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Kim Justice, Policy Analyst

Andy Nicholas, Senior Fiscal Analyst

TITLE

What Opportunities Does the

Exchange Offer Washington?

Emily Brice, Northwest Health Law AdvocatesDecember 2012

Easier Plan Comparisons

Qualified Health Plans Available to individual and small

group in Exchange Must meet certification criteria Will have metallic tiers indicating

actuarial value Goal: Make value clearer to

consumers Calculation: In-network, Essential

Health Benefits Tiers: Bronze – Platinum, plus limited

catastrophic (if under 30 or exempt from minimum essential coverage)

Richer Benefits

Essential Health Benefits Must cover 10 categories of services

Must be one of benchmark plans: Regence Innova (largest small group)

Must cover preventive services without cost-sharing Based on U.S. Preventive Services Task Force A & B

recommendations: www.healthcare.gov/news/factsheets/2010/07/preventive-services-list.html

This aspect largely already in effect

Ambulatory Rehabilitative & habilitative

Emergency Laboratory

Hospitalization Preventive, Wellness, & Chronic Disease Management

Maternity & Newborn Pediatric (including oral & vision)

Prescription Drugs Mental health & substance use disorder (including behavioral health)

Greater Affordability

Sliding Scale Subsidies & Cost Reductions Eligibility:

Under 400% FPL Not undocumented Not eligible for Medicaid, Medicare, CHIP, TriCare, etc. Not offered “affordable” coverage of “minimum value”

through employer Not actually enrolled in coverage through employer

Greater Affordability

Premium Tax Credits Cost-Sharing Reductions

Income Level

Maximum Premium

Up to 133% FPL

2% of income

133-150% FPL

3-4% of income

150-200% FPL

4-6.3% of income

200-250% FPL

6.3-8.05% of income

250-300% FPL

8.05-9.5% of income

300-400% FPL

9.5% of income

Income Level

Reduction in OOP Costs(compare to 70% silver)

100-150% 94% AV

150-200% 87% AV

200-250% 73% AV

• Select any AV tier except catastrophic

• Receive monthly in advance (paid directly to plan) or at close of tax year

• Possibility of reconciliation

• Select silver only! • Only applies to in-network, in-

EHB• Plus: For those under 400%

FPL, additional caps on maximum OOP spending

What Can Washington Do to Maximize

the Exchange Opportunity?

Promote Affordability

Above 400% FPL: Much still unknown about pricing...

Under 200% FPL: Even with subsidies, Exchange may be

unaffordable for 162,000 WA residents in this income bracket due to heightened price sensitivity.

Outcome: Many will remain uninsured, or enroll and then drop coverage.

Promote Affordability: Basic Health Option

Source: Urban Institute, “Using the Basic Health Program to Make Coverage More Affordable to Low-Income Households” (2012)

Average Annual Costs for Adults Nationally with Incomes Between 138-200% FPL: BHP vs. Subsidized Coverage in the Exchange

Consumer Education

Trade-off: Plan Selection v. Cost-sharing Ex: 30-year old Ana earns 150% FPL.

Unsubsidized age-adjusted monthly premium for the second-lowest cost silver-level plan estimated at ~ $3,440 per member annually.

Based on her household size and income, Ana will pay a maximum of 4% of her income toward coverage – about $690 annually, or 20% of the total premium. She can receive a tax credit for the remaining 80% of the premium, $2,750.

Which plan will she choose? Silver Reference Plan

Bronze Plan

Net premium (annual after credit)

$690 Under $690

Cost-sharing Reduction

Yes ( 70% increases to 94%)

No (60%)

OOP Maximum Yes ($2,084) Yes ($2,083)Source of estimates: Kaiser Subsidy Calculator

Maintain Sustainable ExchangeFunding Exchange Operations? Insurance Premium Assessment

Starting 1/2014: Premium tax assessment totaling 0.5% of all premiums and prepayments for health care services received.

Starting 1/2015: Premium tax would rise to 1% of same.

Repurpose Existing Assessment (Hybrid) Starting 1/2014: Authorize and apportion to the Exchange the

premium tax collected on all premiums and prepayments for health care services attributable to the Exchange-generated premiums received.

Any funding shortfalls augmented by assessing a service charge payable by QHPs in the Exchange.

QHP Issuer-Based Revenue Model Starting 1/2014: Assess a service charge payable solely by QHPs

in the Exchange.

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Kim Justice, Policy Analystkimj@budgetandpolicy.org