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Healthcare Reform November 14, 2014

C. Burke King

President

Anthem Blue Cross and

Blue Shield

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Individual Market

Consumer Profile Highlights

December Membership

Average Subscriber Age 39; age band 45-54(28%)

Family Type * more families with children

Female 49%

Income < 400% FPL ** 31%

New 2014 Applicants

Average Subscriber Age 45; age band 55+ (33%)

Family Type more couples w/o children

Female 52%

Income < 400% FPL 68%

- Post reform consumers are older, lower income, more ethnically diverse and likely female; On Exchange consumers also have higher proportion of couple w/o kids

* Single is still the predominant family type ** Income from Dec mbrship was estimated from external KBM data

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Individual MarketWhat’s New for 2015?

Big

Bang!

Jan. 1, 2015

Open

Enrollment

Nov. 15, 2014 –

Feb. 15. 2015

Renewal

Notice

Virginia

requires a

75-day

renewal

notice

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2014 Trends Observed

• 2014 Small Group market size is shrinking quickly due mainly to greater dumping

• 2014 Small Group market size revised down 10% from previous estimates

• Small Group dumping likely continues or accelerates although impact by state/region varies.

• The Individual market will continue to grow from Uninsured buying and Group dumping

• Uninsured reduction not known

• Uninsured will continue to buy as Exchanges are more organized and more carriers are entering the market: The effectiveness of the individual penalty increases as it grows

• Minimal shifts in all other segments

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2014 Key Learnings &

Implications for 2015

• The 2014 open enrollment period resulted in a great deal of confusion

as there was much regulatory instability and the exchanges did not

function efficiently.

• We expect many of the operational issues to stabilize in 2015. We do

still expect some degree of regulatory uncertainty as the first year tax-

time reconciliation could create additional abrasion for consumers

who might have chosen differently if they better understood the tax

implications of their 2014 plan choice.

• As the 2015 open enrollment period begins, we expect to see some

degree of consumer confusion as renewal cycles will begin to

converge and consumers attempt to understand their available

options, ultimately leading to increased shopping activity.

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Small Employers can offer medical and dental plans through the

Small Business Health Options marketplace on healthcare.gov

• Employee Choice available for 2015

• Enrollment for 1-1-2015 will begin Nov. 15 and ends Dec. 15

• All enrollment, billing, and payments will be handled by or through SHOP

SHOPWhat’s New for 2015?

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Employer Mandate RefresherBeginning in 2015

Number of employees

No penaltyNo penalty

49 or fewer50 +

Continue to offer

coverageDrop coverage

Minimum value &

affordable

Pay $2k penalty

per FTE

minus first 30

Drop coverageContinue to offer

coverage

50-99

delayed to

2016

Yes – avoid

penalty

No – pay $3k

penalty per

employee that

gets subsidy

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How are Employers

Preparing?

Cost Shifters Fence Sitters Innovators

Strategy is to

quickly decrease

employer cost in

varying degree of

approaches

Wait & see attitude,

taking small actions

that are not

sustainable long-

term strategies;

ultimately become

Cost Shifter or

Innovator

Providing Health

Care for the long-

term; Tools and

Capabilities to

reduce costs and

engage employees

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Questions??