Rhode Island Exchange Planning

March, 2012

Deb FaulknerFaulkner Consulting Group

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Agenda

Exchange Context

Exchange 101• What is an Exchange? • Who will use Rhode Island’s Exchange?• RI Exchange Status

Implications for Employers

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Exchange Context

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Federal reform, post 2014, envisions affordable coverage for virtually all RIers, through the following elements:

RI Health Benefits Exchange

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Rhode Island Executive Order established the RI Health Benefits Exchange as a division within the Executive Agency

Director of

DOA

Commissioner

of Health

Insurance

Director of

Health

Small

Business

Rep

Small

Business

Rep

Consumer

Rep

Former Health

Insurance Executive

Labor

Former Delivery Sys Governance

Ex-Officio Members

E-Commerce Expert

Former Insurance Executive

Former US Attorney (with hospital system

expertise)

Physician (not currently

practicing)

Director of Administration

Secretary of EOHHS

Director of Health

Commissioner of Health Insurance

Appointed by the Governor

Consumer Rep Consumer Rep

Small Business Rep

Small Business Rep

Labor

Agenda

Exchange Context

Exchange 101• What is an Exchange? • Who will use Rhode Island’s Exchange?• RI Exchange Status

Implications for Employers

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Why establish an Exchange?

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Mission

The Rhode Island Health Benefits Exchange will

serve as a robust resource for Rhode Islanders and

Rhode Island businesses to learn about and easily

compare the quality and affordability of their health

insurance options, enroll in coverage and, if eligible,

access subsidies for coverage.

RI Exchange Goals

1. Improve the health of Rhode Islanders

2. Achieve near universal coverage

3. Favorably impact health insurance cost trends

4. Favorably impact health care delivery system

effectiveness and efficiency

5. Add value to employer health insurance

purchasing

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Exchange Web Portal: Massachusetts

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The RI Health Benefit Exchange

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A robust marketplace for all Rhode Islanders

(1) Web Portal: a robust marketplace for all Rhode Islanders to identify health insurance options and purchase coverage

Medicaid eligible individuals

Subsidy eligible individuals

Individuals (self pay –

no subsidy)

Employees of Small Employers

Employees of Large Employers

Rhode Islanders seeking Health Insurance

(2) Help Rhode Islanders Choose Health InsuranceDisplay insurance options in an easy

to understand, highly interactive web page

(3) EnrollDetermine eligibility,enroll in coverage, &

facilitate subsidy

Post 2014: Exchange Users

Employer-Based Medicaid (1)

IndividualShop through Exchange: 901,000(check affordability, compare prices)

Use Exchange to Determine Eligibility: 256,000

Enroll through Exchange: 81,000

Medicaid (1)

Ind.

Ind.

Employer-based

Source: Preliminary estimates of post-2014 volume , modeled using CPS, DHS, OHIC, ACS and MEPS data and estimates of undocumented immigrants.

RI anticipates three categories of Exchange users

(1) Medicaid totals do not include 17,000 Medicaid eligibles over 65 who will also use the system.

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Exchange Project StatusAchieving our mission requires an aggressive change initiative impacting: 

Policy: business policy, practices and processes

Operations: people, roles & organizational structures

Technology: the systems that support the new policies & practices

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Agenda

Exchange Context

Exchange 101• What is an Exchange? • Who will use Rhode Island’s Exchange?• RI Exchange Status

Implications for Employers

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Implications for Employers

Individual Mandate

Employer Penalties (over 50), Tax Credits (Under 25)

Commercial Market Reforms

Essential Health Benefits

Exchange: SHOP (Small Business Health Options Program)Individual Exchange

Key Elements of ACA: Implications for Employers

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Next Steps

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Less than 18 months from today - need fully operational exchange

Fall 2012 “Operational Readiness”

January 2013 Achieve certification

Summer 2013 Soft Launch

October 2013 Open enrollment begins

December 2014 Exchange Establishment funding ends

December 2015 Medicaid funding (90% federal match) ends

Backup

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Exchange Principles

Exceptional Customer Experience

Simplicity

Affordability

Flexibility

Transparency

Fiscal Prudence

Alignment with other governmental health reform initiatives

Catalyst16

Small Employer Tax Credits

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Small employers will need to purchase insurance through the SHOP Exchange to access tax credits.

Who is EligibleEmployers with <25 employees with average wages of up to $50,000

Amount of CreditSliding scale up to 50% of the amount they contribute toward insurance premiums

SHOP Requirement (after 2014)In order to receive the credit after 2014, small employers must purchase through the state’s SHOP Exchange.

TimingCredits are available starting in 2010. Employers may only receive the credit for 2 years after 2013.

Source: Health Policy Brief: Small Business Tax Credits, Health Affairs, Jan 14, 2011, Robert Wood Johnson Foundation

Employer Penalties

WhoBusinesses with 51 or more FTEs

Penalty$2,000 per employee (excluding the first 30 employees) if they do not offer coverage for employees who average 30+ hours per week.1

CoverageMust cover at least 60% of the actuarial value of the cost of benefits.

Affordability RequirementEmployee’s premium cannot exceed 9.5% of their household income. If not, employees may purchase insurance on their own through the exchange using

tax credits. Employers will either pay $3,000 per employee receiving the tax credit, or $2,000 per

employee excluding the first 30 workers (whichever is less).

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Beginning in 2014, some small businesses may have to pay a penalty if they do not offer affordable coverage.

1 Note that there is no penalty for part-time employees not offered coverage.Source: Kaiser Family Foundation employer penalty flowchart

Individual Mandate

Who is exempted from the requirement to purchase insurance? Religiously opposed to acceptance of benefits from a health insurance policy Undocumented immigrants Persons who are incarcerated Members of an Indian tribe Income below the threshold requiring filing a tax return ($9,350 - individual, $18,700 - family) Anyone who has to pay more than 8% of income for health insurance, after taking into account any employer contributions or tax credits.

What insurance coverage is acceptable? Medicare/Medicaid/CHIP TRICARE or veteran’s health program A plan offered by an employer Insurance bought directly that is at least at the Bronze level A grandfathered health plan in existence before the health reform law was enacted

What is the penalty for not having insurance? 1

2014: $95/adult, $47.50/child ($285 family max) or 1% of family income, whichever is greater 2015: $325/adult, $162.50/child ($975 family max) or 2% of family income, whichever is greater. 2016 and Beyond: $695/adult, $347.50/child ($2,085 family max) or 2.5% of family income, whichever is greater. After 2016, penalty

amounts are increased annually by the cost of living.

191 The penalty is pro-rated by the number of months without coverage, though there is no penalty for a single gap in coverage of less than 3 months in a year. The penalty cannot be greater than the national average premium for Bronze level coverage in an Exchange .

Source: Kaiser Family Foundation individual mandate flowchart

Context: Commercial Reforms

Young adults on parents’ coverage

Pre-existing condition protections

New restrictions on rate factors

“Essential benefits”

Making health insurance accessible to all, leveling the playing field

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Starting Point

21Source: Census Bureau American Community Survey 2009, RI Medicaid, Commercial insurance data as reported to OHIC, Large Group/SI includes both carrier reported data and additional subscribers based on ACS data for total privately insured population.

Under 65 RI Population: Current Health Insurance StatusTotal = 901,000

(1) Medicaid total does not include 17,000 eligibles over 65. (2) Chart uninsured total based on ACS 2009 data. ACS data for 2010 shows 126,000 uninsured, mostly at lower incomes.

Work to Date: Policy

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Populations Served

How Best to Serve Individuals

How Best to Serve Small Businesses

Work to Date: Operations

Detailed workplan for operationalizing RI’s Exchange by 2014

Business requirements

Business process designfocused on efficiencies across agencies, improved consumer experience

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Work to Date: Technology

Translating business requirements into technical requirements

Technology “Gap Analysis”

New England Collaborative – Innovator grant

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