WISCONSIN HEALTHCARE STABILITY PLAN 1 JP Wieske, Deputy Commissioner Office of the Commissioner of Insurance March 2018 OVERVIEW Wisconsin's Individual Health Insurance Market  Impact of the Affordable Care Act (ACA)  Overview of the Wisconsin Healthcare Stability Plan  Wisconsin’s 1332 Waiver Application  2 WISCONSIN’S HEALTH INSURANCE MARKET  Most people receive their health insurance coverage from their employer, Medicare, or Medicaid  Approximately 5% of Wisconsinites purchase coverage from the individual market  Group Health Coverage  Employer Sponsored Coverage    Large Group Small Group Individual Health Coverage  Private Coverage   Individual Health Insurance Public Coverage   BadgerCare / Medicaid Medicare 3 WHO BUYS INSURANCE IN THE INDIVIDUAL MARKET? Non-Medicare eligible retirees  Individuals not eligible for group coverage       Sole proprietors Part-time workers Contract employees No group coverage offered Individuals in-between jobs 4 PURCHASING IN THE INDIVIDUAL MARKET  Plans      Bronze (60% actuarial value) Silver (70% actuarial value) Gold (80% actuarial value) Platinum (90% actuarial value) Health Insurance Exchange  Advanced Premium Tax Credits    Cost Sharing Reduction Subsidies (CSRs)    100% to 250% FPL Receive a higher actuarial value plan if silver plan is purchased Unsubsidized   Covers individuals from 100% to 400% of the federal poverty level (FPL) Based on the cost of the 2nd lowest cost silver plan Over 400% FPL Off-Exchange   Same plan designs, same cost No subsidies available 5 IMPACT OF THE AFFORDABLE CARE ACT  Implementation of the ACA has resulted in an individual market that is not stable  Insurers are leaving the market, shrinking service areas, and increasing rates  Consumers are faced with fewer coverage options and double digit premium increases 6 INSURERS ARE LEAVING THE MARKET  2017:  Approximately 37,000 Wisconsinites had to choose a new insurer Humana and UnitedHealthcare left the individual market entirely  Managed Health Services, WPS Health Plan, and Physicians Plus left the Exchange   2018:  Approximately 75,000 Wisconsinites had to choose a new insurer Health Tradition left the individual market  Anthem and Molina left the Exchange  Molina and Anthem offer plans off-Exchange in one county  7 INSURERS ARE LEAVING THE MARKET  Decline of on-Exchange insurers:  (green 3+, yellow 2, red 1) 2016  2017 2018 75,000 enrollees forced to choose a new insurer for their 2018 coverage (some with 1 or 2 options) 8 RATES ARE INCREASING Average rate increases since 2014 Rate Increase  2014-15 2015-16 2016-17 2017-18 5% 8% 17% 42% 2018 average rate increase for 2nd lowest cost silver plans was 50%  Much of Northeastern Wisconsin saw an increase of over 100% for the 2nd lowest cost silver plan 9 RATE INCREASE IMPACT ON CONSUMERS  Rates below reflect 2nd Lowest Cost Silver increases over the past 3 years for a 21-year-old: 10 RATE INCREASE IMPACT ON CONSUMERS  Many individual market consumers are insulated from rate increases Federal tax credits are available to individuals with income between 100% and 400% FPL  83% on-Exchange consumers accessed federal tax credits to offset their premium expenses  Rate increases result in higher federal tax credit amounts, NOT increased consumer costs    2nd lowest cost silver plan rates are used in determining federal subsidy amounts Thousands of other individual market consumers experience significant rate increases Incomes over 400% FPL  Coverage purchased off-Exchange  11 WHY ARE RATES INCREASING AND INSURERS LEAVING?  Worsening risk pool Higher percentage (34%) of older residents (55-64) than the national average  Lower percentage (16%) of younger residents (26-34) than the national average   High Medical Loss Ratios (MLR) - percentage of premiums paid for direct medical care  ACA contemplated an 80% MLR     2014 insurers had a 91% MLR 2015 insurers had a 101% MLR 2016 insurers had a 94% MLR The net result was insurer losses in the individual market of more than $400 million in the first three years 12 WISCONSIN HEALTHCARE STABILITY PLAN  Announced by Governor Walker on January 24, 2018 at the 2018 State of the State Address  Senate passed on February 20, 2018; bi-partisan vote  Assembly passed on February 20, 2018; bi-partisan vote  Signed by Governor Walker on February 27, 2018  Enrolled as 2017 Wisconsin Act 138 13 WISCONSIN HEALTHCARE STABILITY PLAN  1. 2. 3. The Plan has three main goals: Keep or expand consumer choice Lower the impact of premium increases Stabilize the individual market  The Healthcare Stability Plan will not solve all of the problems in the individual market  A federal law change is required to make most of those changes 14 WHAT IS THE HEALTHCARE STABILITY PLAN?  Allows Wisconsin to apply for a “1332 State Innovation Waiver”  The 1332 Waiver process allows states to make changes to the ACA provided: Coverage is as comprehensive and affordable as it was without a waiver;  Coverage is available to at least a comparable number of state residents as would be provided absent the waiver; and  No increase to the federal deficit.   Waivers can be funded by “pass through dollars”  If the federal government will save money it would have otherwise spent in subsidies absent the waiver, the state can use those “pass through dollars” to help fund the program 15 HEALTHCARE STABILITY PLAN  2017 Wisconsin Act 138 allows OCI to administer a $200 million reinsurance program  Wisconsin would be the 4th state to run a program after Alaska, Minnesota, and Oregon  The actuarial report by Wakely estimates the state will receive approximately 85% of the cost paid through pass through dollars  The federal government will fund approximately $170 million of the cost (pass through funds)  The state will be required to fund approximately $30 million plus administrative costs 16 WHAT IS THE HEALTHCARE STABILITY PLAN?  The plan creates a “reinsurance” program to cover costs in the individual market  Reinsurance is insurance for insurance companies  The program would provide coverage for claims between $50,000 and $250,000  Under the program, the state would pay between 50% and 80% (likely between 50-60%) of those costs up to $200 million 17 HEALTHCARE STABILITY PLAN  The program will reduce Wisconsin consumer premiums and expand coverage  It is estimated that premiums will be approximately 10% lower in 2019 than the projected increase without the program  Enrollment is expected to increase by approximately 0.8% 18 HEALTHCARE STABILITY PLAN – HOW WILL IT WORK?  Premium Savings In July of 2018, insurers will be required to file rates that reflect their premiums with and without the program  If the 1332 Waiver is approved by CMS, insurers will use the rates reflecting the cost decrease in the program   Qualifying Claims    Insurers will submit qualifying claims to OCI for review OCI will audit and review claims Reimbursement  Once reviewed, OCI will send qualifying reimbursements to the insurers 19 HEALTHCARE STABILITY PLAN – TIMELINE March 14 – April 14: Public Comment Period and Tribal Consultations  April 15: Submission of 1332 Waiver application to CMS  July 2: Insurers file rates and forms with OCI  Late August / Early September: Expected federal approval of Waiver  Late September: Insurer rates and forms approved for on-Exchange plans by state and federal government  November: 2019 Open Enrollment  January 1, 2019: Health Care Stability Plan begins  20 RESOURCES Federal Web site: healthcare.gov; cms.gov  OCI Web site: oci.wi.gov  Written comments on the 1332 Draft Waiver Application may be submitted to OCI via:   e-mail: OCI1332WaiverComments@wisconsin.gov  or mail: ATTN: JP Wieske, Deputy Commissioner Wisconsin Office of the Commissioner of Insurance PO Box 7873 Madison, WI 53707-7873 21