1. Holding Down Insurance Premiums: How PPACA Would Help (And what else we need to do) Michael Miller Community Catalyst January 2010

2. Key provisions in PPACA Minimum Loss Ratio standards Standards for rating on age and health status Rate oversight and other provisions

3. Minimum Loss Ratio MLR = % of premium devoted to medical care PPACA provisions –2011 Insurers must report % of premium devoted to medical care –Must pay rebates if fail to meet standards 85% large group market 80% small and non group market

4. Key advocacy issues Creating a standard definition of medical expense What counts as quality improvement Evaluating each line of business separately (if they are not combined)

5. Age and health status Age limits 3:1 No gender rating Rating on health status abolished but: Rates can vary by 1.5:1 for smokers Wellness incentives could also indirectly allow variation based on health status

6. Whats wrong with wellness? Two kinds of programs: participation based (e.g. a required health education class)no limits on size of incentive; no change made by PPACA health status based (e.g. achieving target BMI or blood pressure)incentive cap increased from 20-30% (or up to 50% w/ Secretary approval) Subsidies would not take wellness penalties into account

7. Key advocacy issues States can require stricter age bands Advocates can help shape federal rules on demonstration program to apply wellness discounts in non-group market States can prohibit backdoor experience rating in their states

8. Rate oversight State experience with rate regulation is mixed Oversight can moderate rate increases and push insurers to be more efficient and effective at cost containment, but: –Insurance Commissioners often deferential to insurers (political will) –Public advocates outgunned by industry –Insurers have limited ability to restrain health costs –Quasi-judicial proceedings are less than ideal organizing venue

9. PPACA Provisions Insurers required to report/ justify rate increases Insurance commissioners can recommend exclusion from exchange for pattern of excessive increases Exchanges rate plans on various factors including price Secretary may empower exchanges to exclude plans based on price/ value

10. Steps forward More transparency in rates More competitive pressure/ easier comparisons across plans –Actuarial tiers –Rating system based on quality and price More resources for regulators More resources for consumer assistance

11. Key Advocacy Tasks Make authority of exchanges to negotiate premiums with plans and condition participation based on price explicit States can require greater standardization of plans, making price comparisons easier Make sure exchanges have resources to scrutinize proposed increases (could sub that back to Ins. Commissioners)