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Health Insurance Health Insurance Exchanges in the States Health Insurance Health Insurance Exchanges in the States | MAR 2019 INNOVATIONS IN HEALTH CARE | A TOOLKIT FOR STATE LEGISLATORS Overview Prior to the Affordable Care Act (ACA) becoming law in 2010, Amer- icans who were not eligible for employer-subsidized or public health insurance programs often found coverage through a catego- ry known as individual or commercial health insurance. In many lo- cations, however, consumers faced limited or costly options in the commercial health insurance market. For enrollees with preexisting conditions, such as asthma, diabetes, arthritis or cancer, health in- surance coverage could be costlier than coverage for healthier en- rollees—or denied altogether. Private insurance coverage also of- ten excluded benefits such as maternity care or prescription drugs.1 Moreover, insurers could use other types of premium ratings, like gender or age, which allowed them to sell policies at higher month- ly premiums than for other enrollees. After the ACA, insurance carriers were banned from using such prac- tices. Furthermore, the ACA established a new option for health coverage, known as health insurance exchanges or marketplac- es. The exchanges use an online eligibility and enrollment platform that provides a place for individuals and families to compare pric- es and benefits and purchase coverage. The ACA also established the Small Business Health Options Program (SHOP) as an exchange for small employers to purchase coverage for themselves and their ums. Enrollees can use APTCs to purchase a plan from any tier on employees. the ACA health insurance marketplaces. Those with annual house- hold incomes below 250 percent FPL can also receive extra sav- Plans sold both in and out of the exchanges must follow the same ings with CSRs to reduce the amount they pay toward deductibles, set of rules: They must be guaranteed issue, meaning they must of- copays and other cost-sharing mechanisms for plans purchased fer all applicants a plan regardless of health status or other factors; through the marketplaces. To qualify for CSRs, enrollees much pur- they must follow the ACA’s cost-sharing guidelines; and they must chase a plan in the “silver” metal tier.2 cover 10 “essential health benefits,” or EHBs, with no lifetime or an- nual maximums. To help mitigate the risk of taking on enrollees with Health plans in the ACA are sold in four levels of coverage: bronze, greater health risks and potential costs, the ACA imposed an indi- silver, gold and platinum. Bronze plans have the most affordable vidual health insurance mandate, which required that all Americans premiums but offer the least amount of coverage and the highest purchase some form of health coverage. Even though the individu- out-of-pocket expenses. In contrast, platinum level plan premiums al mandate penalty was reduced to $0 under the Tax Cuts and Jobs are the most expensive but provide greater coverage with less out- Act of 2017, the mandate itself remains in place pending further of-pocket costs. congressional or legal action. For the past five years, at least 80 percent of exchange consumers n Federal subsidies. A major component of the ACA related to ex- have been eligible for APTCs. Of that group, 50 percent or more changes is the availability of federal subsidies. There are two types received CSRs.3 In 2017, advance tax credits reduced the actual of subsidies: advance premium tax credits (APTCs) and cost-shar- monthly premium paid by an individual from an average of $460 per ing reductions (CSRs). Enrollees with annual household incomes month to $167 per month.4 It should be noted that, although many between 100 percent and 400 percent of the federal poverty lev- who shop for insurance through the exchanges receive subsidies, in- el (FPL) can access APTCs to reduce their monthly insurance premi- dividuals or families with incomes above 400 percent FPL may also use the marketplaces to buy nonsubsidized health coverage. The ACA requires insurers to provide CSRs to people with lower earnings and, until recently, the federal government reimbursed carriers for those subsidies. The law was challenged and reversed in 2016 and the federal government stopped making CSR payments to insurers the following year. As Health Affairs reports, all but two states—Vermont and North Dakota—and the District of Columbia allowed insurers to amend their rate filings for plan year 2018. To buffer against the loss of CSR reimbursements, insurance regulators in 43 states allowed plans to ”silver load.”5 This method permits the insurer to pass the full effect of the reduction in funds onto silver tier marketplace plans. This had a positive consequence for many consumers. Since premi- um tax credits are tied to the second lowest-cost silver plan, con- sumers received higher premium tax credits from the government. And because consumers can use their tax credits to purchase a plan in any of the four metal tiers, about 4.5 million people could obtain a bronze-level plan at no cost in 2018.6 Guidance released from the Centers for Medicare & Medicaid Ser- group market, most commonly defined as between one and 50 en- vices (CMS) states that silver-loading is allowed for the 2019 plan rollees or full-time employees. Over the past 30 years, all states also year, but the discussion of CSR payments continues to evolve. De- have established coverage requirements for a wide range of specif- spite the Trump administration’s previous action to discontinue the ic treatments and benefits. They have also required reimbursement reimbursements, there are projections of significant costs to insur- by specific categories of providers not traditionally covered, such as 7 ers and taxpayers, as well as estimates of increases in insurance ex- chiropractors, psychologists, podiatrists or social workers. change premiums.8 The EHBs created within the ACA were aligned with, but not iden- Policy Options tical to, widely used existing state laws. The newly defined federal mandates for coverage were tied to state “benchmark plans,” de- All states were given the opportunity to receive federal planning and fined as an exchange’s silver plan within a certain region. In plan implementation grants to develop their health insurance exchange years 2017, 2018 and 2019, each state’s EHB benchmark plan had platforms. An exchange has operated within each state since 2014. to be one that was sold in its marketplace in 2014. A 2018 HHS no- Exchanges are intended and designed as a state-federal collabora- tice makes significant changes to the way in which states can select tion. Each state is given the choice of whether or not to run its own an EHB benchmark plan by offering three new options for plan year exchange, create its own website, take on plan management tasks, 2020 and annually thereafter:11 or defer to the federal government for some or all of these respon- n Selecting the EHB-benchmark plan that another state sibilities. States have taken on varying degrees of responsibility for Option 1: used for the 2017 plan year. operating exchanges, giving some states more autonomy over cer- tain policy decisions. n Option 2: Replacing one or more categories of EHBs under its EHB-benchmark plan used for the 2017 plan year with the same As of 2018, 11 states and the District of Columbia have a fully state- category or categories from the EHB-benchmark plan that another run exchange, or state-based marketplaces (SBMs), which allow for state used for the 2017 plan year. more locally focused decisions and administration. The state legis- lature and executive agencies can set deadlines and hours of oper- n Option 3: Otherwise selecting a set of benefits that would be- ation, enforce consumer regulations and personalize marketing ac- come the state’s EHB-benchmark plan. tivities such as using storefronts and social media. Five states have a hybrid structure with a state-run exchange but federal web plat- The notice also grants insurers greater flexibility to substitute bene- form.9 In 17 other states, the federal government is legally responsi- fits across the 10 EHB benefit categories, if permitted by the state.12 ble for all marketplace functions but defers to the state to manage States that opt not to exercise one of these options will continue to the plans. Another 17 states have adopted or defaulted entirely to use the same benchmark plan from plan years 2017 to 2019. the federally facilitated marketplace.10 State Examples Despite differing choices, all 50 states and the District of Colum- bia have the authority to regulate in-state sales of health insurance n State-Run Exchange—Colorado. The Colorado General policies. This state regulation is focused on the individual and small Assembly enacted bipartisan legislation creating a state-run NATIONAL CONFERENCE OF STATE LEGISLATURES 2 How State Exchanges Are Run State and local navigators and assistors play a highly visible role ME in person and on the phone to help consumers shop for and AK VT NH purchase appropriate plans. In 2014, approximately 129,000 Coloradans signed up for private health insurance through WA MT ND MN WI MI NY MA RI Connect for Health Colorado during the first open enrollment ID WY SD IA IL IN OH PA NJ CT period. For 2019, enrollment increased to more than 169,000 OR NV CO NE MO KY WV VA DC DE covered people. HI CA UT NM KS AR TN NC SC MD n Federally facilitated marketplace—Florida. Florida was one of 18 states in which the legislature, by 2011 state statute, sought AZ OK LA MS AL GA to prohibit any person from being compelled to purchase health TX FL insurance. The governor also refused to accept the $1 million in State-run exchange planning funds to design a health exchange, as part of a challenge State-run exchange using to the ACA.13 Even so, Florida residents were able to access the federally-supported website AS GU MP PR VI federal platform, HealthCare.gov, during the enrollment period State-federal partnership beginning Oct.
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