Transcripts For CSPAN Discussion Focuses On The Individual Health Insurance Market 20170506

Respond to uncertainty in the marketplace, in light of republican efforts to repeal and replace the Affordable Care act. This is an hour and a half. Affordable Health Care Act. Dash i would like to welcome you to todays briefing. Ais is part of a series on features ons Health Insurance and we will be doing three summits on the future of health care this year starting with the future of Health Insurance and chronic care and the future of the health care workforce. They are excited you are here. But i comes to Health Insurance, the future starts here and now. We have a lot to talk about today. Before we do, i want to thank our sponsors for todays session, our annual series. Our sponsors are anthem, and i want to thank the blue cross and Blue Shield Association and our other sponsors for their support. I would like to point out one of our Board Members is meg murray. Thanks for being here. We will hear a couple of brief words from two of our sponsors. I want to introduce shawn martin, here to say a few words. Shawn . Mr. Martin thank you very much, and congratulations on securing the friday after the Health Reform vote for this discussion. Good morning. I am with the American Academy of family physicians. Years ago organizations launched a campaign to draw attention to the value of Preventive Care in our health care system. There is a lot of debate in washington now, clearly. The one thing we know is investments in primary care and prevention cause longterm benefits. A study found in a state found that for every dollar invested in primary and Preventive Care produce an upstream in the state of oregon. The health and primary campaign is pleased to sponsor this event today. Congratulations on your timing. We look to a good discussion. Ms. Dash thanks, and now i would like to introduce mark congratulations on your timing. Hayes. Mr. Hayes good morning. We are glad to be a sponsor of this session. Ascension is the Largest Nonprofit Health System in the United States and the largest catholic system in the world. We are committed to achieving 100 access and 100 coverage. This session is so timely as all eyes moved to the senate to work the very hard work to strengthen and stabilize the individual market and insure that health plans can participate and have a vibrant, competitive market and to preserve the coverage that we have under current law. Were looking forward to this session. We thank you for being here. And thank you all for being here very much. Have at it. Ms. Dash thank you, mark. Let me give context for the conversation. Clearly in the wake of the passage of the Affordable Health care act yesterday, there are a lot of questions about what happens next. There will be a lot questions about the politics and the process, and we will leave those questions to others. We will focus on the policy and the policy details because as the conversation moves to the senate and beyond, the policy will be critically important. Secondly, we will focus on the individual Health Insurance market because there are immediate questions about what happens next in this marketplace. We know Health Insurers today, this week, this month are making decisions about whether to participate in 2018. They are looking to 2019 and beyond, and there are potentially significant impacts on patients, families, and on the market. We have a fantastic panel. Karen pollitz is a senior fellow at the Kaiser Family foundation where she works on the program for the study of Health Reform and private Health Reform and tracks implementation Health Reform with associates on the Consumer Protections in the system. Next, deep banerjee is a director with a Financial Services Ratings Group which covers a portfolio of private Insurance Companies. He will tell us more about the market impact. Next, cori uccello is an actuary at the American Academy of actuaries. And they provide nonpartisan assistance to policy makers and regulators. Brian webb is the assistant director for Health Policy and education for the National Association of insurance commissioners. Without further ado, we will turn it over to karen for an overview, and lets go. Thank you, karen. Ms. Pollitz i would say that this has to be the most Timely Alliance event i have ever participated in and probably the most aptly named. The individual Health Insurance market is indeed at a crossroads, and the signs are not yet clear where it is going next. My job is to remind you where this market has been in the change in direction it took to get where it is today and then tee up discussion with my colleagues about issues raising questions about where it could go into the future. This is a reminder. The individual market this is the smallest part of our Health Coverage system. Only about 8 of nonelderly people get the coverage to the individual market today. Most of us are covered in work or through public programs, mostly medicaid, chip, and some medicare for disabled under 65. Individual market is largely a transitional market and a residual market. It is where people go when they do not qualify for these other sources of coverage. A lot of people move through this market. They may be here for a year or two between jobs or while they are working in a job that does not offer benefits or while they are getting ready to go on the public program. About 1 3 of people in this market lived here all the time, the selfemployed and Small Business owners who do not sponsor a group plan. That is about 1 3 of the market. Those are the people who this is where they get the coverage and they do not belong in any other places. It is a small market, but it is the tail that wags the dog in our health care system. Over a threeyear period, adults need to get coverage, and before the market reforms in 2014, it was hard to do this. But since new rules and subsidies, the market enrollment has grown. It is in the neighborhood of 20 million people. About 2 3 of them buy their coverage to the marketplace is set up under the Affordable Care act. 20 are buying acacompliant plans that followed the rules because they are not eligible for some do tests of these or they do not know they are eligible. We estimate about 12 are enrolled in noncompliant plans in the individual market. These are the grandfathered plans that did not have to conform and the grandmothered plans just as the market reforms came in place in 2014 and they were allowed to keep them temporarily. It is fair to say this market was entirely transformed by the aca. Before 2014, this was a voluntary market. Now we have an individual mandate. There is a requirement to buy coverage, and if you do not qualify, youre supposed to come here to get it. Before 2014 this was mostly an unsubsidized market. Basically people paid 100 of the premium with their own aftertax dollars. Now it is a heavily subsidized market in a subsidies up to 400 times the poverty level, also help with cost sharing up to incomes of 2 1 2 times of the poverty level. Insurers were concerned about whether to part with people with the premiums that people would make decisions whether they expected to need their Health Insurance and were more inclined to sit out if they decline. Insurers worry about selection. There is a rule about human beings that 20 of us in any given year account for 80 of all Health Care Spending. Where mostly healthy most of the time. When we get sick or have a complicated pregnancy, claims can get high. That is what insurance does. It is supposed to pool risk, but it cannot do that when people only want to buy coverage when they are sick. Before the aca, the result of the individual market was medically underwritten. People would be turned down or charged more or have their preexisting condition excluded, so your ability to buy coverage and a coverage was dependent on your Health Status. Now that is not allowed. Under the aca, in return for making this market mandatory, insurers are reported to everybody and charge them basically the same rate. There were benefits that were highly variable in this market. In particular, it was unusual to see policies that covered Maternity Care unless state law required it. We often saw limits or the absence of coverage for other benefits like mental health, Substance Abuse treatment, rehab, prescription drugs. The definition of Health Insurance under federal law before the aca was anything else into companies sell. With the aca, benefit standards were added also costsharing. Those were done to make coverage meaningful and also definitional. If we are going to have people have something and going to subsidize it, we want to know what it is. Now Health Insurance in the market has to be Major Medical coverage. It was inefficient before. The amount of premium dollars that insurers spent on the aca were 60 before. Now they have to be at least 80 or people have to be given a rebate the following year. This market has been entirely transformed. That transition was difficult. I think challenging, in a way, for Insurance Companies. They had to adopt a new model. When the new marketplaces opened in 2014, insurers were offering products they had not offered before. They were selling them to a public that they were not used to covering. They had new competition by plans they had not competed with before. Cori will tell you they like to do their estimates with experience, but they did not have a lot of experience. We saw file ability in the pricing and a lot of insurers undervalued their policies. The premiums came in lower than anybody expected. Sometimes that was a calculation error. Other carriers were pricing aggressively hoping to tie up new market share early on. Insurers have had to get used to that and that has been tricky. There were other things during the implementation. It is fair to say the early years did not run like clockwork. Lots of things not work out as expected. There were risk stabilization programs. I will let my colleagues talk about that, but they were meant to cushion mistakes in estimating and cushion losses in the market. They do not operate the way folks expected. There was ongoing concern and is, is the mandate strong enough, and are the subsidies high enough to assure this adverse selection . About 70 or more people who are uninsured claim an exemption from the amended because coverage is not affordable. Subsidies are on a sliding scale up to four times the poverty level. So that has been an issue. The website did not work in 2014. There were a lot of things. There were things unique in individual market areas that felt volatility. This is a map you have seen on our website that shows the number of Insurance Companies participating in the marketplace by county in United States. The orange areas are areas where there is just one Insurance Company selling. The blue areas are two, and the gray areas, there are three or more competing in a marketplace. Lots of reasons why the orange areas are the way they are, two in particular. When you look at the allorange states, wyoming, arizona, alaska, alabama, those are all states that have high concentration of rural areas. It is hard for multiple Insurance Companies to compete when there are not many people buying in the first place. They are also areas in states that did not select medicaid expansion. It turns out in one of our papers in her packet that talks about risk scores of Market Participants by state. The Health Status tends to be lower and risk is higher in areas that have not expanded medicaid. Poverty turns out to be correlated with Health Problems and there is a lot of enrollment volatility at lowincome levels, so eligibility for subsidy changes. There are also areas where other stuff is going on. Tennessee has an interesting thing going on that works against stability in the marketplace. Against stability in the marketplace. There is an Organization Called the farm bureau which is not a licensed health insurer, so it does not have to follow the rules, but they sell Health Coverage. They get to cherrypick the other insurers in the marketplace. And then iowa, which is mostly gray and blue, but may go orange or we will need a new color for zero, is a state that has a very high concentration of noncompliant plans. About half of the people in the individual market in iowa are in these grandfathered plans. Elsewhere, you see a lot of insurer participation, and about insurer participation, and about 57 of people in the marketplace are in an area where there are three or more companies participating. I think that is a sign at least in a lot of areas the marketplace is stabilizing. I should point out this is what the market looks like today. This all reflects insurers decisions made last summer. Before the election, for all the stuff were doing now, this was based on how are they doing with all this other kind of problems going on with implementation. Insurers are getting the hang of it. Data shows their margins are coming back up. We are not in a death spiral. I will let panelists talk about that some more. That leads us to where we are now. Since the election, there is a new political x factor that is causing uncertainty in the marketplace. Insure rs are worried about whether these costsharing subsidies are going to continue to be paid. If not, they are on the hook for providing the subsidies, but they do not get reimbursed by the government. These cost between 7 billion and 10 billion a year, and insurers have said one has said they will leave the marketplace altogether if the payments stop or are not guaranteed for 2018. Other insurers are filing to set rates for funding in 2018. One if these payments are made and what if they are not, but also talking about leaving the marketplace altogether. The individual mandate is a question mark. The First Executive order was lets look for ways not to enforce any burdens on people or companies. The secretary has Broad Authority to grant exemptions, so there is concerned. Absent the mandates, cbo has said that alone will cause premiums to go up 20 . And then the future of outreach. How will the next open enrollment work . The new administration canceled the final week of outreach activities during open enrollment. They have since announced the next open enrollment is going to be half as long as we were thinking it was going to be. Just question about how active will the outreach be given that obamacare is horrible and is a mess and will that be an effective selling job to get people to sign up for 2014. And then we have what is going on on the hill. The house bill passed yesterday makes a lot of changes to the marketplace, and it raises questions about how it could operate Going Forward that could operate Going Forward and if said that alone will cause premiums to go up 20 . And then the future of outreach. How will the next open enrollment work . The new administration canceled the final week of outreach activities during open enrollment. They have since announced the next open enrollment is going to be half as long as we were thinking it was going to be. Just question about how active will the outreach be given that obamacare is horrible and is a mess and will that be an effective selling job to get people to sign up for 2014. And then we have what is going on on the hill. The house bill passed yesterday makes a lot of changes to the marketplace, and it raises subsidies substantially, and keeps in place the medicaid expansion, but substantially reduces federal matching money for that population and the entire medicaid program. So this adverse selection factor is back again, and i think insurers are worried about that. Changes were added to the bill over the course of amendments to try to offset that, including facility for states that flexibility for states to waive Community Rating so that insurers would have the ability to screen out of the pool some of the most expensive people. And then in addition, this fund insurers would have the ability for states, the 100 billion fund that is available for a lot of purposes to offset some changes in the bill. States could use that for the subsidies to replace those that were repealed. They could use it for reinsurance which worked pretty well. They could use it for highrisk pools. We do not know if this is going to be enacted. Insurers are going to have to figure out how to compete in a new market under these new provisions and what that will mean for the cost of coverage and who can participate and what will happen to people when they are sick. I guess we will find out. So i will leave it there. Ms. Dash thank you so much. Deep . Mr. Banerjee good afternoon. Yesterday when i was leaving home to fly to d. C. , my wife said because be careful, and that is when i remembered i was going to be on cspan. I will focus on the individual market, the current form, and the questions we can talk about the longer feature. We also have a forecast which is more immediate and we will talk about that. You see me leading into the giant clock, that is why i am leading into it. 2014, the way we think about it is year one. The aca was passed in 2010, but more of the things we considered to be part of the individual market today came into effect in 2014, including the exchanges. Year one was pretty bad for insurers, including a few handful when everybody made losses in the individual segment of the business. 2015 got worse, and that was alarming. The expected an improvement, but it was not. A good reason for it, because Insurance Companies put in their price well in advance of the year they are supposed to market the product. Although they had a feeling that 2014 was not going as well as expected, they did not have enough time to make that correction they needed to. 2015 got worse. Enough time to make that correction they needed to. 2015 got worse. Another big thing that happened in 2015 was the news that one of the three rs that were considered to be premium stabilization forces, one of them, the risk corridor, was not going to be funded, and that did not help. Then came from 2016 and we focused on that quite a bit because the question was in 2016 they had more time to correct, they changes prices and product. 2016 was actually worse, and then perhaps this was not a manageable market. The data shows that 2016 was better than 2015. What you are seeing is what is called the medical loss ratios. Mlrs are part of the law, but well before aca, mlr is a ratio we used to look at to understand how it is doing. If you look at the individual market mlr, 2014 was 97. 5 . That means for every dollar in premiums that came in the door, they had to pay out 97 cents as claims that went out the door. 2015 was worse, 102. 3 . That means they paid out more. And 2016 shows a marked improvement. The reason we put in the group market mlrs is to give a benchmark. The group market mlrs are far better, but more importantly stable, which goes to the point that the individual market today is not as stable as the Insurance Companies would like it to be. It may not come to the same level of profitability as the group market, but probably could come to stability in the future. Despite this showing Gross Margins, it is a metric we look at. If you turn the mlr on its head, you get Gross Margins. You see 2015 was worse, a 2 margin. Gross margin for administrative costs. This is purely premiums minus medical claims. If we tacked on to these numbers, you will realize the Insurance Companies made on average an underwriting loss for all these years. The group market, the Gross Margins are much higher. Even if you attack in the admin costs, they would have made a profit. Lets talk about the future a little bit. I will talk about two kinds of forecasts. One is business as usual. What we mean by that is everything stays with some changes, but no big overhaul to the rules of the marketplace. If that is the case, what we expect . We expect 2017 to be a year when more Insurance Companies get to breakeven margins. One is business as usual. What we mean by that is everything stays with some then continued improvement in 2018 where they get to small singledigit margins. It is a fragile market and needs time to stabilize. Probably the more important discussion is business unusual or business dropped its forecast. Today there is a lot of pricing and insurer participation issues in the marketplace today going into 2018. The biggest things we look at are the csrs, which there is uncertainty about the future funding of that. The reason the csr, not because of the dollar amount that goes toward it, but importantly it is paid to the Insurance Companies after the fact. The Insurance Company on day one accepts members who are csr eligible and start paying out claims. They only receive the federal government funding for the csr later on. Insurance companies do not want to be in a situation where they find out six months later you do not get that money anymore. What we expect to happen are two options available. One, they would price at what we are calling and uncertainty buffer. Thats what they were expecting, to price high signaldigit premium increases for next year. They will probably tap on a little bit of the uncertainty buffer because they do not know what is going to happen. They could load the silver plan with the csr. The second option, they get more selective about participating. If there is a greater amount of uncertainty, they could decide to pull out of certain counties or certain states. The third one, which is important to mention, the marketplace has set up rules. If the rules are changed after you are already playing game, becomes harder to adjust. The rules like the individual mandate are a special enrollment periods. That would be critical for future stabilization of the marketplace. Thank you. Ms. Dash thank you so much. Let me turn it over to cori. Ms. Uccello i would like to thank sarah and the alliance for inviting me to participate today. Were in a different situation today that maybe we were a couple days ago. I will focus my remarks at a fairly general level and discuss the kinds of actions that are needed to improve the stability and sustainability of the individual market. Before giving to those potential improvements, it is important for us to know what the goals are. First, i will talk about what is necessary order to have a stable and sustainable market. We need enrollment levels that are high enough to reduce random fluctuations and abandoned risk pool. We need enough Healthy People so we can spread the cost of the highcost people over a broader role. Second, we need a stable Regulatory Environment that facilitates fair competition. And that includes not only a level playing field, but also consistent rules that are known in advance. Third, we need enough insurers participating to have insurer competition and consumer choice. As karen mentioned, the optimal number of insurers varies by area. And last but not least, because most premiums go toward paying medical claims, it is important not to overlook the need for continuing to control Health Care Spending and improve quality of care. So how is the market doing compared to these criteria . The aca reduced uninsured rates and participation in enrollment in the individual market increased. In general, enrollment in the individual market was lower than initially expected and the risk for was less healthy. In the market, competing rules generally face the same rules, so there is a level playing field. But the uncertain changing and revelatory environment has led to adverse experience among insurers. This is leading to an increase in the number of participating insurers in 2016 and 2017 and there is an indication there will be a further reduction of insurers in 2018. Continued uncertainty could lead to more insurer withdrawals leaving consumers with fewer choices or none at all. As deep has alluded to, insurer experience has stabilized, the market is still fragile. This leads me to the actions that should be taken to improve the market. First and foremost is the need to fund the costsharing reductions. First and fellows is fine the reductions and leading to higher premiums. Estimated that on average not paying for those csrs could result in premium increases of nearly 20 . And that is on top of the premium increases that will already occur due to medical inflation and other factors. Second, the individual mandate needs to be enforced. The mandate is intended to increase enrollment and encourage even Healthy People to enroll, and that is what is needed for a balanced risk pool, as karen mentioned. The mandate is already fairly weak. Further weakening it will make it less effective and lead to higher premiums. Strengthening it could improve the risk profile and put downward pressure on premiums. Enforcement itself is not enough. There is a lot of people who do not realize the mandate is still in play, and so it also needs to be publicized in order to be effective. Alternatives to the mandate are being explored, such as the continuous coverage requirements that were in the housepassed bill, but it is difficult to structure those mechanisms so that they encourage Healthy People to enroll sooner rather than later while providing protections to people with preexisting conditions. If the mandate is the stick to encourage enrollment, premium subsidies are the carrots. More external funding in the form of higher premium subsidies or funding that will offset the costs of highcost enrollees, such as through highrisk pools or invisible pools, or reinsurance could help improve the pool. It is important to note there are many that we use the word highrisk pool a lot, but there are several different ways that these pools can be structured. In your packet, there is a paper from the academy that talks about the different ways that that can be done. They could be done in terms of the traditional highrisk pools that were in place prior to the aca. They could be invisible risk. People enrolling stays in that plan, but there claims are paid through this external funding, and their eligible leave for those pools could be based on either having certain conditions or having spending that exceeds a particular threshold. Finally, it is important to not only take action to improve the market, but also avoid actions that can make things worse. Allowing the sales of insurance across state lines or expanding the availability of Association Health plans could actually lead to market fragmentation and higher premiums. With that, i will turn things over to brian. Mr. Webb thank you very much. I agree with all of them. I will not speak quite as much. What i want to focus on today is just we talk so much when we are in washington, very broadly, very nationally, and we hear things like it is collapsing everywhere, everybody is going to lose their insurance, or people say anything is fine, no problems, do not change a thing. The reality is it depends on where you are at. There are areas in the country in some states where it is collapsing. There are many areas where things are going pretty good. Small changes will be fine. That is why i courage everybody here as you consider how we move forward, talk to your state regulator. Find out what is going on in your state. Where are the carriers, what are the prices, what are the issues going on in your state, and work with how you can figure it out with your state, because the reality is you look at one state, you see one state. The environment is different. Demographics are different. You have to work at a state level to figure out how can the federal government promote better state solutions to solve a lot of these problems. As you talk to your regulators, you should ask them, are carriers pulling out of the exchanges . Or are they pulling out of the market altogether, inside and outside . Is it just in some areas . How do we address that, or is it the whole state, and why is this happening, and what can be done to solve it . Are there fewer options on the exchange, meaning just hmos, or are there broader, Better Options available, and if it is just narrow networks, how can we solve that problem . Where are the premiums . Are the stabilizing or are they very volatile, likely to see major increases in 2018 . Are commissions being eliminated . This is something we are seeing in states where carriers are not paying missions to the individual market. Some just on the exchange, some inside and outside. Why is that a big deal . Health insurance can become complicated for people. I always liken it to filing a 1040ez. If i have issues and investments, and i better talk to someone who knows what they are doing. Same on health. If im not expected to use a lot of health, i can pick a plan, but if i have health needs, prescription drugs, you should talk to an agent. If they are not getting compensated, that could be a problem. Lower uninsured rates, where are the rates in your state . People with preexisting conditions are getting coverage, but can we continue to make better inroads . How can we get the rest of the people insured and in the marketplace . Access for vulnerable populations. That is a good thing. How we make sure that continues even if there are changes. Talk to your state. What is going on . As we look at insurance in general and what has been going on over the last few years, it comes down to the biggest problem we had now is uncertainty. Insurance hates uncertainty. You will pull out of a market, you will do that if there is uncertainty. Right now there is an amount of uncertainty, so the question is as the senate moves on its efforts, how can they bring more certainty into this marketplace . We have seen unsustainable cost growth. Can we address that . Maybe not easily, but can we address that in the long term . How do we get the younger, healthier people into the marketplace and not just waiting until they get sick . How can we stabilize this marketplace, or can we use reinsurance or highrisk pools to stabilize a risk for that is relatively unhealthy . Unreliable funding. Everybody has said it. Csrs must be assured more funding in 2018, 2019, or we are just going to see a system that is going to continue to deteriorate. This goes for other funding. Anything you come up with, do not say every year we may or may not appropriate this. That is not a good funding source. Think about this, because carriers are figuring out their rates, figuring out whether they participate well before any appropriations or other decisions are being made. They need to know the answer. And in the uncertain Regulatory Environment, states and the federal government have to work better. We are working that with the trump administration. You have seen the markets stabilization regulation. We expect other ones that will be working with them on. How can we better regulate so the carriers get a single answer they know that the answer is going to be . We need to keep working on these things, and talk to your commissioner about that. What can be done at the federal double to make sure these issues are addressed as we move forward . That leads us to what is next. Next is legislation. What is the senate going to do and when . If this is going into hearings and months and months and months of discussions, i strongly encourage you to take care of csrs right away, and if you are going to reinsurance, highrisk pools, do that right away. We need to move on those to stabilize 2018 as soon as possible. Regulations we will work on. States are working on waivers. Very much statespecific solutions. We are still watching losses, not just lawsuits that deal with csrs, but also risk corridor lawsuits. Can that bring some funding back in . Really it is that top one. That is happening now. Will carriers participate in 2018 . They are making a decision when . Now. What areas of the state will they participate in . Will they be on or off the exchange . Will they pull out the marketplace altogether . You have seen aetna make some highlevel decisions. Anyone from virginia . The rates are being filed in may, june, and a day in july is the last day. Decisions have to be made by then. Otherwise, companies will build in loads and just adding more rate increases just to hedge their bets if they stay in at all. That is what were facing. We are facing a timing issue. We are facing uncertainty. None of that is good right now for what is going to happen in 2018, 2019. Talk to your regulators and figure out what is necessary for your state and lets try to resolve some of these issues. Call me anytime. [laughter] ms. Dash great. Thank you for your presentations. I will kick it off with a few questions to the panel. Then we will open it up to audience questions. Thats start with the issue with uncertainty. It is something you have mentioned, and you have mentioned to use the word load. Deep used the term uncertainty buffer. Cori said it plainly, that premiums will go up, and that is that actuaries will price for uncertainty. Let me kick it off with a little bit of a provocative question. On the csrs, we knew this lawsuit was in effect. The house v. Price, formerly house v. Burwell are we in a situation where insurers what would have happened if they priced for that uncertainty back then . How can we expect insurers to price for this future uncertainty . I do not know if any one of you want to kick that off and tie that into if there is then continuing uncertainty as to whether highrisk pools will be funded or not or what a Stabilization Fund will look like. There are things subject to appropriations. How does that all play out . Mr. Banerjee if you look at the 2017 premium hike that went to the marketplace, it was pretty significant. It was between 20 and 25 . We looked at that and we considered that to be a correction, not something that would continue forever every year, but more of a pricing correction that was needed to be made because premiums were lower than the risk in the we looked at that and we considered that to be a correction, not something that would continue forever every marketplace. However, we expect it for 2018 yes, premiums go up every year. That is a fact of insurance because costs go up every year. What we expect the premium increases to be high singledigit to low teens that is where the premiums would go up, well below what went up in 2017. If Insurance Companies want to add in a load, that number could take us back to the rates we saw in 2017. You are looking at 20 or higher rate increases. Pretty significant. What happens when premiums go up . That is a critical question. For someone who receives a subsidy, we have seen in 2017, because how the subsidies work today, the impact is almost negligible, because the subsidy, based on income, is linked to the actual price of the plan. The second cheapest silver plan goes up 20 , the subsidies should align with that. Because how the subsidies work today, the impact is almost negligible, because the subsidy, the brunt will not be felt by all exchanges, but it will be felt by the nonsubsidized enrollees. They do not get a discount. We would expect the marketplace would probably not declined significantly because of a premium hike in 2018, but the offexchange market will decline because the impact of two years of continuous 20 plus premium hikes. Ms. Uccello i would add whether or not the insurer could add this uncertainty, some of this depends on the state regulation. Some states are requiring insurers to submit to set of rates. One assuming csrs are paid. If we talk about adding in this buffer, it is hard to add in a buffer of 20 when a risk margin is much lower than that. It is a pretty difficult thing to do, so that is when copies are starting to think do we want to participate at all. Mr. Webb your regulators are talking to the carriers. This is one of the biggest issues they raise. Pennsylvania was told by one carrier it would be 15 to 20 , but the regulator says, i do not know. I do not know if i can justify that because i do not know. The rates have to be according to what you actually will have or expect to have. There are states that are getting two sets of rates. Most states are saying just give it to me assuming csrs are going to be paid. Even after they had been submitted, we will change them before we do a final, which will create more uncertainty about what people will see the next year. And until they sign the top line and say i am going to participate, and say that is in september, we do not know into early fall who is in and out next year. And the more this is not resolved, the more we will not know. Ms. Dash let me ask a question to see if we can follow this a little bit. Lets play this out. Premiums go up in any given scenario. If premiums go up, if you are subsidized under the current subsidy structure, that maybe does not affect you so much. It would affect the federal budget. If it is unsubsidized, how does that play into how does that affordability factor play into at first selection and the health of the market . Mr. Banerjee the offexchange is where more of the risk is if premiums keep going up 20 or plus, because then some buying it, who right now is paying Sticker Price and probably needs it, youre going to see the market shrink a little bit more, so it will be less of plus, because then some buying individuals who really need insurance. I am not eligible for a subsidy and im paying for it. Adverse selection does increase in the offexchange market quite a bit if there is continuous doubledigit premium increases going on. In the offexchange market quite ms. Pollitz and i think that is why the question about how strong is the mandate and how good are the subsidies. How adequate are the subsidies . It becomes critical. So even for people who are subsidized and who are protected from the rate increase, they are still required to pay 2 1 2 times the poverty level. You are required to pay 8 . You do not give any costsharing subsidies at that level. This adverse selection problem is not cured for sure, and the more people have to pay outofpocket for insurance, the that decision is. If it is going to cost me about 300 bucks a month for a young person, that is 300 bucks a month for a young person are they going to part with 300 . If they are thinking about starting a family, having a baby, sure, and if not and they think they are invisible not my kids because they know better then maybe they will not participate. And the tougher that financial tradeoff decision that people make, the more insurers know adverse selection is going to be driving the decision. Ms. Dash let me get to something. Karen, you alluded to the structure of the subsidies under the current Affordable Care act, tied to the income and premium on the exchange. The american Health Care Act will, of course, change the way that the subsidies are structured to more of a flat tax credit based on age. Can anyone on the panel comment, what happens and what is the impact if the structure of the subsidies . We talk about levels, but this is a very different structure in terms of considerations Going Forward . Mr. Banerjee two things are happening with the aca that we took into account when we realize the impact on enrollment as well as Insurance Companies earnings. One is the proposed structure, changing from linking the subsidy to the actual premium off the marketplace to being a as well as Insurance Companies earnings. Flat amount that you get based on the age. Rate band. And this is critical. Also what is changing is the right now an Insurance Company can charge the oldest person in three times of the youngest person. Proposes a 5 to 1 rate band, so you can charge the oldest person five times of the youngest person. If you take those together and removed the subsidy link to the actual costs off the marketplace price, then you will see we expect that on the higher age groups, a decline in enrollment because affordability will become a greater issue as you grow older in your age group. In a have positives on the underside because 5 to 1 gives flexibility to price lower for the younger population. That is an issue with this marketplace. Great in terms of morbidity, so maybe that will help. We expect a sharper decline on the older population, somewhat offset by the younger population. Net decline in enrollment when you combine that with the five to one rate band. Ms. Uccello i said this before, but i will say it is important when we are talking about having a balance risk pool that it is not just about young and old and getting young people into the pool. You want Healthy People of all ages to participate. What deep suggested would happen is as the older adults would face higher premiums, the people who are more willing to pay those premiums are going to be the ones who think they need a lot of health care. You will get more adverse selection among that age group and that could worsen the risk profile of that pool. Something else to keep in mind where it is not just about getting young folks into the pool and lowering average premiums that way. What we really need to have for a healthy, balanced risk pool is Healthy People of all ages. Mr. Banerjee the other thing to be made is, although the aca or ahca in the future is a federal law, insurance is still a very local. Every state is different. Even with the aca, which does a lot of standardization there are , key differences in every market. One of the key differences is the average premium charged in every market is significantly different. What the aca subsidy does, because it is still linking you to your local premium price, you can be in any state in the country but effectively receive the same benefits. But the aca is proposing a standard support no matter where you live. If youre in a state where premiums are higher, the values of the subsidy is much lower to you than a state where premiums are lower. The disparity between states might increase because of this construct. Ms. Dash that is helpful. That leads into my question, which i wanted to ask brian, which is we have heard a lot in the aca, but also in other legislation that has been proposed, about giving the states more flexibility, giving more options to waive Community Rating, to waive essential health benefits. Can you talk about how states are looking at that right now and at the choices and what is the likely effect if you can predict that . Mr. Webb i cannot. [laughter] webb basically every state commissioner, governor, legislatures, they are looking at their market and trying to figure out how can i balance. Balance is the key. Yes, you want to protect consumers. You want to make sure they get the coverage they need when they need it and get to doctors and all that, but you have to balance with making something that is affordable. And also a marketplace where Insurance Companies actually want to participate. That is why it is so difficult , especially when a lot of them are National Standards put down, and that is were the flexibility we think is necessary. To be able to take those National Standards and say, while that may work in that state, in this other area where it is more rural or the mix of demographics, or because of the structure things, i need to be able to change things up a little bit so they can get actual carriers participating and can get affordable coverage to people. That is the balance that will be made at the state level. While that can create some concern about the impact on certain populations, it is something that if we are going to make it work, it is a discussion that has to be made. And since you are involving state legislatures and governors and even some elected state regulators, people will have a say in this. We are just try to work with insurance carriers, consumer groups, stakeholders, providers to figure out, this is the way it is working or not now, how can we make it better, and that will work required tweaking at the state level. Ms. Dash if anybody wants to comment on that, and then we will open it up to the audience for q a. Ms. Pollitz i agree with brian. Theres no way to know what states would do if they are given this flexibility, but i think it is pretty likely that the Insurance Industry in most states would go to the capitol and lobby for these waivers. Certainly the Community Rating waivers. They have been clear all along. I remember sitting on a panel in 2009, saying, we will do this Community Rating thing, but you have to have a strong mandate. We cant do that in a voluntary market. We had experience in states that try doing this in a voluntary market, new york, new jersey, vermont, before the aca. Its just really hard to offer people affordable premiums, even with subsidy money on the table. Its hard to do that in a voluntary market. I think if they have to live in a voluntary market, they will go to their state capitals and say, you have to give us relief on this rating thing. We have experience with that as well. In the 1990s after the clinton Health Reform thing didnt work, congress enacted hipaa, congress which did the privacy stuff we all remember. There was also titled a created portability right into the individual market for some people leaving employer coverage. Under the federal rule, the law, those people could not be turned down. They couldnt have a preexisting condition imposed, but there was no limit on what they could be charged. The hipaa premiums were really high. Insurers said, you cant make us do this. We know who is going to step up and who isnt. Hipaa premiums were often 3 to 4 times of standard rates. In denver there was a 2000 of standard rates that was filed hipaa policy. It invites back to the instability to have the rules on rules uneven in that way. Ms. Dash to follow up, we have heard a lot about preexisting conditions in what is really going to happen to people with preexisting conditions if the rules under the aca change. Can you walk us a little bit through you just talked about a continuity of coverage coming under hipaa, but then the interplay with the premiums. What did the aca do, and what happens under a potential change . While you answer that, for folks who have a question, there are microphones on that side and that right of the room. Its crowded so i give you time to get over. Theres also green cards in your folders if you would like to write a question down we will get it and handed to me. So, preexisting conditions. Under the current law, people still do fall in and out of coverage. In the months when they are uninsured, they owe a penalty. Unless, they qualify for exemption. The idea is, the longer you wait to get back into coverage, the more months of penalty you have to pay. I didnt bring my numbers, but we do see millions of people every year owing that penalty when they file their tax return. We see millions more qualifying for an exemption because the subsidies are limited. Once you owe more than roughly 8 of income for the lowest cost plan, you can be exempt from the penalty. The late enrollment penalties we are talking about now i think even cbo has said, those are meant to counter adverse selection, but they could backfire. Now you do not pay the penalty until you reattach to coverage. So if you are healthy this year i have to my car payment so i will stay out. Next year, now i would owe more than 30 more because of the late enrollment penalty. Im still feeling good, dont expect to have babies so i will stay out another year. But i do expect to have a baby then i will pay the 30 . Otherwise i have to pay the delivery out of pocket. The late enrollment penalty, the timing is off. It actually rewards Healthy People for staying uninsured longer. Thats how we got to this amendment that says, what if we when theythey sign up are sick . That gets to where we are in the macarthur amendment. That raises other issues about, why is it that people experience a lapse in coverage, are they being irresponsible . Did they miss a payment, today was a job . A lot of the things in life that dislodge coverage also change peoples income. He cant afford to just pick back up and resume coverage under some other way, or they cant move that fast. I think there are millions of people who experience a gap in coverage in any given year. A lot of people who could then face this these penalties. It could be tough to get back in. I want to make an observation about allowing a waiver, states to have a waiver that would allow underwriting if people dont have continuous coverage, then later signed up. I think a potential implication of that is actually getting rid of Community Rating more broadly. Even for people who have continuous coverage. What could happen is, if Healthy People who have continuous coverage wait a minute, i could get underwritten and get a lower rate potentially. So who do you have left in this continuously covered pool . Its just the notHealthy People. What will happen then . Premiums will go up to reflect the Health Status of the pool. In effect, unHealthy People will pay high premiums regardless of whether they had continuous coverage. Thats something to keep in mind, why the details of these different kinds of provisions matter. Just one question, you talk pool. Do you read it as saying, they can actually put those people in separate pools, or would they be part of a single risk pool . Which would be very different than hipaa. Its not clear. Clarity would be excellent. [laughter] under hipaa, it was a problem. They were saying basically, most have one single plan, thats the one you can buy. Separate risk pool, everybody in there is sick. If they are still in the single risk pool, that will ameliorate at least some of those problems based on an actuarially sound rating of Health Status. At least they would not be in a sick pool. The details of the risk Stabilization Funding matters. Let me get to the mic. John from norc. Ok. If we go back to the years before 2014, 2010 when we had medical underwriting. As i recall, Insurance Companies would go into not only the medical claims files, also oro physicians offices hospitals, etc to determine the Health Status of the applicant. My question is for the panel. How much did that cost per case . It sounds expensive to me. It was expensive. I dont know if i could give you a dollar per case. Medical underwriting was very expensive. It involves first its a questionnaire that people would fill out, that was easy to screen. Isomebody checked yes to, have diabetes, i have cancer, you were done. Any other have information, you check the box that says i grant the Insurance Company access to all medical records maintained on the anywhere. If there was any reason to investigate you, they pull the records. They would also subscribe to pharmacy claims databases that were that was another cheaper shortcut. You can tell a lot about people buy the drugs they taken in the last year. It often took monthssix weeks to complete. I think with Online Medical claims, it is likely that if Online Medical underwriting were to return, there might be some sort of Technology Advances that make it cheaper. It absolutely was an administrative expense that insurers do not have to incur today. If i could add something on medical underwriting. The size of the pool matters. If you look at a group market are several reasons for the stable market one is scale, second is maturity. If you sign up with your employer, you dont have to do a blood test. This is not new because it is a big enough pool that Insurance Companies are willing to not to do medical underwriting on individuals if it is a large group. The issue at the individual market is that neither has scale nor is it mature. The reason medical writing could be something insurers would like, is because of those factors. The other way to think about it, if the market was to mature, to grow to a size that is considered a good scale, you might not need medical writing at the level we are thinking about. Hi, Heather Foster with the association for Community Affiliated plans. I was wondering if the panel could talk about the potential consequences, including unintended, of the idea of having these agebased tax credits set up for the american Health Care Act. I have heard some talk of maybe there would be a copper tpye plan, more catastrophic coverage. Trying to structure benefit design within that 2000 to 4000 range. I was wondering if you could talk a little about what the impact would be, what the actually be adequate coverage for people with chronic conditions . I will take your question and at a twist. Four people in the older adult age range, what is the impact on medicare . Does anybodygo ahead and answert question. For those that need to pack up, out out up, please fill a blue evaluation. Thanks. Are always consequences of seven a Health Insurance there are always consequences of setting up a Health Insurance program. Is withoutt hand linking the tax credit to the price, you are actively open that the price matches up to the subsidy. That is it. That is the best case scenario. Unfortunately thats not how things work. The first consequence obviously, it becomes an issue for individuals on the higher age band. The second is adverse selection. It is not just the young who are healthy. You can be old and healthy too. We just have to figure out a band where younger are healthy than older. But that is not the case. Adverse selection is an issue as well. I work with the representative house side. My question is about costsharing reductions. Can you talk through, if the funding is removed, what the insurers thought process looks like . What is a compelling reason for insurers to stay through the marketplace market . Ive heard the possibility that insurers might be able to sue the federal government, actually get those payments funded. Is that a possibility . Do you think there is a case . Can you talk about what that looks like 5, 10 years down the road . We have learned with the aca, theres always the possibility for a lawsuit. [laughter] i think the insurers are worried as you pointed out, they provide this subsidy to the enrollee now. They get reimbursed later in the month, each month for people enrolled. Insurers in the market now are worried. Some have talked about, this was the molina announcement trade we would get out now. We would file our 90 day notice and we would be out by september come as soon as the word comes down that we wont get reimbursed. So they could price for the higher, but as was pointed out, that is a pretty big buffer. I think they are wrestling with this now. The market has grown, it is not as big as we thought it would be, but its still 20 million people. I think the insurers purchase a now have a history and intended to have a presence in this market. You can exit the marketplace, and not the markets. The rule is, if you leave the markets, you cant come back for five years. But you can step across the line and sell policies outside of the marketplace, not in the marketplace. When you are outside of the marketplace, you wont be liable for the cfrs, those are only delivered in the marketplace. You also wont have as many people. Stepping out would let them maintain a presence without leaving, but they would have to scale back on their revenue and enrollment. And then you have insurers, not so much for the cfrs, but for other reasons who are actually , talking about getting out of the compliance market altogether. Still keeping those grandmothered and grandfathered plans in place, which are very profitable. Thats what insurers are wrestling with right now. How much do i want to leave my option open to be in this market if it can stabilize how much do i and how much am i not willing to risk this immediate term uncertainty and additional losses . My son gave me permission to ask this question. We are thinking about lifetime caps in my family and risk pools. My son has cystic fibrosis, he is extremely healthy, technology he works hard at it. Hes doing great. He figures that in a generous plan with a generous lifetime cap, he would have insurance for six years that he would be hunting around for somebody, probably a high risk pool. The history of these pools seems to me that the funding there almost is always underfunded. Im not hearing a lot of mechanisms for funding the highrisk pool not just my son but people who would have to rely upon it. What do we know about the best way to find funding for the current high risk pools . Im not clear at all about whether states can be automatically waived out by default. Would this be automatic . Arrangement for a risk pool to make sure that people dont get a piece of paper thats not worth anything . Thank you. Ms. Dash if you use the word invisible high risk pool, can you define what that is . Thanks. I will jump in and say hi to david. I look forward to catching up. I remember when they were born. The high risk pools remember i said at the beginning, 20 of people account for 80 of spending in any given year. When we are in the pool, some of expensive end for a little bit. When you are in the latter category thats when you can run into lifetime limits. And it is not that hard. Either way if you are going to take out of the pool and put into a separate risk pool, the high cost people in a government program, thats what a state high risk pool is, the government has to have a lot of money to pay those claims. A lot of money. Not a couple billion dollars, many billions of dollars every year, if we were going to create that. Taking those high cost out of the pool would take a lot of pressure off of insurance premiums for sure, they would come down. But you cant do it on the cheap. In 2011, when we had 35 state high risk pools, they were already spending combined more than 1 billion a year. Thats to cover just over 200,000 people. So these are expensive. Everyone that you sign up, you a lot you will lose a lot of money even if you make them pay , significant premiums. The invisible highrisk pool goes the other way and says lets have free insurance. I dont know who fought that up. It sounded better politically. It is the same thing. Instead of letting insurers move people into a separate government program, everyone stays in the insurance pool. You relieve pressure on the premium by saying to the insurers, instead of paying highcost claims with your premium revenue, send it over to the Reinsurance Program and we will pay the high cost claim. Or a part of the claim. It just depends how it is designed. In the first year of the aca, 10 billion for one year is made available for reinsurance for the individual market. Thats credited with saving 10 on the premiums. Then in the next year, the money went down. All of the highcost claims that got resubmitted to the insurance pool could be repaid. In the next year when it stays down to 6 billion, only half of the claims could be paid. For the final year its down to 4 billion. It takes billions every year, a lot, to pay for this. The other way to do it is to stash say to highcost people, you dont get to be in the pool. You just dont get insurance. That makes premiums cheaper for those that stay in the pool, but it leaves those other families in a difficult position. Highrisk pools work, sure, but history shows that hasnt worked successfully. But what has worked really well is the Reinsurance Program. The Reinsurance Program for Insurance Companies actually paid out more than expected. The three rs that are part of aca, reinsurance probably the most positive. Datingnt you made, even indicates even with the positive Reinsurance Program, the impact on premiums was only 10 . I raise this point because if your average premiums are already 300, even with the best Reinsurance Program, you copy what is there in aca and keep going with it youll only have a 10 benefit. I say this because everything is trying to fix how much premiums are going up. But very little has been done towards the actual fundamental cost of care. Premiums are a representative thing. They symbolize one thing one is profits. But the majority of the premium you pay represents the actual cost of claims, the actual cost of health care. You pay even with trying to figure out a way to keep premiums down, it would only go so far without actually looking at the cost of care. Ms. Dash let me ask a followup. Someone asked this question specifically about maine. The question is whether the visible high risk pools limit risk for exposure for insurers. The questioner notes that the visible highrisk pool caps insurance liability. I think the question is, is there a difference between exposure and risk . What exactly does that mean in terms of the insurers risk exposure . I cant are not as familiar with maines program but i can speak to alaska. They have an invisible risk pool. What happens is, somebody is in the private market. They have a claim that indicates they have one of 33 conditions. They are put in this invisible pool. They have one of 33 to they are put in this invisible pool. Premiums now go into this high risk pool funding. Out of that pool, all of the money to play the claims is f rom. Whether or not a plan is uploading all of its risk to the highrisk pool depends on how its structured. Risk pools can be structured the invisible ones retains the people in that pool, that depends on whether the Reinsurance Programs for example the Reinsurance Program could cover 80 of claims that exceed a certain level. Insurers would still be on the hook for 20 of those highcost claims. Theres not one way to structure these programs, so its hard to give a yes or no answer to that kind of thing. Ms. Politz i would just say, in iowa where we are seeing a lot of change and whats going on, federal Reinsurance Programs didnt help that much. Federal reinsurance under the aca had an attachment point. Instead of conditions, it was when a persons claim exceeded 45,000. To the risk pool. There was a cap of 250,000. A claim bigger than that went back to Insurance Companies who had to pay the rest. In iowa, there is one person who has been covered for a couple years under a compliant plan. Remember most people arent in a compliant plan so they are not in this pool at all. Claimsd 18 million in in one year. So the federal government paid up to a quarter million. And then it was back on them to pay this again. This year the person was expected to have 10 million in claims. I dont know what the condition is but its really bad. Very expensive. To get away from that claim is if well mark just leaves the compliant market, they dont have to cover this person anymore. If reinsurance were designed differently, it may keep wellmark into the market. If they brought more people into the pool, all those people out in the noncompliant plans are Healthy People. They could be rated up otherwise and they would find their way into the compliant pool. If they had more dollars to contribute to that claim, that would help as well. The design details are very important. Ms. Dash lets go to brian if you wanted to jump in, and the young lady. I would echo that point. Every state is going to deal with it differently. They do want that flexibility. They might want to do what idaho, maine, alaska have done, which is identifying people seating that risk over. Others want to set it at different attachment points and different caps. Different coinsurance. Others want a highrisk pool, a government run program. People want to do it differently. We think they should be able to depending on how best it would work in their market. I want to add one more thing to this. There is private reinsurance. Companies could get private reinsurance to cover the cost, highcost people. The problem is, a reinsurer, is also an insurer. They dont want to take on risks that they dont have to. So maybe if somebody comes in, they have coverage and this multimillion dollar claim, the reinsurer could reimburse the insurer for that highcost. The problem is the next year that reinsurer will not cover that person. They dont have guaranteed issue. They can take out those people who they know are going to have highcost. I want to make that point, the canate reInsurance Market only hope so much in these kinds of situations. Ms. Dash thanks. Just to summarize, sounds like we are talking about highcost being a part of a broader pool, then the challenges of getting healthier people into that pool. Versus a different approach, whereby there is segregation of putting someone physically in a different highrisk pool and paying claims differently, some kind of an invisible highrisk pull. Your question, then we will wrap up. Mollie smith with the American Hospital association. Weve talked a lot about the size of the market and how important that is. We also talked about the balance of risk. If you look at the individual market, both on and off marketplace, it is bigger than the Medicare Advantage enrollment. By definition, the ma population is older. Maybe healthier medicare population. Theyre presumably going to be older, probably sicker, but thats a market highly sought after by commercial insurers. What are some lessons youve talked about that apply in ma that we should be thinking about bringing into the individual market . One factor i would like to hear some comments on is the role of the state. One of the things we have heard up here is how much variation there is an performance, to a large extent based on policies that states have adopted, whether it is the continuation of grandfathered or grandmothered health plans, whether its extending medicaid or not, allowing entities that arent traditional insurers to keep back a healthy working population from within the market. States have a very small role in oversight, and no role in setting policy. I was wondering if you could take Lessons Learned from the ma world and see if theres an application for the individual market. That is actually a great question. A lot of the things the aca have have been borrowed from ma. They do exist in Medicare Advantage. When Medicare Advantage first started, it had its own problems too. Now it is a mature market. The reason private insurers like it is because its a growing market. People are getting older. People are signing up for medicaid advantage quite frequently. The other reason is why these two markets are different, which is how payment actually happened. With Medicare Advantage, Insurance Companies get paid from the federal government based on their risk of their member. The risk coding is a big issue there. If you code your members correctly, the federal government will tell you, this is how much im willing to pay for it, then you have to figure things out. Because the payment structure is very different, it doesnt work the same with the Risk Adjustment Program in the individual market, which is a closed program, whereas the risk adjustment, effectively asking the federal government to pay you for the risk you are taking, is an open program. The fundamental structures of those programs are different. Let me let brian jump in. In ma they can very much to operate within the state. If they dont operate statewide, there is something called traditional medicare. They can find areas that are more profitable. Which we are trying to keep the private Insurance Market from doing that and going statewide. As far as state decisions, yes. State physicians will always impact, not just the ones you mentioned, but policies of how providers are done, how practices and contracting is done. All of those will have impacts. Sometimes it takes that balance at the state level. Sorry, we are officially out of time. We could probably talk about this for days. The alliance is here. Fill out your blue evaluation forms. Tell us what you want to hear about. Please thank me please join me in thanking our panelists. [applause] live with they specter of possibility and that the law should them as property. And jefferson construed them is property. Org. To cspan look at the next, future of health care and the u. S. Of the Affordable Care act. After that, Sarah Huckabee sanders taking questions from. Eporters later count on first hundred days of the presidency. Morning, table this republicans bill to replace, provide veteran health care book. Er, she wrote a thisee, lets begin, does repeal and provide the Affordable Care act . Because the using a budget technique. Be filibustered in the senate and only needs 60 votes