Transcripts For CSPAN3 Discussion Focuses On The Individual Health Insurance Market 20170509

This briefing is part of a series on the future of Health Insurance and we will actually be doing three summits on the future of health care this year starting with the future of Health Insurance, chronic care, and the excited that youre here and its certainly i think fair to say that when it comes to Health Insurance the future starts here and now in the senate. We have a lot to talk about today but before we do i want to thank our sponsors for todays session, our annual Summit Series sponsors are an thumb, ascension and health is primary and i would like to thank them, also the Blue Cross Blue Shield association, cvs health and other sponsors for their generous support. I would like to point out one of our Board Members who is here with us today, one of our new Board Members is me go murray from the association of Community Plans so inks that for being here. We will hear a couple brief words. First i would like to introduce sean martin, Senior Vice President for advocacy, and policy at the American Academy of Family Physicians here to say a few words on behalf of health is primary. Shawn. Thank you very much. Congratulations on securing the friday after a Health Reform vote for this discussion. That was excellent leadership. My name is shawn martin im with the American Academy of Family Physicians but im here on behalf of health is primary. About three years ago the academy and seven other Family Medicine organizations launched a campaign called health is primary to draw attention to the value of primary and Preventive Care in our healthcare system. There is a lot of debate taking place in washington, d. C. Right now, clearly, but one thing that we know is that investments in primary care and prevention actually pay longterm dividends. I would point out a recent study done by Portland State university found in that state for every dollar invested in prime err a and Preventive Care produced 13 upstream to the Healthcare Systems in the date of oregon. The health is primary is pleased to sponsor this event today. Congratulations on your timing again and we look forward to a really good discussion. Great. Thanks, shawn. Now id like to introduce mark hayes, Senior Vice President of policy and advocacy at ascension for a few words. Good morning. We are glad to be a sponsor of this session, very timely today. If you dont know about us already ascension is the Largest Nonprofit Health System in the United States and the largest catholic system in the world. We are committed to achieving 100 access and 100 coverage and this session is so timely as all eyes move to the senate to work the very hard work to strengthen and stabilize the individual market in particular ensure that health plans can participate and have a vibrant competitive market where there is Affordable Access to coverage and also to preserve the coverage that we have under current law. So we are looking forward to this session today, we thank you all for being here and thank you all for being here very much. So have at it. Thank you, mark. Freight. So now we get to the substance. And let me just set a little bit of context for todays conversation. You know, clearly in the wake of the pass the house pass annual of the Affordable Healthcare Act yesterday there are a lot of questions about what happens next and there are going to be a lot of questions certainly about the politics and the process and were going to leave those questions to others. Were really going to focus on the policy and the policy details because as this conversation moves to the senate and beyond this is going to be the policy details are of course going to be critically important. Secondly were going to focus today on the individual Health Insurance market because there are immediate questions about what happens next in this marketplace. We know that Health Insurers today, you know, this week, this month are making decisions about whether to participate in the market in 2018. They are looking to 2019 and beyond and there are potentially significant impacts on patients, on families, on the Health System as a whole and on the market. So we have a fantastic panel today and without further adieu im going to introduce them. Karen pollitz to my left is a senior fellow at the Kaiser Family foundation where she works on the program for the study of Health Reform and private Health Insurance and she tracks implementation of Health Reform with a focus on the Consumer Protections in the system. Next deep banerjee is a director with S P Global Financial Services Ratings Group which covers a portfolio of publicly traded and private Insurance Companies and he will tell us more about the market impacts. Next cori uccello is an actuary and Senior Health fellow at the American Academy of actuaries and this he provide nonpartisan Technical Assistance to federal and state policymakers and regulators. Finally and certainly last but not least brian webb is assistant director for Health Policy and legislation for the National Association of Insurance Commissioners which represents insurance regulators in all 50 states, the district of columbia and five u. S. Territories. So without further adieu were going to turn it over to karen for an overview and lets go. Thank you, karen. Thanks, sarah. Hi, everyone. I would echo the remarks that this has to be the most Timely Alliance event that i have ever participated in and probably the most aptly named. The individual Health Insurance market is indeed at a crossroads and the signs are not yet clear where its going next. So my job today is to remind you where this market has been and the change in direction it took to get where it is today and then tee up discussion with my esteemed colleagues on the panel about issues raising questions about where it could go in the future. Just as a reminder, the individual market this is the smallest part of our Health Coverage system. Only about 8 of nonelderly people get their coverage through the individual market today, most of us are covered either at work . Jobbased plans or through public programs. Mostly medicaid, chip and medicare for some disabled under 65. The individual market is largely a transitional market and a residual market, its where people go when they dont qualify for these other sources of coverage. A lot of people kind of move through this market, they may be here for a year or two while theyre between jobs or while they are working in a job that doesnt offer Health Benefits or while they are just coming off or getting ready to get on a public program. About a third of people in this market live mere all the time, that would be the selfemployed and Small Business owners who dont sponsor a group health plan. So those thats about a third of the market give or take. Those are people who really this is where they get their coverage and they dont really belong in any of the other places. So its a small market but its kind of the tail that wags the dog in our Health Coverage system. Over a threeyear period as many as one in four adults needs to get coverage in this market, at least temporarily, and before the market reforms in 2014 it was often very hard to do this. But since new market rules and subsidies the market enrollment in this market has grown, its right in the neighborhood of 20 Million People now. About twothirds of them buy their coverage through the marketplaces, set up under the Affordable Care act, about 20 are buying acacompliant plans that follow the new market rules off marketplace either because they are not eligible for subsidies or they dont know that theyre eligible for subsidies, and then we estimate about 12 are enrolled in noncompliant plans in the individual market. These are the grandfathered plans that didnt have to conform and the socalled grand motored plans, the transitional plans that people had just as the market reforms came in place in 2014 and they were allowed to keep them temporarily. It is fair to say that this market was entirely transformed by the aca. Before 2014 this was a voluntary market. Now we have an individual mandate, there is a radio irmt to buy coverage and if you dont qualify in those other places you are supposed to come here to get it. Before 2014 this was mostly an unsubsidized market, few tax credits for the selfemployed but basically people paid 100 of the premium with their own after taxed dollars. Now its a heavily subsidized market at least if you qualify for subsidies in the marketplace, premium subsidies up to four times of Poverty Level also help with cost sharing your deductibles and copays up to incomes up to two and a half times the Poverty Level and those two features before the marketplace the fact that it was voluntary and unsubsidized meant that smoor remembers were exceedingly nervous about adverse selection. They were worried that in order to part with those, you know, high dollars to buy premiums that people would make decisions based on whether they expected to need to use their Health Insurance in the coming here and that they were more inclined to sit out if they didnt. Insurers always worry about adverse selection, there is kind of a rule of thumb about human beings that 20 of us in any given year account for 80 of all healthcare spending. So were mostly healthy most of the time, but when we get sick or have a complicated pregnancy then our claims can get really high. Thats what insurance is supposed to do, its supposed to pool risk but it cant do that if people stay out when theyre health kwlee and only want to buy coverage when theyre sick. Before the aca as a result the individual market was medically underwritten, people would at application would be turned down or charged more or have their preexisting condition excluded. So your ability to buy coverage and to buy affordable coverage was entirely dependent on your Health Status. Now, of course, thats not allowed under the aca in return for making this market mandatory and subsidizing it insurers are required to take everybody and charge them basically the same rate. This market there were benefits were highly variable in this market, in particular it was unusual to see policies that covered Maternity Care unless state law required it, we often saw limits or the absence of coverage for other benefits like mental health, Substance Abuse treatment, rehab, prescription drugs. The definition of Health Insurance under federal law before the aca was anything a Health Insurance company sells. With the aca essential Health Benefits standards were added and also limits on cost sharing so those were done to kind of make coverage meaningful, but also just definitional. If were going to require that people have something and were going to subsidize it we want to know what it is, so now now Health Insurance in the individual market has to be Major Medical coverage. It was inefficient before, loss ratios were low, that thats the amount of premium dollar that insurers spend on benefits, they were writing, i dont know, 60 , 70 before the individual market, now they have to be at least 80 or else insurers have to give people a rebate the following year. Havent had any trouble hitting that 80 mlr. I will talk about that in a minute. So this market i think has been entirely transformed. And that transition was difficult. I think challenging anyway for Insurance Companies. They really had to adapt an entirely new Business Model and when the new individual market and marketplaces opened in 2014 insurers were offering products that they hadnt necessarily offered before, they were selling them to a public that they werent used to covering, they had new competition by plans that they hadnt competed with before. Actuaries cori will tell you they like to do their estimates based on experience and they just didnt have any experience with this new market. So we saw a lot of volatility in pricing in the early years and a lot of insurers really underpriced their policies in the first year in particular, the premiums came in way lower than anybody expected. Sometimes that was just kind of a calculation error, other carriers i think were pricing very aggressively hoping to kind of, you know, tie up new market share early on. But so insurers have had to get used to that and that has has been tricky. There were other things during the implementation. It is fair to say that the early years of implementation did not run like clockwork. So lots of things didnt work out as expected. There were risk stabilization programs, i will let me colleagues talk about those a little bit more, but they were meant to kind of cushion these mistakes in estimating and cushion losses in the marketplace. They didnt operate the way that folks expected. There was, i think, ongoing concern and still is the mandate Strong Enough and are the subsidies high enough to to kind of cure this adverse selecti selection. About, i dont know, 70 or more of people who are uninsured claim an exemption from the mandate because coverage isnt affordable. The subsidies are on a sliding scale up to four times the Poverty Level but at two and a half times they kind of run out. So thats been an issue. Then, you know, the website didnt work in 2014, there were a lot of things. And then there were also things, i think, you neek in individual market areas that fueled the volatility and made it harder for insurers to work. This is a map that youve probably seen on our website that just shows the number of Insurance Companies participating in the marketplace by county in the United States. The orange areas are areas where there is just one Insurance Company selling, the blue areas are two and the gray areas there are three or more Insurance Companies competing in the marketplace. Lots of reasons why the orange areas are the way they are, but two in particular when you look at the all orange states, and a and so forth, alabama, those are those are all states, number one, that have high concentration of rural areas. It is low population. It is hard for multiple Insurance Companies to compete when there arent very many people buying in the first place, and theyre also areas in states that did not elect the Medicaid Expansion. It turns out in one of our papers in your packet talks about risk source of Market Participants by states. The Health Status tends to be lower and the risk score higher in areas that havent expanded medicaid, you know, poverty turns out to be correlated with Health Problems and theres also a lot of enrollment volatility at low income levels as income changes and so eligibility for subsidies changed. Thats a common theme. Theres other areas where other stuff is going on. Tennessee which is almost orange has sort of an interesting thing going on that works against stability in the marketplace. Theres an Organization Called the farm bureau which is not a licensed Health Insurer and so it doesnt have to follow the market rule but they sell Health Coverage. So they get to cherry pick the other insurers in the marketplace. And then iowa, which mostly now is gray and blue but that may go orange or will need a new color for zero, is a state that has a very high concentration of noncompliant plans. About half of the people in the individual market in iowa are in the grandfathered or grandmothered plans. So insurers selling in that market are cannibalizing their own risk pool and that leads to problems as well. But elsewhere you do see a loot of insurer participation and about 57 of people who participate in the marketplace are in an area where there are three or more companies participating. And i think thats a sign that at least in a lot of areas the marketplace is stabilizing. Actually, i should point out this is what the market looks like today. This all reflect insurer decisions made last summer, okay, before the election, before all of the stuff that were doing now. This was just sort of based on how are they doing with all of this other kind of, you know, problems going on with implementation. But i think insurers are getting the hang of it. Their mlr data show their margins are coming back up and, you know, we probably arent in a death spiral. Im going to let our panelists talk about that some more. Some that leads us to where we are now. Since the election theres a new kind of political x factor that is causing a lot of uncertainty in the marketplace. In particular, insurers are really worried about whether the cost sharing subsidies are going to continue to be paid. If not, theyre on the hook for providing the subsidies but they dont get reimbursed by the government. These cost between 7 and 10 billion a year and insurers have said one has said they will leave the marketplace all together if these payments stop or arent guaranteed for 2018. Other insurers now i think are filing kind of two sets of rates for 2018. One if these payments get made and one if they dont, but also talking about leaving the marketplace all together. The individual mandate is still kind of a question mark. The First Executive order by the president on health care was lets look for ways to not enforce any kind of you know, burdens on people or companies. The secretary has Broad Authority to grant exemptions, just hardship exemptions to the individual mandate. So theres some concern about what will happen there absent the mandate with keeping Everything Else in place, cbo has said that alone will cause premiums to go up 15 , 20 . And then just kind of the future of outreach. How will the next open enrollment work . The new administration also came in and cancelled the final week of kind of outreach activities during open enrollment four. They have since announced the next open enrollment is going to be half as long as we thought it was going to be, so that raises and just questions about how active will the outreach be given that, you know, obamacare is horrible and a mess and is that going to be kind of an effective selling job to get people to sign up for 2014. And then, of course, weve got what is going on the hill. The house bill passed yesterday makes a lot of changes to the marketplace, and i think it raises real questions about how it could operate Going Forward and how or whether insurers will want to participate. The house bill does make this a mandatory market again, repeals the individual mandate, actually retroactive to last year. It keeps in place the market rules and the essential Health Benefits, but it reduces the subsidy substantially and it keeps in place the Medicaid Expansion but substantially reduces federal matching money for that population and, in fact, the entire medicaid program. So this kind of adverse selection factor is back again, and i think insurers are worried about that. Changes were added to the bill over the course of amendments to try to offset that, including flexibility for states to elect to waive the essential ben filths and also to waive community rating, to actually ease up on one of those market rules so that insurers would have the ability to screen out of the pool some of the most expensive people. And then in addition, this fund for states, the 100 billion fund that is available for a lot of purposes to offset some of the other changes in the bill, states could use that for the cost sharing subsidies to replace some or all of those that were repealed. They could use it for reinsurance which worked pretty well in the first year of the aca. They could use it for high risk pools, for a lot of different purposes. So we dont know yet if this is going to be enacted or a different version of this, but i think it is pretty clear something does get enacted insurers are going to have to start over again, new learning curve, figuring out how to compete in a new market under these new provisions and what that will mean for the cost of coverage and who can participate and what will happen to people when theyre sick. I guess we will find out. So im going to leave it there. Thank you so much. Hi, good afternoon. Good afternoon. Yesterday when i was leaving home to fly to d. C. My wife said, be careful, and thats when i realized shes been watching cspan all day. So if you are still watching, im fine, honey. So im going to continue a little bit what karen talked about, focus on the individual market in its current form, how it is, and perhaps with questions we can talk a little bit about the longer future, but we also have a new forecast which is more immediate and well talk about that a little bit. If you see me leading into the giant clock with my time on it, thats why im leaning in sometimes. Similar to karens talk, you know, 2014, the way we think about is it year one. Obviously aca was passed in 2010, but more of the things that we see that can be part of the individual market today came into effect in 2014 including the exchanges. So we consider that to be year one. Year was was pretty bad for insurers, excludeing just a few handful, everybody made losses that year in the individual segment of the business. 2015 actually got worse, and that was a little alarming. We expected maybe an improvement but it wasnt. So a good reason for it though, because Insurance Companies put in their price well in advance of the year theyre supposed to market their products. So although they had a feeling that 2014 probably wasnt going as well as expected they just didnt have enough time to make the corrections they needed to. So 2015 got worse. Also another big thing that happened in 2015 was the news that the one of the three rs you know, there are three rs set up in the aca that were considered to be premium stabilization forces, one of them, the risk corridor, wasnt going to be funded. They found that out after the fact, and that also didnt help. But then came 2016 and we focused on that quite a bit, because the question was if 16, there they had a little more time to correct, to make some changes to pricing and product, if 16 was actually worse then perhaps this wasnt a manageable market. Now, the data shows that 16 was actually better than 15. What youre seeing on this slide is what is commonly referred to as medical loss ratios or mlrs. Now, mlrs are part of aca, part of the law, but well before aca mlrs are a number or ratio we used to look at as analysts to understand how a company is doing. So if you look at the individual market mlr, 2014 was 97. 5 . What does that mean . That means for every dollar in premiums that came in the door they had to pay out 97 cents or 98 cents as claims, so that went out the door. 2015 was worse. 102. 3 , that means they actually paid out more than a dollar of premiums that came in the door. And then 2016 shows kind of a marked improvement. The reason we put in the group market mlrs next to it is to give you a benchmark. If you see the group market mlrs are far better, but more importantly far stable, which goes to the point that the individual market today isnt as stable as it should as the Insurance Companies probably would like it to be. It may not come to the same level of profitability as the group market but probably could come to amount of stability in the future. This slide is showing growth margins. It is simply the metrics we look at. If you take the mlr and turn it on its head you get Gross Margins. Similar thing that i talked about before, you see 2015 was worse, negative 2 margin and 2016 gets better. The one thing i want to point out here is gross margin is before any administrative costs that the Insurance Companies have. So this is purely premiums minus medical claims. If you tack on to these numbers admin costs you will realize that the Insurance Companies made on average an underwriting loss for all of these years actually. The Gross Margins are obviously much higher, even if you take on the admin costs they still would have made a profit. So lets talk about the future a little bit. So im going to talk about two kinds of forecasts. One is business as usual. What we mean by that is everything stays with obviously some changes but no big overhaul to the rules of the marketplace. If thats the case, what do we expect . Well, we expect 2017 to be a year when more Insurance Companies get to break even margin. So break even, zero percent, no loss, break even margin. And then continued improvement in 2018 where they get through small, single digit margins in this line of business. It is still a very fragile market and it needs time to stabilize, but probably the more important discussion is business unusual or business interrupted forecast. Todays obviously a lot of pricing and insurer participation issues in the marketplace today going into 2018. One of the biggest things that we look at is the csr, which there is some uncertainty about the future funding of that. The reason the csr is important, it is not because it is a dollar amount that goes towards it, but more importantly it is paid to the Insurance Companies after the fact. So the Insurance Company on day one accepts members who are csr eligible and starts paying out claims based on the fact they will receive a csr. They only receive the federal government funding for the csr later on. So Insurance Companies dont want to be in a situation where they find out six months into the year, hey, guess what, you dont get that money anymore. So what we expect to happen are two options available to Insurance Companies. One, they would price what we are calling an uncertainty buffer. So lets say they were expecting to price high single digit premium increases for next year, they will probably tack on a little bit of the uncertainty buffer because they dont know what is going to happen. They can lower the silver plan with the csr that theyre not going to get, so you will see the silver plan premiums go up. The second option, which is probably a little more drastic, is they get more selective about participating. If theres created an amount of uncertainty they could decide to pull out of certain counties or certain states. The third one, which is probably important to mention too, that the marketplace has set of rules. It is kind of, you know, change if the rules are changed after youre already playing the game, it becomes harder to adjust. Rules like the individual mandate or the special enrollment periods, enforcement of that will be critical for the future stabilization of the marketplace, and programs we will talk about aca later on when questions come up. Thank you. Thank you so much. And let me turn it over to corey utillo. I would first like all right. First i would like to thank sara and the alliance for inviting me to anticipate today. As others pointed out, we are in a different situation today than maybe we were a couple of days ago, but im going to still focus my remarks at a fairly general level and discuss the kind of actions that are needed to improve the stability and sustainability of the individual market. Before getting to those potential improvements, i think it is important for us to know what the goals are. First i will talk about what is necessary in order to have a stable and sustainable market. First, we need enrollment levels that are high enough to reduce random fluctuations and a balanced risk pool. In other words we need enough Healthy People so we can spread the cost of the highcost people over a broader pool. Second, we need a stable Regulatory Environment that facilitates fair competition, and that includes not only a level Playing Field but also consistent rules that are known in advance. Third, we need enough insurers participating to have insurer competition and consumer choice. As karen mentioned, the correct the optimal number of insurers probably varies by area. Last but not least, because most premiums go toward paying medical claims it is important not to overlook the need for continuing to control Health Care Spending and improve quality of cave. So how is the market doing compared to these criteria . Well, the aca dramatically reduced uninsured rates and participation and enrollment in the individual market increased. Nevertheless, in general enrollment in the individual market was lower than initially expected and the risk pool was less healthy than expected. In the market competing rule generally face the same rule so theres pretty much a level Playing Field. But the uncertain and changing legislative and Regulatory Environment have contributed to adverse experience among insurers. So this has led to a decrease in the number of participating insurers both in 2016 and 2017, and theres an indication there will be a further reduction of insurers in 2018. Continued uncertainty could lead to more insurer withdrawals, leaving consumers with fewer plan choices or potentially none at all. As deep alluded to, insurer experience has stabilized but the market itself is still fragile. So this leads me to the actions that should be taken to improve the market. I feel like im piling on here, but first and foremost is the need to fund the cautionary reductions. Not paying for these reductions or even uncertainty about whether they will be funded could lead to higher premiums. As karen said, the Kaiser Family foundation has estimated that on average not paying for those csrs could result in premium increases of nearly 20 . Thats on top of the premium increases that will already occur due to medical inflation and other factors. Second, the individual mandate needs to be enforced. The mandate is intended to increase enrollment and encourage even Healthy People to enroll, and thats what is needed for a balanced risk pool. As karen mention, the mandate itself is already fairly weak because the financial penalty is low, many people are exempt from the penalty and enforcement itself is weak. But further weakening it would make it less effective and would lead to higher premiums. Strengthening it could improve the risk profile and downward pressure on premiums. Enforcement itself isnt enough. I think theres a lot of people out there who dont even realize the mandate is still in play, and so it also needs to be publicized in order to be effective alternatives to the mandate are being explored such as continuous coverage requirements that were in the housepassed bill. But it is difficult to structure those kind of mechanisms so that they encourage Healthy People to enroll sooner rather than later while still providing protections to people with preexisting conditions. So if the mandate is the stick to encourage enrollment, premium subsidies are the carrots. More external funding in the form of higher premium subsidies or funding that will offset the cost of highcost enrollees such as through highrisk pools or these invisible highrisk pools or reInsurance Company help improve the pool. It is important to know that there are many we use the word highrisk pools a lot, but there are actually several different ways highrisk pools can be structured. In your packets theres a paper from the academy that talks about the different ways that that could be done. Like i said, they could be done in terms of the traditional highrisk pools that were in place prior to the aca. They could be invisible risk pools so that the person enrolling in the private market stays in that plan but their claims are paid through this external funding and that could be their eligibility for those risk pools could be based on having certain conditions or having spending that exceeds a particular threshold. Finally, it is important to not only take actions to improve the market but also avoid actions that could make things worse. So, for instance, allowing the sales of insurance across state lines or expanding the availability of Association Health plans could actually lead to market fragmentation and higher premiums. So with that i will turn things over to brian. Thank you very much. I agree with all of them. It is good to go last, i dont have to speak quite as much. What i want to focus on today is just we talk so much when were out here in washington d. C. Very broadly, very nation lal, aallye hear things like it is collapsing everywhere, it is terrible, everybody is going to lose their insurance or people say, hey, everything is fine, no problems, dont change a thing. The reality is that it depends on where you are. There are some areas in the country in some states where it is collapsing. There are many areas where things are going pretty good, little small changes will be fine. Thats why i strong lly encoura everybody here as we move forward talk to your state regulator. Find out what actually is going on in your state. Where are the carriers, what are the prices, the issues going on in your state, and work with them to try to figure out how you can solve it for your state. The reality is that you look at one state, you see one state. Every one of them is different, the markets are different, the Regulatory Environment is different, provision of care is different, demographics are different, it goes down the line, and you have to work at a state level to figure out how can the federal government promote better state solutions to solve a lot of these problems. As you talk to your state regulators you should ask, are carriers pulling out of the exchanges. Oar as weve seen in some states, are they pulling out of the individual market all together, inside and outside . Is it just in some areas . How do we adegrees it dress it areas or is it the whole state, and why is this happening and what can be done to solve it . Are there fewer options on the exchange, meaning just hmos, Narrow Network hmos or are there broader, Better Options available . Again, if it is just very Narrow Networks, only hmos, how can we solve that problem . Where are the premiums . Are they stabilizing as they are in some areas or are they very volatile and likely to see, again, major increases in 2018 . Our commission is being eliminate willed. This is something we are seeing in a lot of states where the carriers are not paying any commissions in the individual market. Some just on the exchange, some inside and outside. Now, why is that a big deal . Well, Health Insurance can be complicated for people. I would liken it to, if im just filing a 1040 ez, very little income, i can probably do it by myself. But if i have a lot of issues and a lot of investments and things like that, then i better talk to somebody that knows what theyre doing. Same on health. If im not expect to use a lot of health, yeah, okay, i can just pick a plan. If i have health needs with prescription drugs and things like that, you should talk to an agent. If theyre not getting compensated that could be a problem. Lower uninsured rates. Where is the lower uninsured rate in your state . Just about everywhere it has gone down, which is a good thing. People with preexisting condition and things like that are getting coverage. But can we continue to make better inroads there . How do we get the rest of the people insured and in the marketplace . And then access to vulnerable populations, again, thats a good thing. How do we make sure that continues even if there are changes . So talk to your state. Whats going on . Now, as we look at just insurance in general and what has been going on over the last few years, it comes down to the biggest problem we have right now is uncertainty. Insurance, like everybody at this table would agree, insurance hates uncertainty. You will pull out of a market, you will do that if theres uncertainty, and right now theres still a tremendous amount of uncertainty. So the question for us is as now the senate moves on its efforts, how can they bring more certainty into this marketplace . Weve seen unsustainable cost growth. Can we address that . Maybe not easily, but can we start addressing that in the long term . Unstable risk pool, how do we get the younger, healthier people into the marketplace and not just waiting until they get sick . How can we stabilize this marketplace or can we use reinsurance or highrisk pool invisible otherwise to try to stabilize a risk pool thats relatively unhealthy . Unreliable funding. Everybody has said it, im going to say it, csrs, cost sharing reduction payments must be assured for 2018, 2019 or were going to see a system that will continue to deteriorate. This also goes for other, any kind of other funding, anything else you come up with, do not just say, hey, every year we may or may not appropriate this. That is not a good, reliable funding source. Think about that as youre thinking about this because remember, carriers are figuring out their rates, figuring out whether they participate well before any appropriations or any other kind of decisions are made at the federal government. They need to know the answer. And then the uncertain Regulatory Environment. States and federal government have to Work Together better. Were working on that. Were working with the trump administration. You have seen the market stabilization regulation. We expect other ones that well keep working with them on, maybe not full regulations but just how can we better regulate so carriers get a single answer that they know what the answer is going to be. We need to keep working on all of these things. Again, talk to your insurance commissioner about that. What are they doing . What can be done at the federal level to make sure these underlying issues are addressed as we move forward. That leads us to what is next. You know what is next. Next is legislation. Whats the senate going to do and when . I will make the pitch right now. If this is going to go into hearings and months and months and months of discussions, can i strongly encourage you to take care of csrs right away . And if youre going to do any kind of reinsurance or anything like that, highrisk pools or any kind of funding like that, do that right away. We need to move on those to stabilize 2018 as soon as possible. Regulations well work on, waivers. States are working on waivers to see if they can get some of these issues because, again, very much state specific solutions we need to work on. And were still watching lawsuits, not just lawsuits like house v. Price which deals with csrs, but some of the risk corridor lawsuits as well. Where do those go . Can that bring some funding back in . Really it is that top one. Thats happening now. Will carriers participate in 2018 . They are making a decision when . Now. What areas of the state will they participate in . Will they be on the exchange or just off the exchange . Will they pull out of the individual market spgs together . Youve seen the news. Youve seen aetna make some highlevel decisions. Anybody from virginia . Anybody have aetna . You see people like melina who has been an expanding Insurance Company say, hey, if i dont have insurance on csrs i may pull out of the thing all together. The decisions are being made now and the rate and forms are being filed in may, june, midjuly. July 17th the last date. Decisions have to be made by then or else the companies are going to Start Building in what we call loads, and it is just adding more rate increases just to kind of hedge their bets, if they stay in at all. Thats what were facing. We are facing a timing issue. We are facing uncertainty, and none of that is good right now for what is going to happen in 2018, 2019. We encourage you, talk to your state regulators, figure out what is necessary for your state and lets get moving as quick as we can to try to resolve some of these issues. Call me any time. Thank you. Thank you all for your presentation. So im going to kick it off with a few questions for the panel and then we will open it up to audience q a. So let me lets start with this issue of uncertainty because it is something all of you have mentioned and all of you have mention it in some form or another brian, you just used the word a load, you know. Deep used the term uncertainty buffer. Corey, i think you just said it most plainly, you know, premiums will go up with uncertainty, and actuaries will price for uncertainty. So let me kick it off with maybe a little provocative question. Like on the csrs, we knew that this lawsuit was in effect, you know, the house v. Price previously, house v. Burwell. Are we in a situation where, you know, insurers what would have happened if they priced for that uncertainty back then . I mean how much can we expect actuaries, insurers to price for this kind of future uncertainty and, you know, i dont know if any of you want to kick that off and then maybe tie that into, you know, if there is then continuing uncertainty as to whether high risk pools will be funded or not or what a Stabilization Fund will look like, you know, only those things subject to appropriation. People on the csrs have raised serious constitutional questions. How does it play out . I can start off, sarah. Here are some numbers. If you look at the 2017 premium hike that went into the marketplace, it was pretty significant. On average it was somewhere between 20 to 25 . We look at that and we considered that to be a correction, not something that would continue forever every year but more of a pricing correction that needed to be made because premiums were lower than the risk in the marketplace. However, and so we expected for 2018 if you look forward, yes, premiums go up every year, thats kind of almost a fact of insurance because cost goes up every year, inflation, cost goes up every year. So we expect the premium increases to be high single digit to low teens, kind of that would be where the premiums would go up. Well below where it was in 2017. However, if the csr is not involved and Insurance Companies want to participate and add in a buffer or load, that number could again take us back to the rates we have seen in 2017. You are looking at 20 or higher rate increases again. So obviously pretty significant. Now, what happens when premiums go up . Thats also a critical question. For someone who receives a subsidy, we have seen that in 17 because how the subsidies work today in the aca, the impact is almost negligible because the subsidy based on the income obviously is linked to the actual price of the plan, the second cheapest single plan. If the plan goes up 20 , your subsidies should align with that as well. So the brand wont be felt by on exchange subsidized relief, but it will be felt by the off exchange nonsubsidized enrollees. They have to pay Sticker Price. They dont get a skounlt. We would expect that the marketplace would probably not decline significantly because of a premium height in 18, but the off Exchange Market would probably decline because of the impact of two years of continuous 20 plus premium hikes. I would just add that whaethr and now an insurer can incorporate this uncertainty into their 2018 premiums, some depends on the state regulation. I mean some states are requiring insurers to submit two sets of rates. So one assuming the csrs are paying and one not, but others are requiring only rates i assume that will be paid. I think when we talk about adding in this buffer, i think it is pretty hard to add in a buffer of 20 when a risk margin is much, much lower than that. So i think it is a pretty difficult thing to do. So thats when you Start Companies i think are starting to think, well, do we even want to participate at all. And your regulators are talking to the carriers, trying to figure out if theyre going to stay in. This is one of the biggest issues that they raise. Pennsylvania was told by one carrier it would be 15 to 20 , but then, of course, the regulator says, i dont know. I dont know if im going to be alk able to allow that or justify that, just because it is i dont know. Your rates have to be according to what you actually will have or expect to have. There are a couple of states, just a couple that are getting two sets of rates. Most states are saying just give it to me, assuming csrs are going to be paid but if it looks like that changes we will have you resubmit those rates. Even after theyve been submitted, we will have you change them before we do a final. Which is going to create, again, whats the word . Uncertainty about what people will see the next year. Again, until they sign that dotted line and say im going to participate, which, you know, thats in september, we could not know all the way into summer into early fall who is in or out next year. The more this isnt resolved the more we wont know. Let me ask a question to see if we can follow the bread crumbs a little bit. Lets play this out. Premiums go up in any given scenario. If premiums going up, if youre subsidized, deep, as you said, under the current subsidy structure that maybe doesnt affect you so much. Of course, it would affect the federal budget, right . If youre unsubsidized, how does that play into how does that affordability factor play into adverse selection and the health of the market . Yeah, i mean for sure the offexchanges where probably more of the risk is if premiums keep going up 20 or plus, because then someone buying that product who right now is paying Sticker Price and probably needs it, youre going to probably see that market shrink a little bit so it will be left to the individual to really lead insurance. Im not eligible for a subsidy and paying for it. It does increase in the offExchange Market quite a bit if theres continuous double digit or high double digit premium increases going on. And i think thats why the question about how strong is the mandate and how good are the subsidies, now adequate are the subsidies. It just becomes critical. So even for people who are subsidized i think, who are protected from the rate increase, they still are required to pay a 2 1 2 times poverty, youre required to pay more than 8 of your Household Income for the premium, and then that doesnt take into account you dont get any cost sharing subsidies at that level. That doesnt take into account what you would have to pay in aden addition out of pocket every time you go to the doctor because that hits your high deductible. This adverse selection problem is not geared for sure, and the more people have to pay out of pocket for insurance the tougher that decision is. You know, if it is going to cost me the average i think is about 300 bucks a month for a young person. Thats a car payment. So, you know, are they really going to part with 300 . Well, if theyre thinking about maybe starting family and having a baby, sure. If theyre not and they think theyre invisible and theyre not my kids, because they know better, then maybe they wont participate. The tougher that financial tradeoff decision that people make, the more insurers know adverse selection is going to be dragging the decision. So let me get to something, you know, karen, you alluded to the structure of the subsidies under the current Affordable Care act so tied to a percentage of income and tied to the premium on the exchange. So the American Health care act would, of course, change the way that the subsidies are structured to more of a flat tax credit based on age. So can anyone on the Panel Comment on, you know, what happens then . What is the impact if the structure of the subsidies you know, we could talk about levels but this is a very different structure in terms of consideration Going Forward. Yeah, sure. The two things that are happening with the aca we took into account when we analyzed the impact on enrollment as well as the Insurance Company earnings, one is the proposed structure is changing from linking the subsidy to the actual premium off the marketplace, to being a flat amount that you get based on the age. Also what is changing is the rate ban, and this is critical. Right now an Insurance Company can change the older person in their pool three times the price of the youngest person. We call it the threetoone premium band. The aca brings into effect or supposes a fivetoone rate band. So you can charge the oldest person five times the youngest person. If you take those together so theres the fooitoone rate band, and you remove the subsidy linked to the actual cost of the marketplace price, then you will see we expect that on the higher rage groups a declining enrollment because affordability will become a greater issue as you go older in your age group. It may have some positives on the younger side because it gives the Insurance Company flexibility to price a little lower for the younger population. One thing that was note willd os panel is that the mix is not great in terms of morbid so programs it will help. We expect a sharper decline on the older population, somewhat offset by the younger population, but net impact will be a decline in enrollment when you combine the way the tax credits will work with the aca and the rate ban. I want to add something to that. I have said this in front of this group before but i will say it again. It is important when we are talking about having a balance willed risk pool it is not just about young and old and getting young people into the pool. You want Healthy People of all ages to participate. If what deep suggests would happen is as the older adults would face higher premiums, well, the people who are more willing to pay those premiums are going to be the ones who think they need a lot of health care. So youre going to get more adverse selection among that age group, and that could actually worsen the risk profile of that pool. So it is Something Else to keep in mind when were it is not just about getting young folks into the pool and lower average premiums that way. What we really need to have for a healthy balanced risk pool is Healthy People of all ages. Sarah, if i can add one thing real quick. The other point to be made, and think karen talked about this also, although aca in the future is a federal law, insurance as brian pointed out is very very local. Every state is different. Even with aca which does a lot of standardization, if you go to ever market there are key differences in every market. Would be of the dekif differences charged in every market is significantly different. So what acs subsidy does is theyre still linking you to your local premium price, you can be any state in the country but receive effectively the same benefit. Aca is suppose willedly the standard premium support no matter where you live. So if youre in a state where premiums are higher, the value of the subsidy is lower to you than in your state where the premiums are lower. The disparity may increase because of this construct. Thats helpful. That leads to my question i want to ask brian, which is, you know, weve heard a lot in the hca but other legislation proposed about giving the states more flexibility, giving them more options to, for example, waive Community Ratings, to waive essential Health Benefits. Can you talk a little bit how states are looking at that right now and at those choices and what is the likely effect, if you can predict that . Thanks. I cannot. Basically what every state commissioner along with the state governor and legislature is looking at the market and trying to figure out how can i balance. Balance is the key. You want to protect consumers and make sure they get the coverage they need when they need it and get to doctors and all of that, but you also have to balance that with making it affordable, and also a marketplace where Insurance Companies actually want to participate. Thats why it is so difficult, especially when a lot of them are kind of National Standards, kind of just put down, and thats where the flexibility we think is necessary, is to be able to take those National Standards and say, okay, well, while that may work in that state or that area of my state, in this other area where it is more rural possibly or because of the mix of demographics or the structure of things, i need to be able to change things up a little bit so i can get actual carriers participating and i can get affordable coverage to people. Thats the balance thats going to have to be mailed at the state level. You know, while that can create some concern about the impact on certain populations or things, it is something if were going to make it actually work, it is a discussion that has to be made. Since you are involving state legislators and governors and some elected state regulators, the people will have a say in this but were trying to work with the insurance carriers, the consumer groups, the stakeholders, to try to figure out this is the way it is working now, not working, how can we make it better and that will require tweaking at the state level. Anyone else on the panel wants to comment on that, and then we will start to open it up to the audience for q a. I think i agree with brian, theres no way to know what states would do if they were given this new flexibility. But i think it is pretty likely that the Insurance Agency in most states would go to the capitol and lobby for these waivers, certainly the community waivers. Theyve been clear all along, i remember sitting on panel back in 2009 saying, you know, well do this guarantee Issue Community rating thing, but you have to have a strong mandate in there. We cannot do it in a voluntary market. We had experience in states that tried doing this in a voluntary market, new york, new jersey, vermont before the aca. It is just really hard to offer stable, affordable premiums even with some subsidy money on the table. It is hard to do that in the voluntary market. I think if they have to live in a voluntary market they will, they will go to their state capitals and saying have to give us relief on this rangt thing, and we have experience with that as well. In the 90s after the clinton Health Reform thing didnt work, congress enacted hipaa which did the privacy stuff we all remember but there was also a title that created portability rights into the individual market for some people who were leaving employer coverage, they lost their job, they retired or whatever. And under the federal rule, under the federal law those people could not be turned down, they couldnt have a preexisting condition imposed, but there was no limit on what they could be charged. The hipaa premiums were really high because insurers said, you cant make us do this. You just cant make us do this and waive underwriting for people because we know who is going to step up and who isnt. So the hipaa premiums were often three, four, five Times Standard rates. In denver i think there was 2,000 of standard rate that was filed for a hipaa policy. So it invites back i think the instant to have you know, to have the rules kind of uneven in that way. Just to follow up on that, you know, we have heard a lot about preexisting conditions and what is really going to happen to people with preexisting conditions if the rules under the aca change. So, you know, can you walk us a little bit through . You just talked a little bit about essentially a continue newity of coverage protection under hipaa, but then the interplay with the premium. What did the aca do and what happens under a potential change to that . And while youre answering that for folks who do have a question, there are mikes on that side of the room and that side of the room. It is a little crowded so i will give you a little time to get over there. There are also green cards in your folders if you would like to write a question down and waive, someone will come get it and hand it to me. Thanks. So preexisting conditions. Under the current law people still do fall in and out of coverage, but in the months when they are uninsure they owe a penalty until they qualify for an exemption. So the idea sl, you know, the longer you wait to get back into coverage, the more months of penalty you have to pay. We do i didnt bring my numbers but we do see millions of people every year owing that penalty when they file their tax return. We have seen millions more qualifying for an exemption, and thats because the subsidies are limited and once you owe more than roughly 8 of income for the lowest cost plan you can be exempt from the penalty. So the late enrollment penalties were talking about now i think even cbo has said those those are meant to kind of counter the adverse selection but they could kind of backfire, because now you dont pay the penalty until you reattach the coverage. So if youre healthy this year and, you know, i have to make my car payment so im going to stay out, fine. Then next year, oh, now i would owe even 30 more because of the late enrollment penalty but im still feeling pretty good and i dont expect to have a baby so im going to stay out another year, but i do expect to have a baby then i will pay the 30 because i have to get back in. Other wise i have to pay for the delivery out of pocket. So the late enrollment penalty, the timing is off and it actually rewards Healthy People for staying uninsured longer. So thats why i think we then got to this amendment that said, well, okay, then what if we only penalize them when they sign up when theyre sick and that gets to sort of where we are in the mcarthur amendment. Then that raises other issues about why is it that people experience a lapse in coverage . Are they just being irresponsible . Did they miss a payment . Did they lose a job so they didnt have income . A lot of things in life dislodge coverage also change peoples income and they cant afford to pick back up and resume coverage under some other way or they just cant move that fast. So i think there are millions of people who experience a gap in coverage in any given year and a lot of people who could then face this, you know, they penalties when they go to sign back up again, and if they have preexisting conditions it could be really tough to get back in. I want to make an observation about allowing a waiver, states to have a waiver that would allow underwriting if people dont have continuous coverage and then later signed up. I think a potential implication of that is actually getting rid of Community Ratings more broadly. Even for people who had continuous coverage. Because what could happen is if Healthy People who have continuous coverage, they could decide, wait a minute, i could go get underwritten and get a lower rate potentially. So who do you have left in this continuously covered pool is just the not Healthy People. Well, what is going to happen then . The premiums are going to go up to reflect the Health Status of that pool. So in effect then, unHealthy People are going to be paying high premiums regardless of whether they had continuous coverage. So thats just something to kind of keep in mind and why the details of these different kinds of provisions matter. Just one kind of question on this. You talk pool. Do you read it as saying they can actually take those people and put them in a separate pool or would they still be part of the single risk pool, which would be very different than hipaa . It is not clear. Yeah. Clarity would be excellent. Because under hipaa it was a problem because basically they were saying most states, just one single plan, thats the one you can buy, separate risk pool. Obviously everybody in there is sick. The only reason they would do it otherwise do cobra for a while and then get out or whatever. But if they are still in the single risk pool, that will ameliorate at least some of the problems. Obviously they can still rate at the actuarially found rating based on Health Status but they wouldnt be in a lone sick pool. How do you transfer the money between those plans . It becomes more difficult. The details of the risk Stabilization Funding matters. Let me get to niek and then we have a couple of questions on the card. Go ahead, sir. Im john gable from norc. So if we go back to the years before 2014, 2010 when we had medical underwriting, as i recall Insurance Companies would go into the medical claims files but also go into physicians offices maybe or go into hospitals, et cetera, to determine the Health Status of the applicant. So my question is for the panel. How much did that cost per case . It sounds expensive to me. It was expensive. I dont know if i could give you a dollar per case, but medical underwriting was very expensive. It involved at first just a questionnaire, right, that people would fill out and that was easy to screen. And if someone checked to, yes, i have diabetes, i have cancer, i have hiv, you were done. So that was inexpensive. But then if you had any other information and you always it was standard on these forms, you had to check a box that said, i grant the Insurance Company access to all medical records ever maintained on me anywhere. So if there was any reason to investigate you, they would pull the records. They would also subscribe to pharmacy claims databases. That was another kind of cheaper short cut. You can tell a lot about people just by the drugs theyve taken in the last year. But it could be a very involved process and it often took, you know, a month, six weeks to complete. I think with Online Medical claims it is likely that if medical underwriting were to return there would be Technology Advantages that would make it faster and cheaper, but it absolutely was an administrative expense insurers dont have to incur today. If i could add something on medical underwriting. So the size of the pool matters. If you look at the group market today, there are several reasons a stable market for Insurance Companies. One is scale and the second is maturity. If you sign up with your employer, you dont have to do a blood test. This is not new because it is a big enough pool that Insurance Companies are willing to not do medical underwriting on an individual person if it is a large group. The issue with the individual market is that neither has scale yet nor is it mature. So the reason medical underwriting could be something that insurers would like, especially the adverse selection, is because of those factors. The other way to think about it is if the market was to mature or if the market was to grow to a size that is considered a good scale, you may actually not need medical underwriting at the level that we are thinking about today. Heather foster with the association for Community Affiliated plans. I was wondering if the panel could talk a little bit about some of the potential consequences, including unintended consequences of the idea of having these agebased tax credits set out in the American Health care act and sort of you know, i have heard some talk of, well, maybe there would be a coppertype plan, a more catastrophic coverage and trying to structure benefit design around what could fit into that 2,000 to 4,000 range. And wondering if you can talk a little bit about what the impact of that would be . Would that actually be adequate coverage for people with chronic conditions, things like that . Im going to take your question and add a twist, which is for people in that, you know, older adult age range, what is the impact on medicare . Does anyone know . So go ahead and answer that question, and for those of you who i understand need to pack up, et cetera, please just fill out a blue evaluation if you do need to leave. Thanks. I mean there are all of the consequences of setting up a Health Insurance program because it is so complex. There are so many ends that need to be tied, but the issue at hand is without linking back the subsidy or the tax credit to the actual price of the marketplace, youre ethically hoping that the price matches up to the subsidy, thats it. Thats the best case scene aari. Unfortunately thats not how things work. The first consequence is it becomes an issue for individuals on the higher age band. The second thing is actually adverse selection. I think corey pointed out it is not just the young who are healthy, you can be older and healthy too. We just assume because we have to figure out a way to create a rate band that younger people are more healthy than older, but thats not the case. So you could have people not sign up even if theyre healthy even if theyre older because they can afford, so adverse selection is an issue as well. Hi. Emma blake. I work with representative byers office on the house side. Me question is about the costsharing reductions. Can you talk through if the funding is removed what the insurer thought process looks like . Like what is a compelling reason for insurers to stay in the marketplace markets . I have heard the possibility that the insurers might be able to sometime in the future sue the federal government to actually get those payments funded. Is that a possibility . Do you think theres a case there . Can you talk about what that looks like, you know, five, ten years down the road . I think weve learned with the aca theres always a possibility for a lawsuit. So i think the insurers the insurers are worried. As deep pointed out they provide the subsidy to enrollees now and get reimbursed later in the month for people enrolled. Insurers in the market now are worried and some have even talked about this was the melina announcement, you know, we get out now. We would find out 90day notice and be out by september or whenever as soon as the word comes down were not going to get reimbursed any longer. So, you know, they could price for the higher, but as was pointed out it is thats a pretty big buffer. So i think theyre wrestling with this now. The market has grown. You know, it is no, sir as big as we thought it was going to be but it is still 20 Million People. I think the insurers that are participating now have, you know, a history and intended to, you know, kind of have a presence in this market. So you can exit the marketplace and not the markets. The rule is if you leave the markets, right, in and out of the marketplace, you cant come back for five years. But you can kind of step across the line and sell policies outside of the marketplace, not in the market place. When youre occupant side of the marketplace youre not going to be liable for the csrs because those are only delivered in the marketplace, but youre also not going to have as many people. Think stepping out would sort of let them kind of maintain a presence without leaving, but they would really have to scale back on their revenue and on their enrollment. And then you do have insurers, not so much i think for this csrs but for other reasons, including what is going on in iowa, who is actually talking about getting out of the compliant markets all together, still keeping those grandmothered and grandfathered plans in place which i think are very profitable. But so i think thats what insurers are wrestling with right now, is how much do iwith. How much do i want to leave my option open to be in this market if it can stabilize. And how much am i not willing to risk this kind of immediate uncertainty and additional losses. David shulky. In our family were thinking about lifetime caps right now and the risk pools. So my son has cystic fibrosis. Hes extremely healthy for a kid with cystic fibrosis. Hes doing great. But he figures that in a very generous plan with a generous lifetime cap, he would have insurance for about six years and e he would be out there hunting for somebody, probably a high risk poll. The history of these pools seems to me that the funding are almost always underfunded. Im not hearing a lot of thoughtfulness in the mechanisms for funding the high risk pools that people, not just my son, would have to rely upon. What do we know about the best way to figure out funding for high risk pools and im not clear at all about whether states could be automatically by e default waved out of the cap regulations in the aca. Would it be automatic by defult as it says in the house bill, and what is the best arrangement for a risk pool. In answering that question, theres a question here about invisible high risk pools. If you use the word invisible high risk pool, can you also define what that is . Thanks. Ill just jump in and say hi to david. We Work Together up here a long time ago and our sons are the same age so i look forward to catching up. I remember when they were born. So the high risk pools, remember i said at the beginning, 20 of people account for 80 of spending in any given year. Some of us when were in that pool are in the expensive end for a little bit. Some with a lifetime condition are in there their whole lives. In the latter category, thats when you can run sbo a lifetime limit, and its not that hard. So either way, if youre going to take out of the pool and put into a separate risk pool, the high cost people in a government program, thats what a state high risk pool is, then the government has to have a lot of money to pay those claims. A lot of money. Not a couple billion dollars. Many billions of dollars every year if we were going to create that as a way. Taking the high costs out of the pool would take a lot of pressure off insurance premiums and they would come down. But you cant do it on the cheap. In 2011 when we had 35 state high risk pools, they were already spending combined more than a billion dollars a year to cover just over 200,000 people. So these are expensive folks. Everyone that you sign up, youre going to lose a lot of money on even if you make them pay significant premiums. The invisible high risk pool goes the other way and its reinsurance. I dont know who thought up, someone this maine, because it sounded better politically. But its the same thing. So instead of letting insurers move people out sbo a separate government program, everyone stays in the insurance pool, but you relieve pressure on the premium by saying to the insurers e instead of paying e those high cost claims with the premium revenue, send it over to the Reinsurance Program and well pay the high cost claim or a part of the claim, it depends on how it is designed. In the first year, 10 billion for one year was made available for reinsurance for the individual market insurers and that is credited with kind of saving about 10 on the premi s premiums. So in the next yore, the money went down and all of the high cost claims that got submitted to the reinsurance pool in the tirs year could be paid. In the next year when the money phased down to 6 billion, only half of the claims could be paid. Then for the final year, its down to 4 billion. So it takes a lot of billions every year to pay for this. And then the other way to do it to say you dont get to be in the pool. You dont get insurance. That makes premiums cheap r for those who stay in the pool, but it leaves the other families in a very difficult position. High risk pools, can they work, sure. But it hasnt worked very successfully. What has worked really well is the Reinsurance Program. So the Reinsurance Program for Insurance Companies paid out more than expected. Off the three rs part of aca, reinsurance was probably the most positive. But the point we made, and carol mentioned this, even data indicates with the positive Reinsurance Program, the impact on premiums was only 10 . I raise this point because if average premiums are 300, even with the best Reinsurance Program, lets say you copy what was there in aca and keep going with it, you only have a 10 benefit. The reason i say this is because everything is trying to fix how much premiums are and how much premiums are going up, but very little is going towards the fundamental cost of care. Premiums are two things. One, profits, Insurance Companies want to make profit. Majority of the premium that you pay represents the actual cost of claims. Actual cost of health care. So even with trying to figure out a way to keep premiums down, it will only go so far without looking at the actual cost of care. Let me ask a follow up. Someone asked this question specifically about maine. And the question is whether invisible high risk pools limit risk or exposure for insurers ask the questioner notes the main high risk pool caps the liability and i think the question is there a difference between exposure and risk. What does that mean in terms of the insurers risk exposure. Maybe you can touch on that wp. So i cant can im not as familiar with maines program, but i can speak to alaskas. So what happens in alaska, so they have an invisible risk pool. What happens is somebody is in the private market, and if during the year they have a claim that indicate cans they have o1 of 33 conditions, they are put sbo this invisible pool. So they stay in their plan, but they are in this segregated place. All the premiums for those people that they pay now go sbo this high risk pool funding. And then out of this pool, all the money to pay the claims is tr. And whether or not a a plan, ab insurer is off loading off its risk to the high risk pool really depends on how its structured. It can be structured where the insurer retains the people in that pool. It depends on whether for the uninsured the Reinsurance Program, the Reinsurance Program could cover 80 of the claims that exceed a certain level. So the insurer would still be on the hook for 20 of those high cost claims. So theres not one way to structure these programs. Its hard to give a yes or no answer to that. I would just add in iowa where were seeing a lot of change in whats going on, the federal Reinsurance Program didnt actually help that much. The federal reinsurance under the aca had an attachment point. Instead of conditions, it was when a a persons claim exceeded a 45,000, it got seated to the reinsurance pool, which paid it up to a cap, so there was also a cap of 250,000. If a claim was bigger than that, it went back to the Insurance Company and they had to pay the rest. In iowa theres one person who has been covered for a couple of years under a plan. Most of the people arent in compliant plans who had 18 million in claims in one year. So the federal government paid up to a quarter million and then it was back on well mart to pay this again. And they cant this year the person was expected to have 10 million in claims. I dont know what the condition is, but its really bad and really expensive. And to get away from that claim it if well mark just leaves the compliant market, they dont have to cover this person anymore. So reinsurance if it were designed differently might have kept wellmark in the market. If they brought more people into the pool, all those people out in the noncompliant plans are Healthy People because they could be rated up and find their way into the compliant pool. If it they could broader their pool and have it helping to contribute to that claim, that would help as well. It really the design details are very important. Lets go to brian, if if you wanted to jump in. Every state is going to deal with it differently. They want that flexibility. Some want to do the reinsurance, but different attachment points ask different coinsurance. Others. Want to do a high risk pool. A governmentrun program. I just want to add one more thing to this. There is private reinsurance. So companies could get private reinsurance to cover some of the costs their high class people. The problem is a reinsurer is also an insurer. They dont want to take on risks that they dont have to. So maybe if somebody comes in and have coverage and they have this multimillion dollar claim, the reinsurer could reimburse the insurer for that high cost. Problem is the next year that reinsurer is is not going to cover that person. They dont have guaranteed issue. They can pick out those people who they know are going to have high costs. So just wanted to kind of make that point that the private reInsurance Market can only help so much in these kinds of situations. So just to summarize, were talking about high cost claims being part of a broader pool and the challenges of getting healthier paying customers in that pool versus a different approach whereby theres some kind of a segregation of putting someone physically in a different high risk pool or paying claims differently through some kind of invisible high risk pool. Your question and then well wrap up, thanks. Molly smith with the American Hospital association. We talked about the size of the market and how important that is and the balance of risk. And yet if you lock at the individual market both on and off marketplace, its actually bigger than the Medicare Advantage enrollment and by just definition, the population is older. Now maybe they are the healthier of the medicare population, but they are presumably going to be older and probably sicker and have Higher Health care needs. So that is a market thats highly sought after. So what are some lessons and things you have talked about that apply in ma that e we should be thinking about bringing into the individual market and one factor that i would like to hear some comment on is the role of the states. Because one of the things we have heard up here is how much variation there is in performance somewhat or to a large extent based on policies that have states have adopted. Whether its allowing those to continue to keep healthy working population from the market. All of these things that state decisions are making and states have a very small role in oversight of the program and no role in setting policy. Im just curious if you can take some lessons and see if theres any application for the individual market. A lot of the things in aca have been borrowed. But if you go back, Medicare Advantage had some issues of its own too. Its a mature market now. The reason insurers like the market is its a a growing market. People are getting older and signing up for e Medicare Advantage quite frequently. The other reason, which is why these two markets are very different is how payment actually happens. So with e Medicare Advantage, the Insurance Companies get paid from the fellow government based on the risk of their member. And so risk is a big issue th e there. So the fellow government will tell you that this is how much im willing to pay for it and then you have to figure things out. So because the payment structure is very different, it doesnt work the same like the Risk Adjustment Program works in the individual market, which is a closed program, whereas the risk adjustment which is asking the fellow government to pay you for the risk youre taking is kind of an a open program. The fundamental structure is different. Its attractive because its a growing market. So let me let brian jump in and then well wrap up. They can very much choose where they want to operate. If they dont operate statewide, theres something called medicare. So they can find areas that are more profitable than which were trying to keep the private Insurance Market from doing that and have them go statewide in all areas. As far as state decisions, yes. State decisions will always impact not just ones you mentioned but policies to how providers are done and how practices are done and contracting is done and all of those will all have impacts and thats why sometimes it takes that balance at the state level. Officially out of time. Im sorry. E we could probably talk about this for days and days. The alliance, were here, well be. Back. Fill out your evaluation forms. Join me in thanking our panelists. [ applause ]