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PwC's Health Research Institute: Health Insurance Exchanges

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PwC overview on health insurance exchanges. These new marketplaces which go into effect in 2014 will form the backbone of the Affordable Care Act and expand health insurance coverage to all Americans.
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www.pwc.com/hix The “101” on the new marketplaces Health Research Institute www.pwc.com/hri
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Page 1: PwC's Health Research Institute: Health Insurance Exchanges

www.pwc.com/hix

The “101” on the new marketplaces

Health Research Institute

www.pwc.com/hri

Page 2: PwC's Health Research Institute: Health Insurance Exchanges

PwC Health Research Institute

Table of Contents

Section Slide #Overview and Background 3-5What are Health Insurance Exchanges? 6-9Types of Exchanges 10-14Exchange Enrollment 15Exchange Participation 16-19What’s Next 20

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Page 3: PwC's Health Research Institute: Health Insurance Exchanges

PwC Health Research Institute

What is a health insurance exchange?The six basic facts you need to know.

3

Overview What are HIXs?

Types of HIXs

Exchange Enrollment

HIX Participatio

nWhat’s Next

1. The exchanges allow customers to compare private insurance plans in terms of cost, quality and benefits.

2. Each state and the District of Columbia will have an exchange managed by the state, the federal government or a partnership between the two.

3. Open enrollment is Oct. 1, 2013, through March 31, 2014. Coverage begins January 1, 2014.

4. Plans offered through the exchanges will provide services that include ER visits, maternity care, prescription drugs, rehab, hospitalization, and outpatient services.

5. Exchange customers may qualify for subsidies based on a sliding income scale.

6. Insurance plans are organized into five categories: catastrophic, bronze, silver, gold and platinum based on the percentage of costs they cover.

Page 4: PwC's Health Research Institute: Health Insurance Exchanges

PwC Health Research Institute

The Affordable Care Act (ACA) The ACA was signed into law on March 23, 2010 with the goals of increasing access to healthcare, improving affordability, and improving quality.

4

Increase access Health insurance exchanges are designed to cover half of the newly insured The newly insured will have different demographic attributes than the currently

insured Health plans must guarantee issue and renewability of health insurance regardless of

health status

Improve affordability As online marketplaces, exchanges promote price and quality transparency to

increase competition Exchange coverage is subsidized for those who earn between 100% and 400% of the

federal poverty line

Improve quality Health plans must offer essential health benefit standards providing a minimum level

of coverage Exchange health plans will be required to report on quality measures starting in 2016

Overview What are HIXs?

Types of HIXs

Exchange Enrollment

HIX Participatio

nWhat’s Next

Page 5: PwC's Health Research Institute: Health Insurance Exchanges

PwC Health Research Institute

ACA implementation hits its stride in 2014

5

Overview What are HIXs?

Types of HIXs

Exchange Enrollment

HIX Participatio

nWhat’s Next

Page 6: PwC's Health Research Institute: Health Insurance Exchanges

PwC Health Research Institute

Private exchanges came first and are growingPrivate exchanges present coverage alternatives to employers

Overview What are HIXs?

Types of HIXs

Exchange Enrollment

HIX Participatio

nWhat’s Next

6

Insurer-run model

Individual insurers or groups of insurers operate exchanges to showcase plan

options

Minnesota-based insurer Medica partnered with Bloom Health

Retailer-run model

Companies outside of the health

industry begin selling various

insurance products

Market is still in development by familiar retailers

Third party-run model

External administrator links consumers to plan

choices across multiple insurers

California based CHOICE

Administrators focuses on small

employers

Page 7: PwC's Health Research Institute: Health Insurance Exchanges

PwC Health Research Institute

State exchange implementation timeline

7

October 1, 2013Exchanges open enrollment for new consumers

March 31, 2014Exchanges first enrollment period closes

January 1, 2015Employers must offer health benefits to employees (delayed from 2014)

January 1, 2017Large employers may offer coverage sold through the exchanges. States’ participation is optional.

January 1, 2014Health benefit exchanges fully operational and coverage begins

Overview What are HIXs?

Types of HIXs

Exchange Enrollment

HIX Participatio

nWhat’s Next

Page 8: PwC's Health Research Institute: Health Insurance Exchanges

PwC Health Research Institute 8

Common questionsWho is eligible for state health insurance exchanges? Initially, exchanges will be open to individuals buying their own coverage and employees of firms with 100 or fewer workers (50 or fewer in some states).How many exchanges are there? Every state has 2 exchanges – an individual exchange and a small business (or SHOP) exchange although not every state will have their small business exchange up and running next year. What are some key characteristics of the exchanges? Insurance plans are offered by private companies. Information about health plans, including price, benefits, and quality, is

accessible. Health plans provide the same core set of benefits, facilitating side-by-side

comparison. There are 4 tiers of qualifying health plans – bronze, silver, gold, and

platinum.What if my employer already gives me health insurance? Individuals who receive employer-based insurance already can keep their coverage and do not need to enter the exchange.

Overview What are HIXs?

Types of HIXs

Exchange Enrollment

HIX Participatio

nWhat’s Next

Page 9: PwC's Health Research Institute: Health Insurance Exchanges

PwC Health Research Institute 9

What is the size of the new exchange market?

2023

Nearly $210B, 28

million members

7 million

members

, 2014

22 millio

n

member

s, 2016

24 millio

n

member

s, 2023

2 million members

, 2014

3 million members

, 2016

4 million member

s,2023

Indi

vidua

l exc

hang

e Small group

exchange

2014About

$40B, 7 M

members

With an estimated 7 million individual members, the exchanges are expected to be worth $40B in premium revenue in 2014.

Overview What are HIXs?

Types of HIXs

Exchange Enrollment

HIX Participatio

nWhat’s Next

Page 10: PwC's Health Research Institute: Health Insurance Exchanges

PwC Health Research Institute 10

Three types of state exchangesOverview What are

HIXs?Types of

HIXsExchange

EnrollmentHIX

Participation

What’s Next

Federally Facilitated Partnership State-Based

# of States* 27 7 16 + Washington

D.C.

Description

The federal government runs the state’s exchanges

Some states run the SHOP while the federal government oversees the individual exchange Other states review health plans while the federal government builds and maintains necessary IT infrastructure such as exchange websites

States run their own exchanges More money is available for outreach and enrollment for state-based exchanges

*Numbers as of September 3, 2013.

Page 11: PwC's Health Research Institute: Health Insurance Exchanges

PwC Health Research Institute 11

States on the frontline of ACA implementation

*To view updates to the map visit: http://www.pwc.com/us/en/health-industries/health-research-institute/index.jhtml

Overview What are HIXs?

Types of HIXs

Exchange Enrollment

HIX Participatio

nWhat’s Next

Page 12: PwC's Health Research Institute: Health Insurance Exchanges

PwC Health Research Institute 12

What types of plans can I buy on the exchanges?

Catastrophic

• Minimal coverage plan

• Only available to people age 30 and under

Bronze

• 60% AV*

Silver

• 70% AV*• Every

insurer must offer a silver plan

Gold

• 80% AV*

Platinum

• 90% AV*

*AV= Actuarial value. In simple terms, this is the percent of health costs paid for by the plan. The higher the AV, the more the consumer pays in premiums.

$80 $100 $200 $300 $400

Sample FULL PRICED monthly premiums

Qualified health plans (QHP) are offered by an issuer that is licensed by the state and in good standing

QHPs must cover essential health benefits QHPs agree to charge the same premium rate whether offered directly

through the exchanges or outside of the exchanges

Overview What are HIXs?

Types of HIXs

Exchange Enrollment

HIX Participatio

nWhat’s Next

Page 13: PwC's Health Research Institute: Health Insurance Exchanges

PwC Health Research Institute 13

The Essential Health BenefitsEvery qualified health plan is required to offer benefits in the following categories:

Overview What are HIXs?

Types of HIXs

Exchange Enrollment

HIX Participatio

nWhat’s Next

Ambulatory patient services

Emergency services

Preventive, wellness &

chronic disease mgmt

Hospitalization

Pediatric services

Maternity & newborn

care

Mental health &

substance use disorder

services

Prescription drugs

Rehabilitative &

habilitative services and

devices

Laboratory services

Page 14: PwC's Health Research Institute: Health Insurance Exchanges

PwC Health Research Institute 14

Subsidies are available based on incomeIndividuals applying for coverage through the exchanges who make between 100%-400% of the Federal Poverty Level will be eligible for federal subsidies to purchase coverage.

Household Size 100% FPL 400% FPL

1 $11,490 $45,960

4 $23,550 $94,200

Overview What are HIXs?

Types of HIXs

Exchange Enrollment

HIX Participatio

nWhat’s Next

SUBSIDYINCOME

Min

imum

Sub

sidy

100% 400%Federal Poverty Level

Income Family Size

Subsidy Amount

and defines your

Page 15: PwC's Health Research Institute: Health Insurance Exchanges

PwC Health Research Institute 15

Exchange enrollment: Navigators, IPAs, and CACsFederal government has defined 3 roles for education and enrollment “helpers

Navigator In-Person Assister (IPA) Certified Application Counselor (CAC)

Role

Conduct outreach activities to raise awareness about exchanges. Additionally, assist individuals with preparing electronic and paper applications to determine eligibility.

Assist individuals with preparing electronic and paper applications to determine eligibility.

Assist in educating individuals about Medicaid, CHIP, and plans sold through the exchanges.

Exchange Participation

• Federally-facilitated exchange• Federal/state partnership

exchange• State-based exchange

• Federal/state partnership exchange

• State-based exchange (optional)

• Federally-facilitated exchange

• Federal/state partnership exchange

• State-based exchange

Training Requirement

• Navigators must be certified, which requires initial web‐based training of up to 30 hrs

• Annual recertification

• Must complete comprehensive training

• Must complete comprehensive training

Funding

• Federal government provided 105 grant applicants in federally- facilitated and partnership exchanges with $67M in navigator grants

• State-based exchanges will provider navigator programs with grants from their exchange budgets

• State-based programs will apply for exchange establishment grants to fund IPAs

• Not Applicable

Overview What are HIXs?

Types of HIXs

Exchange Enrollment

HIX Participatio

nWhat’s Next

Page 16: PwC's Health Research Institute: Health Insurance Exchanges

PwC Health Research Institute

HIX Participation

Insurance companies’ participation in exchanges*INSURER PERSPECTIVENational carriers participating:• Blues plans will be offered in at least 36

states (but not in Iowa, Mississippi, and South Dakota) in 2014

• Big national insurers are offering plans in 8-11 states including: Aetna , Wellpoint (incl. Anthem), Coventry, Humana , and Kaiser

National carriers delaying participation or not participating:• Wellmark won’t be selling their blues

plans (mentioned above) in Iowa or South Dakota until 2015

• Aetna has withdrawn participation in 8 states in which it originally planned to participate

Minimal ParticipationStates that have announced only 1 or 2 carriers:

• Alaska • Hawaii• Maine • Mississippi

• New Hampshire • Oklahoma• Rhode Island• Vermont

Maximum Participation

States with the most carriers (between 13 and 19):• Colorado• Michigan• New York

• Oregon• Wisconsin

STATE PERSPECTIVEWhile most states with high participation are state or partnership exchanges, Wisconsin and Florida, both FFEs, had 13 and 9 plans announce participation, respectively.

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Overview What are HIXs?

Types of HIXs

Exchange Enrollment What’s

Next

*Non-exhaustive, snapshot as of Sept. 2, 2013

Page 17: PwC's Health Research Institute: Health Insurance Exchanges

PwC Health Research Institute 17

How will exchanges impact insurance companies?Exchanges demand a shift in the insurance business model that will look and feel more like a retail experience. This will require competition on price and service offerings, focus on population management, knowledge of consumer preferences, and consumer engagement.

Price will be a leading factor in

consumer decision making

As consumers become more sophisticated

insurers will need to differentiate through quality, benefits and customer experience

47% of consumers are

willing to pay extra for ancillary

services

HIX ParticipationOverview What are

HIXs?Types of

HIXsExchange

Enrollment What’s Next

Page 18: PwC's Health Research Institute: Health Insurance Exchanges

PwC Health Research Institute 18

How will exchanges impact providers?Exchanges will lead to a broad coverage expansion that can offer a financial boost for hospitals that are currently under a financial squeeze. To gain an edge at a time when money is tight, hospitals must target the right audience, plug into local networks, and rethink the role of outreach.

Hospital DSH and Medicare payments are declining – new paying customers

are the answer

Through outreach and education; state, community and local groups can help to publicize new plan

options

Only 9.5% of the 105 navigator grants distributed went to hospitals or medical

centers

HIX ParticipationOverview What are

HIXs?Types of

HIXsExchange

Enrollment What’s Next

Source: Health Research Institute Analysis

Page 19: PwC's Health Research Institute: Health Insurance Exchanges

PwC Health Research Institute 19

HIX Participation

Race to October 1st Sectors participating in healthcare exchanges have been preparing for the October 1st launch in varying ways:

Insurers•Choosing which states exchange to offer coverage in•Negotiating with provider networks•Ensuring technological components are ready to communicate with state exchanges•Determining the most cost effective plan pricing

Providers•Partnering with community health organizations on outreach and enrollment •Pursuing CAC designation and training financial counselors

Pharma•Identifying ways to retool their efforts to enroll participants in their prescription drug assistance programs

New Entrants

•Tax preparers using their experience with the federal tax system to educate individuals about the ACA’s personal financial implications•Technology contractors partnering with the federal government to implement federal data hub

HIX ParticipationOverview What are

HIXs?Types of

HIXsExchange

Enrollment What’s Next

Page 20: PwC's Health Research Institute: Health Insurance Exchanges

PwC Health Research Institute 20

What’s Next

What’s Next? - 2014 & BeyondThe number of insurance

companies and consumers participating in exchanges will be watched closely to determine the

health of the market

Large employers explore private health insurance exchanges

Non-traditional players look to capitalize on new opportunities

due to exchanges (i.e. retail pharmacies & web brokers)

In 2017, employers may be allowed to send employees to exchanges to obtain coverage

In 2018, the Cadillac tax, a tax on high cost insurance policies,

takes effect

Overview What are HIXs?

Types of HIXs

Exchange Enrollment

HIX Participatio

n

Page 21: PwC's Health Research Institute: Health Insurance Exchanges

PwC Health Research Institute 21

What’s Next

For More Information

HRI website

Overview What are HIXs?

Types of HIXs

Exchange Enrollment

HIX Participatio

n

www.pwc.com/hri

HRI Regulatory Centerhttp://www.pwc.com/us/en/health-industries/health-research-institute/hri-regulatory-center.jhtml

HIX Reportwww.pwc.com/us/hix


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