Insights into Virginia's Health Care Coverage Landscape

Gain valuable insights into the health care coverage landscape in Virginia, including a breakdown of coverage types for the Virginia population, premium rates over time in individual and small group markets, carrier participation, and the effects of various options. Explore enrollment statistics in self-funded plans and different market segments to understand the dynamics of health care coverage in Virginia.

• Virginia health care
• Insurance marketplace
• Premium rates
• Carrier participation
• Enrollment statistics

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1. State of the Commonwealths Insurance Marketplace Presented by: Julie S. Blauvelt, Deputy Commissioner Life and Health Division State Corporation Commission Bureau of Insurance May 6, 2019

2. Overview Provide a breakdown of health care coverage in Virginia Look at premium rates over time in the individual and small group markets Carrier participation in Virginia Breakdown of individual market and the effects of various options 2

3. Health Care Coverage of the Virginia Population Health Care Coverage of the Virginia Population - - 2018 2018 Other Public 7% Individual 4% Uninsured 10% Self-Funded 35% Medicaid 12% Small Employer 4% Medicare 14% Large Employer 14% Self-Funded Small Employer Large Employer Medicare Medicaid Uninsured Other Public Individual Source: U.S. Census Bureau - Current Population Survey - Annual Social and Economic Supplements Definitions Medicaid: Includes those covered by Medicaid, the Children s Health Insurance Program (CHIP), and those who have both Medicaid and another type of coverage, such as dual eligibles who are also covered by Medicare. Medicare: Includes those covered by Medicare, Medicare Advantage, and those who have Medicare and another type of non-Medicaid coverage where Medicare is the primary payer. Excludes those with Medicare Part A coverage only and those covered by Medicare and Medicaid (dual eligibles). Employer: Includes those covered by employer-sponsored coverage either through their own job or as a dependent in the same household. Other Public: Includes those covered under the military or Veterans Administration. Non-Group: Includes individuals and families that purchased or are covered as a dependent by non-group insurance. 3 Uninsured: Includes those without health insurance and those who have coverage under the Indian Health Service only.

4. Enrollment in Self Enrollment in Self- -Funded Plans and the Funded Plans and the Individual, Small Group, and Large Group Individual, Small Group, and Large Group Comprehensive Markets Comprehensive Markets - - 2018 Enrollment in the Fully Enrollment in the Fully- -Insured Market Individual, Small Group, and Large Group Individual, Small Group, and Large Group Comprehensive Comprehensive - - 2018 Insured Market 2018 2018 Individual Market, 347,087 Individual Market, 347,087 Small Group Market, 351,779 Large Group Market, 1,148,370 Small Group Market, 351,779 Large Group Market, 1,148,370 Self-Funded Plans, 3,007,088 4 Source: Company reported data found in the Annual Report - Supplemental Health Care Exhibit.

5. Health Care Coverage of the Virginia Population Employer Non-Group Medicaid Medicare Other Public Uninsured 2018 53% 4% 12% 14% 7% 10% 2017 55% 5% 11% 14% 5% 9% 2016 55% 5% 12% 14% 5% 10% 2015 53% 8% 11% 14% 5% 9% 2014 55% 7% 9% 13% 6% 10% 2013 57% 4% 9% 12% 6% 12% 2012 55% 5% 11% 12% 5% 13% 2011 55% 5% 11% 12% 5% 13% 2010 55% 5% 10% 12% 5% 13% 2009 57% 5% 10% 11% 5% 12% 2008 59% 5% 9% 11% 4% 12% Source: U.S. Census Bureau - Current Population Survey - Annual Social and Economic Supplements Definitions Medicaid: Includes those covered by Medicaid, the Children s Health Insurance Program (CHIP), and those who have both Medicaid and another type of coverage, such as dual eligibles who are also covered by Medicare. Medicare: Includes those covered by Medicare, Medicare Advantage, and those who have Medicare and another type of non-Medicaid coverage where Medicare is the primary payer. Excludes those with Medicare Part A coverage only and those covered by Medicare and Medicaid (dual eligibles). Employer: Includes those covered by employer-sponsored coverage either through their own job or as a dependent in the same household. Other Public: Includes those covered under the military or Veterans Administration. 5 Non-Group: Includes individuals and families that purchased or are covered as a dependent by non-group insurance. Uninsured: Includes those without health insurance and those who have coverage under the Indian Health Service only.

6. Individual and Small Group Comprehensive Markets Total Enrollment 2014 - 2019 550,000 494,086 500,000 468,590 450,000 425,288 416,161 405,032 394,424 400,000 378,264 359,545 356,016 351,779 347,087 350,000 293,100 300,000 250,000 2014 2015 2016 2017 2018 2019 Projected Individual Small Group Sources: Annual Supplemental Health Care Report Number of covered lives by market for 2014-2018. 2019 data derived from the 2019 rate filings and the report Virginia Individual Market Summary and Modeling Results January 4, 2019 - Oliver Wyman.

7. Effects on Individual Market Rates due to Medicaid Expansion Effects on Individual Market Rates due to Medicaid Expansion Medicaid expansion estimated impact ranged from 0% to -2.3% Actuarial study estimated 44,300-70,400 will move from Individual Market to Medicaid over the next one to three years. Transition agencies worked together 7

8. ACA Individual Market Total Weighted Average Premium by Plan Year $1,000 $796.29 $732.45 $800 $600 $433.15 $393.67 $331.29 $322.41 $400 $200 $0 2014 2015 2016 2017 2018 2019 Percentage Change Over Prior Plan Year 0.8 69.10% 0.7 0.6 0.5 0.4 0.3 18.83% 0.2 10.03% 8.71% 0.1 2.75% 0 0 2014 2015 2016 2017 2018 2019 Total Increase of Weighted Average Premium 2014-2019: $473.87/mo. Total Percentage Increase of Weighted Average Premium 2014-2019: 147%. 8

9. Individual ACA Total Enrollment and Total Weighted Average Premium 2014 - 2019 430,000 $900.00 418,013 $796.29 406,758 410,000 $800.00 $732.45 384,026 390,000 $700.00 370,000 $600.00 350,000 $500.00 $433.15 $393.67 330,000 $400.00 317,866 $331.29 $322.41 310,000 $300.00 290,000 $200.00 265,386 262,800 270,000 $100.00 250,000 $- 2014 2015 Enrollment 2016 2017 2018 2019 Projected Total Weighted Average Premium Sources: 2014-2018 data derived from the rate filings. 2019 data derived from the report Virginia Individual Market Summary and Modeling Results January 4, 2019 - Oliver Wyman.

10. ACA Small Group Total Weighted Average Premium by Plan Year $550 $500.71 $500 $470.49 $457.81 $450 $404.15 $388.74 $385.77 $400 $350 2014 2015 2016 2017 2018 2019 Percentage Change Over Prior Plan Year 0.2 17.77% 0.15 0.1 6.42% 0.05 2.77% 0.77% 0 0 2014 2015 2016 2017 2018 2019 -0.05 -4.55% Total Increase of Weighted Average Premium 2014-2019: $96.56/mo. Total Percentage Increase of Weighted Average Premium 2014-2019: 24%. 10

11. Number of Carriers in the Individual Market Number of Carriers in the Individual Market On and Off Exchange On and Off Exchange 18 16 14 12 9 11 10 11 8 8 6 9 8 7 4 6 5 2 3 3 1 1 1 0 2014 2015 2016 2017 2018 2019 2020 Projected Off Exchange Only On and Off Exchange 11

12. Number of Carriers in the Small Group Market Number of Carriers in the Small Group Market On and Off Exchange On and Off Exchange 24 22 20 6 18 5 16 5 5 3 3 3 14 12 10 17 8 14 13 13 13 13 13 6 4 2 0 2014 2015 2016 2017 2018 2019 2020 Projected 12 Off Exchange Only On and Off Exchange

13. 2019 Virginia Individual Market 2019 Virginia Individual Market Number of Carriers by County or Independent City Number of Carriers by County or Independent City In an effort to provide the most accurate information available, the carrier count for the counties of Caroline, Louisa, Orange, and Westmorland includes a carrier that does not cover the entire county, but who offers coverage to a substantial population in those counties. The carrier count for the counties of Fairfax and Prince William include two carriers that do not cover the entire county, but who offer coverage to a substantial population in those counties. An additional one or two carriers offer coverage to a small population in partial areas of the counties of Loudoun, Culpeper, Fauquier, and Hanover. Those carriers are not counted in the total for these counties. 13

14. Distribution of the Individual Market Enrollment by Rating Area Distribution of the Individual Market Enrollment by Rating Area 2016 2017 2018 45.00% 40.00% 35.00% 30.00% 25.00% 20.00% 15.00% 10.00% 5.00% 0.00% 1 2 3 4 5 6 7 8 9 10 11 12 **Metropolitan Statistical (Rating Area) Key 1 Blacksburg 2 Charlottesville 3 Danville 4 Harrisonburg 5 Bristol 6 Lynchburg 7 Richmond 8 Roanoke 9 VA Beach Norfolk 10 Washington/Arlington/Alexandria 11 Winchester 12 Non-MSA 14 Source: Carrier data call and Marketplace Open Enrollment Period Public Use Files. Virginia Individual Market Summary and Modeling Results January 4, 2019. Oliver Wyman.

15. Estimated Distribution of the On Estimated Distribution of the On- -Exchange Individual Market Enrollment by Federal Poverty Level Enrollment by Federal Poverty Level Exchange Individual Market 400+ 300-400 250-300 200-250 150-200 100-150 <100 0% 5% 10% 15% 20% 25% 30% 35% 2016 2017 2018 Source: Carrier data call and Marketplace Open Enrollment Period Public Use files. Virginia Individual Market Summary and Modeling Results January 4, 2019. Oliver Wyman. 15

16. Estimated Impact of New Coverage Options on Projected Individual Market Enrollees Estimated Impact of New Coverage Options on Projected Individual Market Enrollees 350000 6,800 4,100 10,000 8,100 8,800 32,300 44,300 3,800 10,400 24,800 24,900 19,100 300000 61,600 70,400 30,300 70,400 70,400 27,500 250000 23,800 20,800 20,200 200000 263,800 220,700 150000 204,500 196,200 196,400 196,400 100000 50000 49,200 42,100 33,500 27,100 22,100 21,400 0 2019 - No Additional Coverage Options 2019 - All Coverage Options 2020 - All Coverage Options 2021 - All Coverage Options 2022 - All Coverage Options 2023 - All Coverage Options ACA Non-APTC ACA APTC Transitional/GF Medicaid Expansion Sole Proprietor STLDI Plans 16 Source: Carrier data call and Marketplace Open Enrollment Period Public Use files. Virginia Individual Market Summary and Modeling Results January 4, 2019. Oliver Wyman.

17. Summary of Markets Summary of Markets Recent Years Recent Years Employer-sponsored coverage covers more than half of the Virginia population; the majority being self-funded Employer market steadily decreasing Medicare, Medicaid, Other Public increasing as a percentage of total Virginia population Uninsured decreased since ACA inception; expect that to decrease more with Medicaid expansion Individual market enrollment peaked in early years of ACA, but mostly subsidized individuals remain as the cost of coverage continues to increase; however, carrier interest has re-emerged 17

18. Market Observations; Market Observations; Effect of Other Coverage Options Effect of Other Coverage Options Greatest effect on individual market for 2019 is Medicaid expansion project that approx. 45,000 left the <138% FPL tier to move to Medicaid (about 55% of those eligible) Assume those unsubsidized that remain in the individual market are less healthy than in previous years due to high premium Assume all self-employed unsubsidized individuals move to small group over time improves morbidity of individual market due to higher average morbidity of the unsubsidized portion of the market Healthy unsubsidized move to less expensive short-term limited- duration coverage increases morbidity of individual market 18

19. Mandated Benefits and Essential Health Benefits (EHBs) Presented by: Julie S. Blauvelt, Deputy Commissioner Life and Health Division State Corporation Commission Bureau of Insurance May 6, 2019 19

20. Overview Employer-sponsored and individual health plans have basic benefit and protection requirements under federal law Virginia law includes mandated benefits for fully-insured health care coverage Quick summary of mandated benefits report ACA requires coverage of EHB for individual and small group plans EHB benchmark options 20

21. Self-funded/Fully-insured Comparison Self-funded employer coverage Fully-insured employer coverage ERISA requirements apply US Department of Labor enforcement ERISA requirements apply US Department of Labor enforcement of ERISA Certain ACA requirements apply US Health and Human Services enforcement ACA requirements apply State enforcement State-mandated benefits do not apply State-mandated benefits apply 21

22. Minimum coverage required for employer groups ERISA requires group health plans (fully-insured and self-funded) to provide certain minimum coverage: Coverage of adopted children Mental health parity, if mental health benefits are provided Minimum hospital stays for newborns and mothers Reconstructive surgery after mastectomy Pregnancy Discrimination Act groups of 15 or more must provide equal coverage for pregnancy as for other conditions. 22

23. Base ACA Requirements Benefits and protections for enrollees in fully-insured and self-funded health plans: Prohibition on pre-existing exclusions Prohibition of annual and lifetime dollar limits on EHB Prohibition of rescissions, except for fraud or intentional material misrepresentation Prohibition on discrimination based on health status Prohibition on excessive waiting periods Preventive care services with no cost sharing (non-grandfathered plans) Dependent coverage up to age 26 Annual limit on cost-sharing (non-grandfathered plans) Coverage for approved clinical trials (non-grandfathered plans) Internal appeal and independent external review process (non-grandfathered plans) 23

24. VIRGINIA MANDATED BENEFITS Name of Required Benefit Market Applicability Year of Enactment Citation Number Coverage of newborn children Coverage for obstetrical services * Coverage for victims of rape and incest Coverage for mammograms Coverage for childhood immunizations and well baby visits and care Individual, group Group Individual, group Individual, group Individual, group 1975 1978 1981 1989 1990 38.2-3411 38.2-3414 38.2-3418 38.2-3418.1 38.2-3411.1 - 38.2-3411.3 Coverage for mental health and substance abuse services Coverage of procedures involving bones and joints Coverage for pap smears Coverage for postpartum services ** Coverage for PSA (prostate-specific antigen) testing Coverage for reconstructive breast surgery Minimal hospital stays mastectomy, certain lymph node dissection patients Coverage for early intervention services Coverage for hemophilia and congenital bleeding disorders Coverage for hospice care Minimum hospital stays for hysterectomy Coverage for diabetes equipment, supplies, and education Coverage for clinical trials for treatment studies on cancer Coverage for Colorectal Cancer Screenings Coverage for Hospitalization and Anesthesia for dental procedures Coverage for morbid obesity * Coverage for infant hearing screening and related diagnostics Coverage for Lymphedema Coverage for prosthetic devices and components * Coverage for telemedicine Coverage for preventive care services Coverage for autism spectrum disorders Individual, group Individual, group Individual, group Individual, group Individual, group Individual, group Individual, group Individual, group Individual, group Individual, group Individual, group Individual, group Individual, group Individual, group Individual, group Large Group Individual, group Individual, group Individual, group Individual, group Individual, group Large Group 1993 1995 1996 1996 1998 1998 1998 1998 1998 1999 1999 1999 1999 2000 2000 2000 2001 2003 2009 2010 2011 2011 38.2-3412.1 38.2-3418.2 38.2-3418.1:2 38.2-3414.1 38.2-3418.7 38.2-3418.4 38.2-3418.6 38.2-3418.5 38.2-3418.3 38.2-3418.11 38.2-3418.9 38.2-3418.10 38.2-3418.8 38.2-3418.7:1 38.2-3418.12 38.2-3418.13 38.2-3411.4 38.2-3418.14 38.2-3418.15 38.2-3418.16 38.2-3442 38.2-3418.17 * These benefits are mandated offers. ** This benefit is required to be offered if obstetrical services are offered. 24

25. Costs of Virginia Mandated Benefits Costs of Virginia Mandated Benefits Individual Contracts Average Annual Claim Cost Per Contract $747.00 Average Percentage of Total Claims 14.03% Least Impact on Premiums Single Coverage Hospice Care $0.01, Mental Health Services Partial Hospitalization $0.02; Substance Use Services Partial Hospitalization $0.02 Most Impact on Premiums Single Coverage Telemedicine Services $2.13; Mental Health Outpatient $1.06; Early Intervention Services $0.90 Least Impact on Premiums Family Coverage Mental Health partial hospitalization $0.01; Substance Use partial hospitalization $0.01; Pregnancy from Rape or Incest $0.03 Most Impact on Premiums Family Coverage Telemedicine $1.37; Childhood Immunizations $1.16; Mental Health Outpatient $0.97 Lowest Average Claim Cost Per Contract Pregnancy from Rape or Incest $0.01; Prosthetic Devices and components $0.04; Substance use partial hospitalization $0.08 Highest Average Claim Cost Per Contract Telemedicine $179.72; Mental Health outpatient $67.90; Colorectal cancer screening $55.00 Source: Financial Impact of Mandated Health Insurance Benefits and Providers Pursuant to Section 38.2-3419.1 of the Code of Virginia: 2016-2017 Reporting Period of the SCC to the Governor and General Assembly of Virginia. 25

26. Costs of Virginia Mandated Benefits Costs of Virginia Mandated Benefits Group Contracts Average Annual Claim Cost Per Contract $1,237.95 Average Percentage of Total Claims 17.04% Least Impact on Premiums Single Coverage Pregnancy from Rape or Incest $0.00; Mental Health Partial Hospitalization $0.01; Substance Use Partial Hospitalization $0.01; Prosthetic Devices and Components Most Impact on Premiums Single Coverage Telemedicine Services $1.94; obstetrical services normal $1.51; obstetrical services all other $1.33 Least Impact on Premiums Family Coverage Pregnancy from Rape or incest $0.00; Mental health partial hospitalization $0.01; Substance Use partial hospitalization $0.01 Most Impact on Premiums Family Coverage Telemedicine $1.86; Newborn children $1.82; Obstetrical services normal $1.63 Lowest Average Claim Cost Per Contract Pregnancy from rape or incest $0.04; morbid obesity $0.15; mental health partial hospitalization $0.29 Highest Average Claim Cost Per Contract Telemedicine $186.65; Obstetrical services all other $151.84; childhood immunizations $82.34 No Measurable Utilization of Services Mental health partial hospitalization; substance use partial hospitalization; pregnancy from rape or incest; clinical trials for treatment studies on cancer; minimum hospital stay for hysterectomy; hospice care; hospitalization and anesthesia for dental procedures; treatment of morbid obesity Utilization of Services Most Visits Average Visits Per Contract Telemedicine 2.02; Childhood immunizations 1.18; mental health outpatient .70 Utilization of Services Most Inpatient or Partial Inpatient Days Newborn children .15; obstetrical services all other 0.12; mental health inpatient 0.11 Source: Financial Impact of Mandated Health Insurance Benefits and Providers Pursuant to Section 38.2-3419.1 of the Code of Virginia: 2016-2017 Reporting Period of the SCC to the Governor and General Assembly of Virginia. 26

27. Essential Health Benefits Individual and Small Group Outpatient Care Emergency Care Inpatient Services Maternity and Newborn Lab Services Prescription Drug Rehabilitative and Habilitative Services Mental Health/Substance Use Disorder Services Preventive Care and Wellness Pediatric Vision and Pediatric Dental 27

28. Relationship of EHB to State-mandated Benefits EHB Large group mandated benefits and offers State-mandated benefits for small group and individual State- mandated offers 28

29. EHB and State-mandated Benefit Requirement Comparison Self-funded employer coverage Large group fully-insured coverage Small group and individual fully- insured coverage State-mandated benefits do not apply Subject to state-mandated benefits Subject to state-mandated benefits Not required to provide any EHB category Not required to provide any EHB category Must provide EHB categories If provide any EHB category, annual or lifetime dollar limits on EHB are prohibited If provide any EHB category, annual or lifetime dollar limits on EHB are prohibited Annual and lifetime dollar limits on EHB prohibited Must adhere to HHS-set annual out-of-pocket maximum applicable to EHBs Must adhere to HHS-set annual out-of-pocket maximum applicable to EHBs Must adhere to HHS-set annual out-of-pocket maximum applicable to EHBs 29

30. New EHB Benchmark Options Beginning in 2020, states have opportunity to revise some or all of EHB benchmark; parameters apply Three options: Select an EHB benchmark used by another state Replace a category of EHB from state s current benchmark with a category used by another state s 2017 benchmark Choose its own set of EHBs within parameters State may submit options through 1332 waiver Previous requirement was that coverage under a waiver must be at least as comprehensive as absent the waiver New guidance from CMS indicates at least as many individuals have access to affordable and comprehensive coverage as under the waiver 30

31. Summary EHB Benchmark applies to a limited segment of the population State mandated benefits applies to a broader segment All state-mandated benefits applicable to individual and small group are included in EHB Self-funded employer-sponsored coverage must meet ERISA and certain ACA requirements State may revise EHB benchmark State may have other options through 1332 waiver State may be required to defray costs of a mandate that is in addition to EHB 31