemented in 2019. Proven effectiveness at the national level: Federal Transitional Reinsurance Program. Likely eligible for federal funding to help finance the program through a federal waiver, as in Alaska, Minnesota, and Oregon. Reinsurance and rating area rule update February 2, 2018
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How reinsurance works Individual claim
Example: If an enrollee’s claims costs for the year totaled $200,000 (which is above the attachment point and below the reinsurance cap), the insurer would receive a portion of the enrollee’s claims costs based on the coinsurance rate: ($200,000 - $75,000) x 80% = $100,000 Reinsurance cap Issuer is responsible for costs above the reinsurance cap. $500,000 $75,000 - $500,000 Coinsurance rate (i.e., the reimbursement percentage) Issuer is paid a portion of claims costs, based on the coinsurance rate. Attachment point Issuer is responsible for costs up to the attachment point. $0- $75,000 Reinsurance and rating area rule update February 2, 2018
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2SSB 6062/SHB 2355 - Program operation
The Washington Vaccine Association would operate the program with oversight by a Washington Reinsurance Program Management Board. Membership includes carriers, TPA’s, self-funded group health plans, Taft-Hartley plans, and consumers. OIC and HBE are non-voting board members. Reinsurance payments to carriers are capped at $200 million per year. OIC will reset “payment parameters” for the program after the first year of operation in order to maintain spending within the $200 million cap. Reinsurance and rating area rule update February 2, 2018
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Program financing (as introduced)
Sources of funding: Health carrier/insurer and third party administrator (TPA) assessments modeled on the federal transitional reinsurance program. Carriers and TPA’s pay an amount per covered life into program based. Medicare, Medicaid, and other federal health programs are excluded. Federal funding through a state innovation waiver (Section 1332 waiver) or other federal funding for state reinsurance programs. Board determines the assessment per covered life needed to generate $200 million, which is reduced by available federal funds and under-expenditures from prior years. For years beyond CY 2020, OIC will evaluate alternative financing sources for the program, including a health care paid claims assessment like that used in Michigan. Reinsurance and rating area rule update February 2, 2018
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State innovation waiver (as introduced)
OIC will submit a state innovation waiver (Section 1332 waiver) application to the Department of Health and Human Services on or before April 1, 2018, preceded by tribal consultation and public review. Legislation must be enacted quickly in order to meet the requirements for a federal waiver request and have a waiver approved by the time carriers file their proposed plans and rates for 2019. Implementation of the reinsurance program is contingent on approval of the waiver application. Reinsurance and rating area rule update February 2, 2018
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Geographic rating area rulemaking
ACA allows states to establish rating areas based upon differences in provider costs. Health status is factored into the single risk pool index rate. It cannot be considered in establishing rating areas. Proposal: Increase the number of rating areas from five to nine. Reinsurance and rating area rule update February 2, 2018
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Geographic rating area regions
Reinsurance and rating area rule update February 2, 2018
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Geographic rating area rulemaking
Current rule: Premium ratio for the highest cost rating area, when compared to the lowest cost rating area, cannot be more than 1: 1.15. Proposal: Same base of 1: 1.15, but adds two alternatives with goal of incentivizing coverage in additional counties. 1: 1.22 ratio if an issuer offers QHP’s in all counties in six or more rating areas. 1: 1.4 ratio if an issuer offers QHP’s statewide. Rates must be actuarially justified. Reinsurance and rating area rule update February 2, 2018
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Questions? Jane Beyer Senior Health Policy Advisor JaneB@oic.wa.gov
AnnaLisa Gellermann Deputy Insurance Commissioner, Policy and Legislation Connect with us! Facebook: Twitter: Reinsurance and rating area rule update February 2, 2018
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Appendix Reinsurance and rating area rule update February
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Reinsurance and rating area rule update
February 2, 2018
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