The Texas Association of Health Plans

Back to Basics: Understanding Commercial Health InsuranceSeptember 20, 2018

PATI MCCANDLESS, Vice President of State Health Policy, Health Care Service CorporationBlue Cross Blue Shield of Texas

Evolution of State & Federal Insurance Regulation

Source: New Yorker Magazine

Sources of U.S. Health Care Coverage (2016)

https://www.kff.org/other/state-indicator/total-population/?currentTimeframe=0&selectedRows=%7B%22states%22:%7B%22texas%22:%7B%7D%7D%7D&sortModel=%7B%22colId%22:%22Location%22,%22sort%22:%22asc%22%7D

Employer Coverage 49%

Medicaid 19%

Medicare 14%

Other Public (FEP) 2%

Uninsured 9%

Individual 7%

1.7M People in the Texas Individual MarketSlide courtesy of CPPP/Stacey Pogue

Kaiser Family Foundation estimates for 2016 coverage using 2017 Census Bureau's Current Population Survey, March Annual Social and Economic Supplement and CMS February Effectuated Enrollment Snapshot

• About 1.7 million Texans rely on the individual market for coverage (6%)

• Half get subsidies to lower premiums in the Marketplace – 3% (100%-400% FPL)

• Half buy at full cost within or outside of the Marketplace – 3%

Employer49%

Medicaid/CHIP16%

Medicare11% Military/VA

2%Uninsured

16%

Individual Market w/

Subsidy829,400

3%

Individual Market at Full Cost832,700

3%

Individual Market6%

One11%

Two23%

Three67%

Number of InsurersSource: KFF

2018 Texas Marketplace Options• 67% of Texans are

in counties where 3 or more insurers offer Marketplace plans

• 11% of Texans in counties with only 1 Marketplace insurer

• 8 insurers in 2018 Texas Marketplace

Slide courtesy of CPPP/Stacey Pogue

2018 Marketplace EnrollmentPlan Selections during Open Enrollment: %

change2017 2018Texas 1,227,290 1,126,838 -8%

States Using HealthCare.gov 9.2 million 8.7 million -5%

Dip in enrollment for 2018 likely driven by:• Enrollment period cut in half• Ad budget cut by 90%• Enrollment assistance funds

cut by 40%

• Premium increases for middle/upper income

• Confusion about penalty/status of ACA

Slide courtesy of CPPP/Stacey Pogue

Carriers in the Individual Market in Texas(2014-2018)

12 1419

10 8

2

109

13

4

2014 2015 2016 2017 2018

On-Exchange Off-Exchange

Evolution of State/Federal Insurance Regulation States Have Provided Comprehensive Regulatory Oversight of Insurance for Over 170 Years

2017

1850s to Today

McCarran-Ferguson Act

Employee Retirement Income

Security Act(ERISA)

•Mental Health Parity and Other Targeted Laws

•FAILED: Patients’ Bill of Rights

Affordable Care Act (ACA)

20101996-2008199619741945

Health Insurance Portability and

Accountability Act (HIPAA)

Initially the federal government had no involvement, but intervention has increased substantially since 1996

FAILED: Repeal and

Replace

Slide courtesy of CPPP/Stacey Pogue

State & Federal Regulations

StateLicensure

Financial RegulationForm/Rate ReviewNetwork Adequacy

Consumer ComplaintsMarket Conduct

MixedInsurance Market

RulesRating/PoolingBenefit Design

Consumer Protections

FederalRisk

AdjustmentMedical Loss

Ratios

TDI Regulatory AuthorityHeavily Regulated

• Individual plans• Small group insured

plans (2 to 50 employees)

Minimally Regulated

• Large group plans (51 and up)

• Small group level-funded plans

• Student plans• Short term plans• Association health

plans• Government

employee plans

Not Regulated

• Self-funded ERISA plans (federal preemption)

• Federal employees plan (federal preemption)

• Health care sharing ministries (not insurance)

• Farm bureau plans (not insurance)

Texas Commercial Health Insurance Market

PPO

• Most Purchased• Higher Premiums• Out-of-Network

Benefits• Referrals not

Required

HMO

• No Out-of-Network Benefits (Except ER & When Network Provider not Available)

• May Include PCP Referrals

• Individual Market

EPO

• No Out-of-Network Benefits (Except ER & When Network Provider not Available)

• No PCP Referral Requirement

• Individual Market

Consumers’ Rights Before and After the ACAIndividual Market Small Group MarketBefore After Before After

Guaranteed Issue for All Few states √ √ √

Renewal √ √ √ √Pre-Existing Conditions Few (some

limits)√ (prohibition) √ (some limits) √ (prohibition)

Premium Limits Few √ Some √Rate Review Few √ Some √Broad Benefits Few √ Few √Financial Protections Few √ Few √Medical Loss Ratios Some √ Some √

Affordable Care Act - Insurance Reform• Guarantee issue – can’t deny coverage• Preexisting conditions protections• Premium assistance for individual coverage (100% to 400% FPL)• Medicaid expansion below 133% FPL (optional for states)• Individual mandate – subject to tax penalty if fail to obtain

coverage – revised to $0 as of 2019 (Congress changed in 2017)• Employer penalties • Health Insurance Tax/Fees

Coverage Gap – Non Medicaid Expansion States

Premium Costs for Individual Coverage• Average Texas premium for 2018 exchange plan

– $543 per month– $79 average premium for those with APTC

• Contrast with Texas High Risk Pool Average Monthly Premium– Average premium around $650 in 2013 (last year of operation)– Texas pool created in 1997 - insurer for those with preexisting

conditions– 2013 - covered 26k enrollees– $100M - funded by insurer assessment

Premium Costs for Employer Coverage• Average Premium Employer Coverage - 2017

– Individual• $6,690 per year OR $557 per month

– Family coverage• $18,764 per year OR $1563.67 per month

• Employee Contributions - 2017:– Individual – 18% of premium or $100 per month– Family – 31% of premium or $484 per month

*https://www.kff.org/report-section/ehbs-2017-summary-of-findings/

ACA: Enforcement & Implementation• Wholesale Adoption (CA, CO, WA)

– Expanded Medicaid & State Based Exchange – State Enforcement & Plan Management

• Partial Adoption (AZ, AR, IL, W VA)– Expanded Medicaid & Federal Exchange – OR – No Medicaid Expansion/FFE/Partnership– State Enforcement

• Complete Rejection (TX, OK, WY, MS)– No Medicaid Expansion & Federal Exchange– No Enforcement

HIPAA: Three Levels of State & Federal InteractionState Enforcement Legal authority under state law to enforce federal

requirements

State/Federal Collaborative Arrangement

No legal authority to enforce federal requirements, but is willing to monitor compliance with federal requirements, handle consumer complaints, and seek voluntary issuer compliance If an health plan refuses to comply, the state will refer the case to CMS for enforcement

Federal Enforcement

CMS will enforce federal requirements in a state if:• The state notifies CMS it lacks legal authority or• CMS makes a determination that the state is not

substantially enforcing federal requirements

State & Federal Enforcement Status

State/Federal Collaboration

State

Federal

* CMS enforces most federal requirements in Missouri, but Missouri performs rate review consistent with federal standards.

White House

Department of Health Human Services (HHS)

Secretary Alex Azar

Centers for Medicare & Medicaid Services (CMS)

Administrator Seema Verma

Center for Consumer Information and Insurance

Oversight (CCIIO)Director Randy Pate

Deputy Director Jeff Wu

Department of Labor (DOL)

Department of the Treasury (Treasury)

Federal Regulators

• HHS issues insurance market and Exchange rules

• Many other rules are jointly issued by HHS, DOL, and Treasury under a decades-old consensus process

Major Texas Health Insurance Legislation• 1995 - Texas Patient Protection Act (emergency care mandate; disclosure;

vetoed by Gov. Bush) • 1996 – Patient Protection Act rules passed by TDI • 1997 - Texas enacted HIPAA statutes (provides for funding of the Texas high risk

pool) HB 1212 and HB 710; TDI Patient Protection Act rules codified• 1997 – SB 386 Managed Care liability statute passed • 2007 - SB 1731 Transparency bill - disclosure effort to address surprise balance

billing• 2009 - HB 2256 Mediation bill + PPO Network Adequacy • 2011 – HB 1772 – EPO plans• 2011 to 2013 – major TDI PPO rule update

Major Texas Managed Care Related Legislation• 2015 – SB 481 - expansion of mediation – applies to PPO only • 2017 – SB 507 – expansion of mediation to all out of network emergency care• Mandated benefits – every legislative sessionProvider Related:• Prompt Pay

– 1999 HB 610 first prompt pay bill– 2001 HB 1826 vetoed by Governor Perry– 2003 SB 418 current prompt pay statutes– 2007 SB 1884 prompt pay amended to correct formula for underpayments– 2009 HB 2064 prompt pay amended to create risk pool subsidy program– 2015 HB 1433 – coalition supported reform bill to reduce litigation (died in committee)

• SB 130 (1999) -original “Silent PPO” Bill passes• SB 1468 (1999) physician collective bargaining bill • SB 822 (2013) – Silent PPO