ACA Section 1332 Waiver Innovation Application
States can apply for innovation waivers under ACA Section 1332 to improve patient access, affordability, and market stability. Waivers must maintain coverage levels, affordability, essential benefits, and budget neutrality. Maine utilized a waiver to leverage reinsurance through the MGARA to stabilize and reduce health insurance premiums in the individual market.
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Presentation Transcript
ACA Section 1332 Waiver Innovation Application Maine Bureau of Insurance APRIL 2018
Allows states to apply to the US DHHS for state innovation waivers of ACA provisions. ACA Section 1332 What is It? Encourages state-by-state strategies to improve patient access to care, increase affordability of coverage and choices offered, and improved market stability.
Scope of Coverage Will facilitate coverage for at least a comparable number of persons as without the waiver. Key Section 1332 Requirements Affordability Will not decrease existing coverage or cost-sharing protections and will not result in a decrease in coverage affordability.
Comprehensive Coverage May not alter required scope of benefits offered in market and may not decrease the number of persons with coverage providing ACA Essential Health Benefits. Key Section 1332 Requirements (cont.) Federal Budget Neutrality Must not increase the federal deficit.
Budget neutrality works both ways. Section 1332 provides that innovation waivers can t increase the cost to the federal government, but won t reduce it either. States with approved Section 1332 innovation waivers receive pass-through funding to recover premium subsidies or other federal support they would otherwise lose by operating the state program. Preservation of Federal Support Pass-through funding allows state and federal resources to be combined, rather than penalizing the state by reducing the federal contribution.
Authorized by 2011 PL c. 90 Leveraging the Maine Guaranteed Access Reinsurance Association (MGARA) using a Section 1332 Waiver Purpose To stabilize and reduce premiums in individual health insurance market by providing reinsurance to insurers in that market. Funding Reinsurance premiums paid by carriers ceding coverage to MGARA and by $4 per person per month assessment on all market segments. No Effect on Insureds Ceding of coverage does not affect individual insured s coverage in any way.
MGARA Results During 18 months of operation in 2012-13 MGARA: oCollected about $26.3 million in premium and $41.2 million in assessments oPaid about $66 million in reinsured health insurance claims oKept premium increases about 20% lower than they otherwise would have been
ACA provided a national transitional reinsurance program which operated from 2014-16. Federal Transitional Reinsurance Program Due to substantial overlap between the federal and state programs, MGARA s active operations were suspended effective January 1, 2014.
Authorizes MGARAs reactivation subject to a successful application to the federal government for a Section 1332 innovation waiver. 2017 Public Law c. 124 A Section 1332 Innovation Waiver is necessary because
Federal Premium Tax Credits (PTCs) currently subsidize persons in the individual market with income from 100% to 400% of the federal poverty level. Nearly 80% of Mainers insured in the individual market are in this demographic. The PTC program caps the net premiums paid by those persons on a sliding scale based on income. This means that when premiums decrease, federal support for Mainers receiving PTC assistance is reduced dollar-for-dollar. Need for an Innovation Waiver Therefore, absent a waiver, state efforts to utilize MGARA to stabilize the market and reduce premiums would primarily benefit the federal government, not Maine s insurance consumers.
Carriers: Enrollees: Only 2 carriers currently selling on the Exchange 1 additional carrier has coverage available only off Exchange Approximately 80,000 enrollees in individual market Approximately 76,000 enrolled through the Exchange Approximately 65,000 eligible for premium tax credits Maine s Individual Market - 2018
Who Buys Insurance in the Individual Market Non-Medicare-eligible retirees Individuals not eligible for group coverage Sole proprietors with no employees Part-time workers Contract employees No group coverage offered
Rates are Increasing Average rate increases since 2014: 2014-15 -0.8% 2015-16 -1.2% 2016-17 22% 2017-18 21% AVG RATE INCREASES SINCE 2014 25.00% 20.00% 15.00% 10.00% 5.00% 0.00% 2014-2015 2015-2016 2016-2017 2017-2018 -5.00%
Federal tax credits are available to individuals with income up to 400%FPL 85% (2018) On-Exchange consumers eligible to access federal tax credits to offset their premium expenses For these people, rate increases result in higher federal tax credit amounts, not increased consumer costs Many individual market consumers are insulated from rate increases Rate Increase Impact on Consumers Other individual market consumers experience significant rate increases Incomes over 400% FPL Coverage purchased off-Exchange
Maine to apply for a Section 1332 State Innovation Waiver Waivers can be funded by pass through dollars The Proposal If the federal government will save money it otherwise would have spent in subsidies absent the waiver, the state can use those pass-through dollars to help fund MGARA, in turn helping those consumers who do not receive a subsidy.
MGARA to be reactivated effective January 1, 2019 MGARA funded by three, not two, sources: Reinsurance premiums $4 per person per month assessment on all market segments Federal pass-through payments The Proposal (Continued) Total 2019 estimated revenue: $93 million Total 2019-2023 estimated revenue: $503.6 million
Carriers reinsuring an individual health policy through MGARA will pay a reinsurance premium of 90% of the underlying policy premium Estimated 2019 reinsurance premiums: $37.0 million Reinsurance Premiums and Coverage When MGARA reinsures a policy, it pays 90% of claims between $47,000 and $77,000 and 100% of claims above $77,000 in a year Ceding mandatory with respect to specified medical conditions and otherwise voluntary
$4 per member per month assessment on all market segments Estimated 2019 assessments: $22.6 million Assessments Includes individual and group markets and self-funded plans administered by third-party administrators
Reductions in federal premium tax credits as a result of MGARA s operation, net of minor adjustments, would be returned to the State for the purpose of further reducing premiums Estimated 2019 pass-through payments: $33.4 million Federal Pass-Through Payments
Modeling Milliman, Inc. has performed economic and actuarial modeling of the program for 2019 through 2028. The modeling: Predicts program will meet all federal requirements Estimates individual market premium reduction of about 9% in 2019 relative to what they would otherwise be with similar results each year of the program. Estimates number of uninsured will be reduced by between 300 to 1,100 per year Program makes no change to required policy benefits for consumers
How Will It Work? Premium Savings In June 2018, insurers will be required to file 2019 rates that reflect their premiums with and without the program. If the 1332 Waiver is approved by CMS and the Board reactivates MGARA, insurers will use the rates reflecting the cost decrease in the program.
Timeline April 2- May 2 Public comment period and tribal consultations May Submission of 1332 waiver application to CMS June Insurers file rates with Maine BOI Late Summer Expected federal approval of waiver Late September Insurer rates approved November Open enrollment begins January 1, 2019 MGARA reactivated
Maine Bureau of Insurance 34 State House Station Augusta ME 04333 Phone: 800-300-5000 (TTY: Relay 711) Fax: 207-624-8599 Email: insurance.pfr@maine.gov Website: maine.gov/pfr/insurance MGARA related information: maine.gov/pfr/insurance/mgara/index.html
