1. National Association of Insurance Commissioners
Addressing Risk
Brian Webb
National Association of Insurance Commissioners
September 2011

2. PPACA Implementation Timeline
2010
2011
2012
2013
2014
2015
2016
2017
Temporary High Risk Pool Program
Temporary Reinsurance Program For Early Retirees
Immediate Market Reforms:
No Lifetime Limits
Restricted Annual Limits
Restrictions on Rescission
First Dollar Coverage of Preventive Services
Extended Dependent Coverage
Internal/External Review
No Pre-Existing Conditions for Children
Disclosure of Justifications for Premium Increases
Medical Loss Ratios with Rebates
Exchanges
Subsidies
Individual/Employer Mandates
Market Reforms
Guaranteed Issue
No Pre-Existing Condition Exclusions for Adults
Rating Rules
Essential Benefits
No Annual Limits for Essential Benefits
Co-Op Plans & Multistate Plans
Risk Adjustment
Individual Market Reinsurance and
Risk Corridor Programs

3. 2014 Market Reforms Single Risk Pool Requirement
Guaranteed Issue
No Pre-Existing Condition Exclusions for Adults
Rating Rules
No health status
3 : 1 maximum variation for age
1.5 : 1 maximum variation for tobacco use
Single Risk Pool Requirement
Essential Benefits Package
Individual Mandate
Employer Responsibilities

4. Small Group Premium VariationME NH VT WA MN MT ND WI MA NY OR RI ID SD MI PA IA CT WY OH NE NJ WV MD VA DE NV MO IL IN UT KS KY CA CO DC TN NC AR OK GA SC AZ MS NM AL LA HI TX FL AK
Rating Schemes
Rating Band Variability:
Community Rating
13:1 or less
Adjusted Community Rating
13.1:1 – 19:1
*Note: Michigan HMOs and Blue Cross/Blue Shield are restricted to 3.12:1 maximum variation. All others may use 3.96 maximum variation
No Rating Structure
19.1:1 – 25:1
25.1:1 or greater

5. Individual Market RatingME WA MN VT NH MT ND MI NY WI MA OR ID SD PA RI WY IA CT OH NE IL IN NJ WV MD VA DE NV MO UT KS KY CA CO NC DC TN AR OK AL GA SC AZ MS NM LA HI FL TX AK
No Rating Structure
Community Rating
Adjusted Community Rating
Rating Bands
Hybrid
Michigan Blue Cross/Blue Shield must use community rating. There is no rating structure for other carriers.

6. Addressing Risk Temporary? Reinsurance Risk Corridors Ongoing:
Single Risk Pools
Risk Adjustment

7. Risk Adjustment Participants: Establishment:
Non-grandfathered individual
Non-grandfathered small group
Inside and outside the Exchange
Establishment:
State may establish if state operates Exchange
HHS will establish if state does not

8. Addressing Risk: Risk Adjustment (Ongoing)
Risk Adjuster
Exchange Plans
Non-Grandfathered Plans
Risk $ $ $ $

9. Risk Adjustment: NPRM Methodology:
HHS will develop a methodology – similar to Parts C and D in Medicare
A state may use alternative, if certified by HHS
HHS-certified alternatives may be used by other states
HHS methodology will be published in a Federal Notice of Benefit and Payment Parameters – with public comment
State alternative must be published in a state Notice of Benefit and Payment Parameters
Must include factors, weights, data collection strategy, and nay adjustments to determine actuarial risk

10. Risk Adjustment: White Paper
Questions:
Choices in developing a risk adjustment model
Prospective or concurrent or mix?
Options for calculating and balancing payments and charges
“Baseline premium” and budget neutrality
Issues created by permissible rating factors
Methods for dealing with different benefit levels
Accounting for other payments and reforms

11. Conclusion Next Steps Comments on NPRM due Oct 31st
Comments on White Paper ongoing
Part of state planning discussions
Discussions at the NAIC

12. Questions?
Brian Webb Jolie Matthews Manager Senior Health & Life Counsel Health Policy and Legislation Josh Goldberg Health Policy and Legislative Advisor