Legislative Roundtable #1: Private Health Insurance

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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

Published in: Health & Medicine
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Legislative Roundtable #1: Private Health Insurance

  1. 1. The Private Market: <br />The Foundation of Health Insurance<br />Health Policy Roundtable<br />March 10, 2011<br />Legislative Services Building<br />
  2. 2. Colorado Health Institute: Our mission<br />To serve as an independent and impartial source of reliable and relevant health information. CHI provides:<br />Presentations and roundtables<br />One-on-one briefings with legislators, caucus or staff upon request<br />Succinct publications (LOT report) <br />Custom research <br />No spin, just the facts <br />2<br />
  3. 3. Questions CHI is often asked<br />How are Coloradans currently insured?<br />How will that change under national reform?<br />What are other options?<br />What are decisions the General Assembly will make?<br />What else can the state legislature do?<br />3<br />
  4. 4. Four sessions will address these issues<br />Thursday, March 10: The Private Market: The Foundation of Health Insurance<br />Thursday, March 24: The Changing Landscape of Publicly Funded Insurance<br />Thursday, March 31: A Profile of Your Community’s Health<br />Thursday, April 14: The State Health Insurance Exchange<br />4<br />
  5. 5. Today’s discussion<br />Overview of the private insurance market and policy implications<br />Frame current legislative issues in greater national and policy-oriented context<br />Share how CHI can be a resource for your health policy interests<br />5<br />
  6. 6. What is health insurance?<br />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. <br />6<br />
  7. 7. Why we are discussing health insurance today<br />14% of Coloradans have no insurance<br />Nearly 700,000 people<br />The cost of insurance is significant and rising<br />Over past 5 years: Small group premiums up 20%, large group up 23% and individual policies up 56%<br />Evidence suggests that insurance leads to better outcomes and more coordinated care<br />7<br />
  8. 8. Insurance markets and spectrum of risk<br />8<br />
  9. 9. Private insurance covers 71% of Coloradans<br />9<br />SOURCE: 2008-09 Colorado Household Survey, Colorado Department of Health Care Policy and Financing, <br />analyzed by the Colorado Health Institute<br />
  10. 10. Overview of private insurance markets in Colorado <br />Individual market<br />Individually purchased plans<br />High-risk pools <br />CoverColorado <br />GettingUSCovered<br />Employer-sponsored insurance<br />Small group market <br />Large group and self-insured plans <br />10<br />
  11. 11. individual (non-group) health insurance market in colorado<br />11<br />
  12. 12. Individual market in Colorado<br />Individuals secure insurance directly with health insurance plans<br />Few mandated benefits <br />No guaranteed issue–plans can rate or reject individuals based on claims experience<br />12<br />
  13. 13. CoverColorado: High-risk pool for individuals underwritten out of individual market <br />State subsidized health insurance plan <br />Individuals with pre-existing medical condition and rejected from individual market<br />CoverColorado currently has 13,200enrollees<br />Premiums are relatively high and may not be affordable <br />13<br />
  14. 14. Individual market post-federal health reform <br />Ban on lifetime limits and rescission (2010)<br />Guaranteed issue for children (2010)<br />80% of premiums must be spent on medical care (2011) <br />Guaranteed issue for adults (2014) <br />GettingUSCovered high-risk pool (2010)<br />Subsidies provided on exchange for people with incomes between 134% and 400% of FPL (2014) <br />Individual policies can be purchased through state’s health insurance exchange (2014)<br />Insurance policies (in all markets) must include essential benefits package (2014) <br />14<br />
  15. 15. What is the “essential benefits” package?<br />Comprehensive set of services approved by Secretary of Health and Human Services <br />Limits annual cost-sharing to $5,950 individual, $11,900 family<br />No annual or lifetime limits on coverage<br />No co-pays for prevention<br />Many individual plans will not meet new requirements (underinsurance) <br />15<br />
  16. 16. Employer-sponsored coverage in Colorado <br />16<br />
  17. 17. Why we have employer-sponsored insurance<br />Result of WWII wage restrictions and freezes<br />Birth of employee benefit packages<br />1954 employer contributions to employee health plans were exempt from taxable income<br />17<br />
  18. 18. Health insurance offer rates by size of employer, Colorado, 2009 <br />18<br />SOURCE: Medical Expenditure Panel Survey, 2008.<br />
  19. 19. Employee-only premiums by firm size, U.S. <br />19<br />SOURCE: Medical Expenditure Panel Survey <br />
  20. 20. small group market in colorado<br />20<br />
  21. 21. Decline of small group market in Colorado<br />21<br />Covered Lives<br />Annual Premiums<br />
  22. 22. Small group health insurance market in Colorado<br />22<br />1-50 employees<br />Mandated benefits<br />Guaranteed issue and renewal <br />Includes Business Group of One<br />Premium rating based on smoking status, industry, age, family size and geographic location<br />
  23. 23. Small group market post-federal health reform <br />No employer penalties for small employers<br />Tax credits for firms with 25 or fewer employees and average wage at or below $50,000 (2010)<br />Must spend 80% of premiums on medical care (2011)<br />Small Business Health Options Program (SHOP) exchange for small businesses to pool lives and purchase insurance (2014)<br />Must include essential benefits package (2014) <br />With federal subsidies for low- and middle-income workers, small employers may discontinue coverage and send workers to state’s health insurance exchange<br />23<br />
  24. 24. Large Group and self- funded plans <br />24<br />
  25. 25. Large employers and self-funded plans<br />38% of Coloradans with employer-sponsored insurance are in self-funded plans<br />Employer assumes risk to pay health care claims<br />May hire third-party administrator to process claims<br />Usually includes stop-loss coverage<br />Regulated by federal Employee’s Retirement income Security Act (ERISA)<br />25<br />
  26. 26. Large group market and self-funded plans post-federal health reform <br />Amendments to ERISA to bring all employers into conformance with market reforms<br />Employers with more than 50 employees must provide affordable coverage or pay penalties<br />Coverage must include essential benefits package (existing plans can be grandfathered)<br />Temporary reinsurance program for early retirees <br />Excise tax on “Cadillac” plans <br />26<br />
  27. 27. Legislative Context<br />27<br />
  28. 28. Where we differ<br />Extent of insurance and how to provide access<br />Lower total health care costs<br />Improve quality of care<br />Colorado – before and after reform – has grappled with these issues<br />28<br />
  29. 29. One example: Pooling risk<br />The question: To what degree should risk be shared?<br />Last year:<br />HB10-1008: Insurers cannot use gender to determine rates<br />HB10-1021: Covering maternity and contraception<br />HB10-1252: Covering mammography for those at risk<br />29<br />
  30. 30. Legislation this year: Debating pooled risk <br /><ul><li>SB11- 019 (King/Stephens) Small employers’ payments to cover individual purchase of health insurance
  31. 31. HB 11-1273 (Nikkel, Stephens, Kopp), Interstate compact to opt out of federal health reform
  32. 32. Health insurance exchange legislation (not yet introduced)</li></ul>30<br />
  33. 33. Wrapping up<br />Thank you<br />CHI as resource for you<br />Key insurance concepts at work<br />Mechanics of the market<br />Legislative environment and themes of the time<br />31<br />
  34. 34. CHI as your resource<br />How will certain legislation affect your district?<br />How many constituents will be affected by the “individual mandate?”<br />Does your district have the workforce to meet current and future health needs?<br />What can I tell my constituents about the cost of reform?<br />32<br />
  35. 35. Contacts <br />33<br />Allison Summerton<br />Amy Downs<br />Michele Lueck<br />303.831.4200<br />www.ColoradoHealthInstitute.org<br />Twitter: @CoHealthInst<br />
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