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Legislative Roundtable #1: Private Health Insurance

Legislative Roundtable #1: Private Health Insurance



What is the current health insurance status of Coloradans? What are the characteristics of the state’s private health insurance market? How will these change as a result of recent state and federal ...

What is the current health insurance status of Coloradans? What are the characteristics of the state’s private health insurance market? How will these change as a result of recent state and federal health reforms?

These questions and others were addressed at a special health policy roundtable for legislators and their staff.

Presented to: 2011 Healthcare Roundtables for Legislators



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    Legislative Roundtable #1: Private Health Insurance Legislative Roundtable #1: Private Health Insurance Presentation Transcript

    • The Private Market:
      The Foundation of Health Insurance
      Health Policy Roundtable
      March 10, 2011
      Legislative Services Building
    • Colorado Health Institute: Our mission
      To serve as an independent and impartial source of reliable and relevant health information. CHI provides:
      Presentations and roundtables
      One-on-one briefings with legislators, caucus or staff upon request
      Succinct publications (LOT report)
      Custom research
      No spin, just the facts
    • Questions CHI is often asked
      How are Coloradans currently insured?
      How will that change under national reform?
      What are other options?
      What are decisions the General Assembly will make?
      What else can the state legislature do?
    • Four sessions will address these issues
      Thursday, March 10: The Private Market: The Foundation of Health Insurance
      Thursday, March 24: The Changing Landscape of Publicly Funded Insurance
      Thursday, March 31: A Profile of Your Community’s Health
      Thursday, April 14: The State Health Insurance Exchange
    • Today’s discussion
      Overview of the private insurance market and policy implications
      Frame current legislative issues in greater national and policy-oriented context
      Share how CHI can be a resource for your health policy interests
    • What is health insurance?
      The intended purpose of health insurance is to collectively pool risk to protect individuals from incurring large expenditures or losses associated with illness, injury or disability.
    • Why we are discussing health insurance today
      14% of Coloradans have no insurance
      Nearly 700,000 people
      The cost of insurance is significant and rising
      Over past 5 years: Small group premiums up 20%, large group up 23% and individual policies up 56%
      Evidence suggests that insurance leads to better outcomes and more coordinated care
    • Insurance markets and spectrum of risk
    • Private insurance covers 71% of Coloradans
      SOURCE: 2008-09 Colorado Household Survey, Colorado Department of Health Care Policy and Financing,
      analyzed by the Colorado Health Institute
    • Overview of private insurance markets in Colorado
      Individual market
      Individually purchased plans
      High-risk pools
      Employer-sponsored insurance
      Small group market
      Large group and self-insured plans
    • individual (non-group) health insurance market in colorado
    • Individual market in Colorado
      Individuals secure insurance directly with health insurance plans
      Few mandated benefits
      No guaranteed issue–plans can rate or reject individuals based on claims experience
    • CoverColorado: High-risk pool for individuals underwritten out of individual market
      State subsidized health insurance plan
      Individuals with pre-existing medical condition and rejected from individual market
      CoverColorado currently has 13,200enrollees
      Premiums are relatively high and may not be affordable
    • Individual market post-federal health reform
      Ban on lifetime limits and rescission (2010)
      Guaranteed issue for children (2010)
      80% of premiums must be spent on medical care (2011)
      Guaranteed issue for adults (2014)
      GettingUSCovered high-risk pool (2010)
      Subsidies provided on exchange for people with incomes between 134% and 400% of FPL (2014)
      Individual policies can be purchased through state’s health insurance exchange (2014)
      Insurance policies (in all markets) must include essential benefits package (2014)
    • What is the “essential benefits” package?
      Comprehensive set of services approved by Secretary of Health and Human Services
      Limits annual cost-sharing to $5,950 individual, $11,900 family
      No annual or lifetime limits on coverage
      No co-pays for prevention
      Many individual plans will not meet new requirements (underinsurance)
    • Employer-sponsored coverage in Colorado
    • Why we have employer-sponsored insurance
      Result of WWII wage restrictions and freezes
      Birth of employee benefit packages
      1954 employer contributions to employee health plans were exempt from taxable income
    • Health insurance offer rates by size of employer, Colorado, 2009
      SOURCE: Medical Expenditure Panel Survey, 2008.
    • Employee-only premiums by firm size, U.S.
      SOURCE: Medical Expenditure Panel Survey
    • small group market in colorado
    • Decline of small group market in Colorado
      Covered Lives
      Annual Premiums
    • Small group health insurance market in Colorado
      1-50 employees
      Mandated benefits
      Guaranteed issue and renewal
      Includes Business Group of One
      Premium rating based on smoking status, industry, age, family size and geographic location
    • Small group market post-federal health reform
      No employer penalties for small employers
      Tax credits for firms with 25 or fewer employees and average wage at or below $50,000 (2010)
      Must spend 80% of premiums on medical care (2011)
      Small Business Health Options Program (SHOP) exchange for small businesses to pool lives and purchase insurance (2014)
      Must include essential benefits package (2014)
      With federal subsidies for low- and middle-income workers, small employers may discontinue coverage and send workers to state’s health insurance exchange
    • Large Group and self- funded plans
    • Large employers and self-funded plans
      38% of Coloradans with employer-sponsored insurance are in self-funded plans
      Employer assumes risk to pay health care claims
      May hire third-party administrator to process claims
      Usually includes stop-loss coverage
      Regulated by federal Employee’s Retirement income Security Act (ERISA)
    • Large group market and self-funded plans post-federal health reform
      Amendments to ERISA to bring all employers into conformance with market reforms
      Employers with more than 50 employees must provide affordable coverage or pay penalties
      Coverage must include essential benefits package (existing plans can be grandfathered)
      Temporary reinsurance program for early retirees
      Excise tax on “Cadillac” plans
    • Legislative Context
    • Where we differ
      Extent of insurance and how to provide access
      Lower total health care costs
      Improve quality of care
      Colorado – before and after reform – has grappled with these issues
    • One example: Pooling risk
      The question: To what degree should risk be shared?
      Last year:
      HB10-1008: Insurers cannot use gender to determine rates
      HB10-1021: Covering maternity and contraception
      HB10-1252: Covering mammography for those at risk
    • Legislation this year: Debating pooled risk
      • SB11- 019 (King/Stephens) Small employers’ payments to cover individual purchase of health insurance
      • HB 11-1273 (Nikkel, Stephens, Kopp), Interstate compact to opt out of federal health reform
      • Health insurance exchange legislation (not yet introduced)
    • Wrapping up
      Thank you
      CHI as resource for you
      Key insurance concepts at work
      Mechanics of the market
      Legislative environment and themes of the time
    • CHI as your resource
      How will certain legislation affect your district?
      How many constituents will be affected by the “individual mandate?”
      Does your district have the workforce to meet current and future health needs?
      What can I tell my constituents about the cost of reform?
    • Contacts
      Allison Summerton
      Amy Downs
      Michele Lueck
      Twitter: @CoHealthInst