PwC's Health Research Institute: Health Insurance Exchanges

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PwC overview on health insurance exchanges. These new marketplaces which go into effect in 2014 will form the backbone of the Affordable Care Act and expand health insurance coverage to all Americans.

PwC's Health Research Institute: Health Insurance Exchanges

  1. 1. www.pwc.com/hix The “101” on the new marketplaces Health Research Institute www.pwc.com/hri
  2. 2. PwC Health Research Institute Table of Contents Section Slide # Overview and Background 3-5 What are Health Insurance Exchanges? 6-9 Types of Exchanges 10-14 Exchange Enrollment 15 Exchange Participation 16-19 What’s Next 20 2
  3. 3. PwC Health Research Institute What is a health insurance exchange? The six basic facts you need to know. 3 Overview What are HIXs? Types of HIXs Exchange Enrollment HIX Participation What’s Next 1. The exchanges allow customers to compare private insurance plans in terms of cost, quality and benefits. 2. Each state and the District of Columbia will have an exchange managed by the state, the federal government or a partnership between the two. 3. Open enrollment is Oct. 1, 2013, through March 31, 2014. Coverage begins January 1, 2014. 4. Plans offered through the exchanges will provide services that include ER visits, maternity care, prescription drugs, rehab, hospitalization, and outpatient services. 5. Exchange customers may qualify for subsidies based on a sliding income scale. 6. Insurance plans are organized into five categories: catastrophic, bronze, silver, gold and platinum based on the percentage of costs they cover.
  4. 4. PwC Health Research Institute The Affordable Care Act (ACA) The ACA was signed into law on March 23, 2010 with the goals of increasing access to healthcare, improving affordability, and improving quality. 4 Increase access  Health insurance exchanges are designed to cover half of the newly insured  The newly insured will have different demographic attributes than the currently insured  Health plans must guarantee issue and renewability of health insurance regardless of health status Improve affordability  As online marketplaces, exchanges promote price and quality transparency to increase competition  Exchange coverage is subsidized for those who earn between 100% and 400% of the federal poverty line Improve quality  Health plans must offer essential health benefit standards providing a minimum level of coverage  Exchange health plans will be required to report on quality measures starting in 2016 Overview What are HIXs? Types of HIXs Exchange Enrollment HIX Participation What’s Next
  5. 5. PwC Health Research Institute ACA implementation hits its stride in 2014 5 Overview What are HIXs? Types of HIXs Exchange Enrollment HIX Participation What’s Next
  6. 6. PwC Health Research Institute Private exchanges came first and are growing Private exchanges present coverage alternatives to employers Overview What are HIXs? Types of HIXs Exchange Enrollment HIX Participation What’s Next 6 Insurer-run model Individual insurers or groups of insurers operate exchanges to showcase plan options Minnesota-based insurer Medica partnered with Bloom Health Retailer-run model Companies outside of the health industry begin selling various insurance products Market is still in development by familiar retailers Third party-run model External administrator links consumers to plan choices across multiple insurers California based CHOICE Administrators focuses on small employers
  7. 7. PwC Health Research Institute State exchange implementation timeline 7 October 1, 2013 Exchanges open enrollment for new consumers March 31, 2014 Exchanges first enrollment period closes January 1, 2015 Employers must offer health benefits to employees (delayed from 2014) January 1, 2017 Large employers may offer coverage sold through the exchanges. States’ participation is optional. January 1, 2014 Health benefit exchanges fully operational and coverage begins Overview What are HIXs? Types of HIXs Exchange Enrollment HIX Participation What’s Next
  8. 8. PwC Health Research Institute Common questions Who is eligible for state health insurance exchanges? Initially, exchanges will be open to individuals buying their own coverage and employees of firms with 100 or fewer workers (50 or fewer in some states). How many exchanges are there? Every state has 2 exchanges – an individual exchange and a small business (or SHOP) exchange although not every state will have their small business exchange up and running next year. What are some key characteristics of the exchanges?  Insurance plans are offered by private companies.  Information about health plans, including price, benefits, and quality, is accessible.  Health plans provide the same core set of benefits, facilitating side-by-side comparison.  There are 4 tiers of qualifying health plans – bronze, silver, gold, and platinum. What if my employer already gives me health insurance? Individuals who receive employer-based insurance already can keep their coverage and do not need to enter the exchange. 8 Overview What are HIXs? Types of HIXs Exchange Enrollment HIX Participation What’s Next
  9. 9. PwC Health Research Institute What is the size of the new exchange market? 9 2023 Nearly $210B, 28 million members 7 million members, 2014 22 million members, 2016 24 million members, 2023 2 million members, 2014 3 million members, 2016 4 million members, 2023 2014 About $40B, 7 M members With an estimated 7 million individual members, the exchanges are expected to be worth $40B in premium revenue in 2014. Overview What are HIXs? Types of HIXs Exchange Enrollment HIX Participation What’s Next
  10. 10. PwC Health Research Institute Three types of state exchanges 10 Overview What are HIXs? Types of HIXs Exchange Enrollment HIX Participation What’s Next Federally Facilitated Partnership State-Based # of States* 27 7 16 + Washington D.C. Description  The federal government runs the state’s exchanges  Some states run the SHOP while the federal government oversees the individual exchange  Other states review health plans while the federal government builds and maintains necessary IT infrastructure such as exchange websites  States run their own exchanges  More money is available for outreach and enrollment for state-based exchanges *Numbers as of September 3, 2013.
  11. 11. PwC Health Research Institute 11 States on the frontline of ACA implementation *To view updates to the map visit: http://www.pwc.com/us/en/health-industries/health-research- institute/index.jhtml Overview What are HIXs? Types of HIXs Exchange Enrollment HIX Participation What’s Next
  12. 12. PwC Health Research Institute What types of plans can I buy on the exchanges? Catastrophic • Minimal coverage plan • Only available to people age 30 and under Bronze • 60% AV* Silver • 70% AV* • Every insurer must offer a silver plan Gold • 80% AV* Platinum • 90% AV* 12 *AV= Actuarial value. In simple terms, this is the percent of health costs paid for by the plan. The higher the AV, the more the consumer pays in premiums. $80 $100 $200 $300 $400 Sample FULL PRICED monthly premiums  Qualified health plans (QHP) are offered by an issuer that is licensed by the state and in good standing  QHPs must cover essential health benefits  QHPs agree to charge the same premium rate whether offered directly through the exchanges or outside of the exchanges Overview What are HIXs? Types of HIXs Exchange Enrollment HIX Participation What’s Next
  13. 13. PwC Health Research Institute 13 The Essential Health Benefits Every qualified health plan is required to offer benefits in the following categories: Overview What are HIXs? Types of HIXs Exchange Enrollment HIX Participation What’s Next Ambulatory patient services Emergency services Preventive, wellness & chronic disease mgmt Hospitalization Pediatric services Maternity & newborn care Mental health & substance use disorder services Prescription drugs Rehabilitative & habilitative services and devices Laboratory services
  14. 14. PwC Health Research Institute 14 Subsidies are available based on income Individuals applying for coverage through the exchanges who make between 100%-400% of the Federal Poverty Level will be eligible for federal subsidies to purchase coverage. Household Size 100% FPL 400% FPL 1 $11,490 $45,960 4 $23,550 $94,200 Overview What are HIXs? Types of HIXs Exchange Enrollment HIX Participation What’s Next SUBSIDY INCOME MinimumSubsidy 100% 400%Federal Poverty Level Income Family Size Subsidy Amount and defines your
  15. 15. PwC Health Research Institute Exchange enrollment: Navigators, IPAs, and CACs 15 Federal government has defined 3 roles for education and enrollment “helpers Navigator In-Person Assister (IPA) Certified Application Counselor (CAC) Role Conduct outreach activities to raise awareness about exchanges. Additionally, assist individuals with preparing electronic and paper applications to determine eligibility. Assist individuals with preparing electronic and paper applications to determine eligibility. Assist in educating individuals about Medicaid, CHIP, and plans sold through the exchanges. Exchange Participation • Federally-facilitated exchange • Federal/state partnership exchange • State-based exchange • Federal/state partnership exchange • State-based exchange (optional) • Federally-facilitated exchange • Federal/state partnership exchange • State-based exchange Training Requirement • Navigators must be certified, which requires initial web‐based training of up to 30 hrs • Annual recertification • Must complete comprehensive training • Must complete comprehensive training Funding • Federal government provided 105 grant applicants in federally- facilitated and partnership exchanges with $67M in navigator grants • State-based exchanges will provider navigator programs with grants from their exchange budgets • State-based programs will apply for exchange establishment grants to fund IPAs • Not Applicable Overview What are HIXs? Types of HIXs Exchange Enrollment HIX Participation What’s Next
  16. 16. PwC Health Research Institute HIX Participation Insurance companies’ participation in exchanges* INSURER PERSPECTIVE National carriers participating: • Blues plans will be offered in at least 36 states (but not in Iowa, Mississippi, and South Dakota) in 2014 • Big national insurers are offering plans in 8-11 states including: Aetna , Wellpoint (incl. Anthem), Coventry, Humana , and Kaiser National carriers delaying participation or not participating: • Wellmark won’t be selling their blues plans (mentioned above) in Iowa or South Dakota until 2015 • Aetna has withdrawn participation in 8 states in which it originally planned to participate Minimal Participation States that have announced only 1 or 2 carriers: • Alaska • Hawaii • Maine • Mississippi • New Hampshire • Oklahoma • Rhode Island • Vermont Maximum Participation States with the most carriers (between 13 and 19): • Colorado • Michigan • New York • Oregon • Wisconsin STATE PERSPECTIVE While most states with high participation are state or partnership exchanges, Wisconsin and Florida, both FFEs, had 13 and 9 plans announce participation, respectively. 16 Overview What are HIXs? Types of HIXs Exchange Enrollment What’s Next *Non-exhaustive, snapshot as of Sept. 2, 2013
  17. 17. PwC Health Research Institute 17 How will exchanges impact insurance companies? Exchanges demand a shift in the insurance business model that will look and feel more like a retail experience. This will require competition on price and service offerings, focus on population management, knowledge of consumer preferences, and consumer engagement. Price will be a leading factor in consumer decision making As consumers become more sophisticated insurers will need to differentiate through quality, benefits and customer experience 47% of consumers are willing to pay extra for ancillary services HIX Participation Overview What are HIXs? Types of HIXs Exchange Enrollment What’s Next
  18. 18. PwC Health Research Institute 18 How will exchanges impact providers? Exchanges will lead to a broad coverage expansion that can offer a financial boost for hospitals that are currently under a financial squeeze. To gain an edge at a time when money is tight, hospitals must target the right audience, plug into local networks, and rethink the role of outreach. Hospital DSH and Medicare payments are declining – new paying customers are the answer Through outreach and education; state, community and local groups can help to publicize new plan options Only 9.5% of the 105 navigator grants distributed went to hospitals or medical centers HIX Participation Overview What are HIXs? Types of HIXs Exchange Enrollment What’s Next Source: Health Research Institute Analysis
  19. 19. PwC Health Research Institute HIX Participation Race to October 1st 19 Sectors participating in healthcare exchanges have been preparing for the October 1st launch in varying ways: Insurers • Choosing which states exchange to offer coverage in • Negotiating with provider networks • Ensuring technological components are ready to communicate with state exchanges • Determining the most cost effective plan pricing Providers • Partnering with community health organizations on outreach and enrollment • Pursuing CAC designation and training financial counselors Pharma • Identifying ways to retool their efforts to enroll participants in their prescription drug assistance programs New Entrants • Tax preparers using their experience with the federal tax system to educate individuals about the ACA’s personal financial implications • Technology contractors partnering with the federal government to implement federal data hub HIX Participation Overview What are HIXs? Types of HIXs Exchange Enrollment What’s Next
  20. 20. PwC Health Research Institute What’s Next What’s Next? - 2014 & Beyond 20 The number of insurance companies and consumers participating in exchanges will be watched closely to determine the health of the market Large employers explore private health insurance exchanges Non-traditional players look to capitalize on new opportunities due to exchanges (i.e. retail pharmacies & web brokers) In 2017, employers may be allowed to send employees to exchanges to obtain coverage In 2018, the Cadillac tax, a tax on high cost insurance policies, takes effect Overview What are HIXs? Types of HIXs Exchange Enrollment HIX Participation
  21. 21. PwC Health Research Institute What’s Next For More Information 21 HRI website Overview What are HIXs? Types of HIXs Exchange Enrollment HIX Participation www.pwc.com/hri HRI Regulatory Center http://www.pwc.com/us/en/health-industries/health-research-institute/hri-regulatory-center.jhtml HIX Report www.pwc.com/us/hix
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