Feed: Affordability Study — Pathways to Lower Health Prices

Maine: Affordability Study

Upshot

Gov. Janet Mills (D) signed L.D. 1778 into law which requires the Office of Affordable Health Care to conduct a study on health care affordability. The study will consider possible reforms such as a public option, Medicaid buy-in, and subsidy programs. The results of the study will inform health reforms that the state legislature can pursue in 2023 and beyond.
The report is due by January 1, 2023 and will include recommendations to inform future policymaking.

Background

Maine transitioned to its own state-based Marketplace called Maine Health in 2021, which resulted in a ten percent increase in enrollment. Four carriers offered Marketplace plans in 2022 and 66,095 individuals enrolled during the 2022 open enrollment period. Premium rates have declined for the past three years, but there will be an average increase of 11.4 percent in 2023 for full price plans.

Summary

The legislation requires the Maine Office of Affordable Health Care to analyze barriers to affordable health care and coverage. The Office will then develop a report containing legislative proposals to improve health care affordability and coverage. The report is due to the state legislature by January 1, 2023.

The Office must consider the following policies:

Creating a public option health benefit plan;
Creating a Medicaid buy-in program;
Increasing income eligibility levels to expand enrollment in Medicaid and CHIP; and
Providing state-level subsidies to populations that do not qualify for federal subsidies through the Maine Health Insurance Marketplace.

For each potential policy reform, the Office must assess the affordability of premiums, cost-sharing in the individual and small groups health insurance markets, and enrollment in comprehensive health care coverage.

Illinois: Premium Misalignment Study

Upshot

·H.B. 836 was passed and enacted on May 26, 2022, and requires a study on possible misalignment between premiums and generosity of coverage for each metal tier in Illinois’s health insurance Marketplace. The study is due January 1, 2024 and would inform potential health reforms in 2024.
·The legislation is intended to address this misalignment between premiums and actuarial value that resulted from silver loading after federal cost sharing reduction payments were discontinued.

Background

Illinois runs a federally-facilitated Marketplace called Get Covered Illinois that covers over 320,000 individuals in 2022 – an 11 percent increase from 2021. In 2022, there are 11 insurers offering coverage.

This proposal aims to address misalignment in health care premiums that result from a practice called “silver loading,” which the sponsors note was adopted by many states when the federal government discontinued cost-sharing reduction payments. The practice is also called “cost sharing reduction uncertainty cost.” In brief, it allows issuers to increase their silver plan baseline premiums to make up the losses from the missing federal cost-sharing reduction payments. The increased baseline premiums are commonly offset by higher advanced premium tax credits, but members of the legislature are concerned that the changes to premiums mean that some Illinoisans are paying more than they should for low-value plans and less than they should for high value plans. In the bill, the legislature notes that the federal government discontinued cost-sharing reduction payments to issuers from the ACA which prompted Illinois, like most states, to begin silver loading.

Summary

HB 836 requires the Illinois Department of Insurance (IDOI) to study “possible misalignment” between premiums and actuarial value (or generosity) of coverage for each metal tier in the health insurance Marketplace. IDOI would determine if the approaches for setting premium rates across different metal tiers yield rates that are commensurate with their actuarial value. The study would consider best practices of other states to address metal-level premium misalignment and analyze the following:

The number of consumers in Illinois eligible for a premium subsidy under the ACA and the relative affordability of plans;
·The relation of the premium amount for silver plans compared to premiums charged for QHPs offering different levels of coverage, taking into account any funding or lack of funding for CSRs and covered benefits; and

Whether the issuer utilized the “induced demand factors” developed by CMS for risk adjustment, which reflect the anticipated induced demand associated with a plan's cost sharing (metal) level.

The analysis would inform the development of a policy proposal to address metal-level premium misalignment, including the design and implementation of such a policy and projected costs and outcomes for consumers. IDOI is required to submit the policy proposal in a report to the Illinois General Assembly and Governor by January 1, 2024.

Another bill (HB 1465) that did not pass included the same language requiring the premium misalignment study but would have gone further by also authorizing the Director of the Illinois Department of Insurance (IDOI) to disapprove rate filings with an “unreasonable rate increase,” defined as a “rate increase the Director of the Department of Insurance determines to be excessive, unjustified, or unfairly discriminatory.”