CEO of Health Insurance Risk-Sharing Plan (HIRSP) Authority, which administers Wisconsin

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Introduction

• CEO of Health Insurance Risk-Sharing Plan (HIRSP)
  Authority, which administers Wisconsins 30
  year-old state high-risk pool.
• Board Chair, National Association of State
  Comprehensive Health Insurance Plans (NASCHIP),
  which is the association for 35 state high-risk
  pools and 21 PCIPs.

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Overview

• State High-Risk Pools
• Pre-Existing Condition Insurance Plans
• Impact of PPACA on Future of Pools

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State High Risk Pools

• There are currently 35 state high-risk pools in
  operation across the country. All but Florida
  (which has been closed for many years), are
  actively taking new enrollment.
• Some risk pools (CT, MN, WI) have been
  operational for over three decades. Others have
  been created more recently (NC).
• As of December 31, 2010, almost 222,000
  individuals were covered under the state risk
  pools. The pools incurred almost 2.4 billion in
  expense for pool operations in 2010. Both
  enrollment and costs increased from 2009 to 2010.

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Whos Eligible?

• High risk pools offer an alternative to
  individuals who would otherwise be uninsured.
• Risk pools were originally established to provide
  coverage to individuals for primarily two
  reasons
• Medically uninsurable
• Loss of group health insurance (HIPAA)
• A number of risk pools also serve individuals
  eligible for Medicare due to disability (19
  states) and HCTC eligible individuals (23 states)

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Risk Pool Funding

• Risk pool funding sources vary by state but are
  generally comprised of member premiums, insurer
  assessments, state GPR, and federal grant
  funding
• All 35 states charge premiums for coverage
• 31 of 35 states assess insurers to fund pool
  costs
• 6 states receive state GPR support and 5 others
  receive funding through other state monies (e.g.
  premium taxes, unclaimed property tax fund,
  tobacco settlement)

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Plan Choice
The pools offer a wide variety of plan options,
including HSA- qualified plans in 21 of the
states. In 17 of the 35 states, the most popular
plan has a deductible of at least 2,000. Of
these, 11 are at least 5,000, which would likely
exceed PPACA limits.

• HIRSP offers a Medicare supplemental policy and
  five major medical plans
• HIRSP 1,000 - 1,000 deductible
• HIRSP 2,500 - 2,500 deductible
• HIRSP 5,000 - 5,000 deductible
• HIRSP Health Savings Account - 2,500 deductible,
  HSA Plan
• HIRSP Health Savings Account - 3,500 deductible,
  HSA Plan

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Costs

• On average, risk pool members claims costs are
  over 889 per member per month (PMPM).
• Administrative costs are low at 46 PMPM.
• Even though risk pools premiums are at levels
  above what a standard risk would pay in the
  commercial market, the premiums comprised only
  54 of the revenues collected by the pools in
  2010. In other words, there was significant
  subsidization to supplement member premiums and
  keep the pools solvent.
• Member liability for claim costs (e.g.
  deductible, co-payment or co-insurance) in 2010
  averaged 20 for the 23 states for which data was
  available. The pools paid the remaining 80 of
  the claims.

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PCIP Authorization

• Under the Affordable Care Act, the HHS Secretary
  is authorized to implement the temporary, federal
  risk pool (PCIP) either directly or through
  contracts with states or non-profit entities.
• The PCIP was created to offer coverage from July
  1, 2010 through December 31, 2013. At that time
  PCIP enrollees would be transitioned to the
  Exchange.
• Total funding provided for PCIP by Congress is 5
  billion, which is allocated to states under a
  formula similar to what was used for CHIP
  allocations.

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PCIP Administration

• PCIP is administered by HHS in 23 states through
  a contract with GEHA, the health plan for federal
  employees.
• In the remaining 27 states, the PCIP is
  administered at the state level.
• 20 of these state-run PCIPs are in states that
  are also administering a state-risk pool.

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PCIP Eligibility

• Eligibility
• Citizen of US or Legally Present and WI Resident
• Uninsured for Previous Six Months
• Pre-existing Condition
• Premium
• A standard rate for a standard population (i.e.
  what a healthy person would pay in commercial
  market)
• Pre-existing Waiting Period
• Pre-existing waiting periods are prohibited under
  PCIP.

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Covered Benefits

• In states where the state pool and PCIP are
  administered side-by-side coverage is generally
  the same under both pools and represents very
  comprehensive coverage. Comprehensive coverage is
  also available in the federally run PCIP states.
  For example, in Wisconsin coverage includes
• Provide first dollar coverage for an annual
  physical exam with labs and select preventive
  services such as colonoscopies and mammograms
  with no cost sharing from members
• Provide mental health benefits comparable to all
  other medical benefits (mental health parity)
• Offer 5 generic drug copayments

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PCIP Premiums

• Premiums vary considerably by state. For
  illustrative purposes, Wisconsin PCIP premiums
  for the two most popular plans are included
  below

• HIRSP Federal 2,500
• 0 to 18 112
• 19-24 119
• 25-29 126
• 30-34 143
• 35-39 170
• 40-44 202
• 45-49 250
• 50-54 310
• 55-59 381
• 60 445

• HIRSP Federal 3,500
• 0 to 18 94
• 19-24 100
• 25-29 106
• 30-34 120
• 35-39 143
• 40-44 170
• 45-49 210
• 50-54 261
• 55-59 320
• 60 374

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Key Differences

• Six month uninsurability for PCIP coverage, but
  no waiting period for pre-existing conditions
• Evidence of medical uninsurability/pre-existing
  condition may vary (e.g. market rejection versus
  physician letter). More likely to be the case in
  a state with a state run risk-pool and federally
  administered PCIP.
• Low-income subsidy support available in majority
  of state risk pools. No income subsidy support in
  any PCIP.
• Plan Choice Higher deductible, lower premium
  options may be available in state pool versus
  PCIP.

Choosing Plans Someone who has been uninsured
for six months will most likely do better in
PCIP however, if the applicant is low-income
they may find the coverage in the state risk pool
more affordable, if they reside in one of the 19
states were subsidy is available.
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PCIP Adverse Selection

• Members in the federal pool are less likely to
  have accessed coverage via an insurance agent.
  Only 12 of HIRSP Federal applications were
  submitted via an agent. By comparison, almost
  50of HIRSP applications are submitted via an
  agent.
• HIRSP Federal members have a higher morbidity
  than HIRSP members. On a per member per month
  basis, HIRSP Federal members had significantly
  higher medical costs, which were only partially
  offset by lower pharmacy costs. This pattern is
  consistent with the other state high-risk pools
  administering the PCIP in their state.
• Nine state requested 2012 funding above their
  allocation (Alaska, California, Colorado,
  Montana, New Hampshire, New Mexico, Oregon, South
  Dakota and Utah).

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What Can be Learned?

• Low-income Americans are more likely to be
  uninsured and may be more likely to seek
  enrollment in the PCIP only when coverage is
  necessary for obtaining needed treatment. This is
  a more feasible option then what was available in
  the legacy state risk pool because there is no
  waiting period for treatment of pre-existing
  conditions.
• Individuals who have been uninsured for at least
  six months may have created mechanisms for
  managing their health (e.g. using community
  clinics and generic drug programs). It may take
  considerable education in addition to traditional
  outreach strategies to identify and enroll these
  individuals.
• More data is needed to understand whether
  low-enrollment is a function of lack of
  knowledge whether it is a function of the plan
  design (e.g. six month go bare requirement,
  guarantee issue/no pre-ex) or premium
  affordability.

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2014 and Guarantee Issue

• Guarantee Issue in 2014 theoretically eliminates
  the need for risk pools since all individuals
  will be guaranteed access to coverage in the
  commercial market regardless of health status in
  the newly created State Exchanges.

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Risk Pools and State Exchanges

• What are the implications for the stability and
  premium affordability of the State Exchanges if
  risk pool members are all transferred on day one
  and the exchange utilizes modified community
  rating?
• The recently released Gorman/Gruber analysis
  reports that merging HIRSP into the commercial
  market in Wisconsin would result in a 16 premium
  increase overall. This impact was estimated based
  on 2009 data. Since that time HIRSP has grown at
  a faster rate than the market as a whole, and
  estimates now stand at a 20-21 impact.
• How will plans and benefits available through the
  exchanges compare to the risk pools?
• Risk pool benefits have been designed to mirror
  the commercial market, but in many cases have
  been enhanced to better serve individuals with
  rare and complex diseases.
• How will the cost of coverage (premiums and cost
  sharing) available through the exchanges compare
  to the cost of coverage through the risk pools?
• Analysis in New Mexico suggests that the
  subsidies available through the risk pool are
  greater than the subsidy available through the
  tax credit.
• What will happen to individuals served by risk
  pools that will not be eligible to transition to
  the State Exchanges (Medicare eligibles,
  non-citizens)?

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Transition Concerns

• NASCHIP and its members are committed to ensuring
  a smooth transition for its member when the PCIP
  expires and if the state risk-pools are phased
  out.
• Some PCIP and risk-pool members could be newly
  eligible under the PPACA Medicaid expansions.
  Others could be seeking coverage in new
  guarantee-issue market.
• Auto enrollment will not work for this population
  as it did for Medicare Part D. Differences in
  covered benefits, networks, premiums and cost
  sharing make this unfeasible.
• Many high-risk pools have existing relationships
  and data sharing agreements with state Medicaid
  and HIV/AID premium subsidy programs to help
  facilitate transition members to Medicaid.
• Identifying for strategies for minimizing
  disruptions in care for members that are in the
  midst of treatments or are actively engaged in
  care management programs is also critical.

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Risk Allocation Strategies

• PPACA creates three risk allocation Programs and
  has issued draft regulations to outline how they
  would be implemented
• Temporary Reinsurance
• Temporary Risk Corridors
• Ongoing Risk Adjustment
• The purpose of these programs is to help balance
  the marketplace if there are risk concentrations
  among select carriers and to ensure that carriers
  have an incentive to remain in the marketplace by
  providing them with compensation for excess risk
  assumption.
• States that operate their own Exchange are
  required to contract with a non-profit
  reinsurance entity to administer the three-year
  Reinsurance program. States may also opt to
  administer the ongoing Risk Adjustment for their
  state. HHS will administer the three-year Risk
  Corridor program in all states.

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Ongoing Role for Pools

• A number of risk-pools are exploring the
  possibility of taking on the responsibility of
  risk-adjustment and reinsurance for the State
  Exchanges. This role is consistent with the
  original purpose of the pools (keeping markets
  competitive and affordable) and requires similar
  skill and expertise.
• Work is also underway to explore options for
  pools to combine care and complex case management
  risk functions in conjunction with administration
  of the reinsurance program.
• A number of risk pools are also exploring options
  to keep their risk pools operational beyond 2014.
  Under some scenarios risk pools would be phased
  out over time to mitigate the rate shock to the
  market. In other cases, the pool is exploring how
  it may play a role as a issuer of coverage in the
  Exchange.

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Implications of Supreme Court Decision

• If the individual mandate is deemed
  unconstitutional, it is possible that the 2014
  guarantee issue requirement and other aspects of
  the law would be deemed as non-severable from the
  mandate. If the guarantee issue requirement was
  deemed severable, Congress may reconsider whether
  a guarantee issue market can function
  successfully without a mandate.
• If guarantee issue is not implemented in 2014,
  risk pools will continue to play an important
  role in assuring access to coverage for
  individuals with pre-existing conditions and may
  be expanded to play an even bigger role in the
  marketplace.
• If PPACA in its entirety was struck down by the
  Supreme Court, there would also be implications
  for the PCIPs, which were authorized under the
  Act.

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Contact Info

• Amie Goldman
• CEO, HIRSP Authority
• Chair, NASCHIP Board of Directors
• agoldman_at_hirsp.org
• [phone]