Massachusetts: Subsidy Program

Massachusetts: Subsidy Program

Upshot

• Democrats proposed a pilot program (H.B. 5123) that would expand eligibility for Massachusetts’s Marketplace health care subsidy program to individuals with incomes between 300 percent and 500 percent FPL. Currently, individuals with incomes up to 300 percent FPL who meet federal criteria for Marketplace coverage are eligible.

• The bill was part of the General Appropriations Bill in 2022. After several rounds of back-and-forth with the governor regarding amendments to require further study before implementation of a pilot program, Gov. Baker vetoed the bill.

• Republican Gov. Baker indicated that he would not support the program without further study of the impacts on the delivery system.

Background

Massachusetts runs a state-based Marketplace called the Health Insurance Connector. Importantly, Massachusetts has an individual coverage mandate meaning that residents must purchase health insurance coverage or else incur a financial penalty. Because of this mandate, the state maintains a strong subsidy program to keep coverage affordable and avoid penalizing people who are required to be covered even if they would not normally choose to purchase health insurance. Massachusetts’s ConnectorCare is a  health care subsidy program, combining state and federal subsidies to assist with health care costs in the Health Insurance Connector. Massachusetts covers the difference between federal subsidies and ConnectorCare cost-sharing. The program was based on Commonwealth Care which was the subsidy program that the ACA APTCs and CSRs were modeled after.

As a result of the mandate and subsidy program, Massachusetts has the highest rate of coverage in the country at 97 percent, and has the second-lowest average monthly premiums. Eligible residents can access silver-level plans with $0 premiums, no deductibles, and copays as low as $0 for primary care, specialist, emergency, urgent care, inpatient, and imaging services. Currently, residents are eligible for ConnectorCare if they meet federal criteria to receive Marketplace coverage and subsidies and have an income at or below 300 percent FPL. Sixty-two percent of Health Connector participants were enrolled in ConnectorCare in 2021 and over half of ConnectorCare enrollees had income between 150 percent and 250 percent FPL. The proposed expansion to 500 percent FPL would cover an additional 37,000 residents.

The proposal to expand ConnectorCare was initially included in the state budget proposal. However, it was removed by Gov. Baker who expressed concern about the potential impacts of the pilot program on carriers and enrollees in the Massachusetts Health Care Connector. Gov. Baker had requested that the bill include a provision to study the potential impacts of such a pilot program on the market and enrollees. The proposal was reintroduced by Democrats in the legislature, who wanted to use the state’s budget surplus from enhanced tax revenue and federal COVID-19 aid. Gov. Baker ultimately vetoed the legislation. Instead, Gov. Baker said that he would support efforts to maximize the uptake in affordable plans that are currently offered for the individuals who are eligible for affordable health plans through the Connector.

Summary

This legislation would create a two-year pilot program beginning June 1, 2023, to extend eligibility for premium assistance payments or cost-sharing subsidies for applicants with incomes up to 500 percent FPL in the Massachusetts Health Insurance Connector. Specifically, applicants with incomes between 300 and 500 percent FPL would qualify for a plan that would have an actuarial value of at least 90 percent and no deductible. The pilot program would be funded through the Commonwealth Care Trust Fund that is financed through employer medical assistance contribution, revenue from surcharges or penalties related to medical assistance contributions, and any other transfers or appropriations

The current ConnectorCare plan offerings are detailed in the table below with the proposed addition italicized:

The health insurance connector authority would consult with the Center for Health Information and Analysis to evaluate the pilot program and assess the health, equity, utilization, and financial impacts of reducing OOP and premium costs on residents. Data collected would include:

• Rates of unmet medical need due to cost;

• Disparities in rates of unmet need due to cost;

• Difficulties accessing care at a doctor’s office or clinic;

• Racial and ethnic disparities in difficulties accessing care at a doctor’s office or clinic;

• Insurance coverage rates, including rates of continuous coverage;

• Racial and ethnic disparities in insurance coverage rates;

• Visits to a doctor’s office; and

• Racial and ethnic disparities in visits to a doctor’s office.      

Maryland: Subsidy Program

Maryland: Subsidy Program

Upshot

• On May 16, 2022, Gov. Larry Hogan (R) signed S.B. 632 into law requiring a workgroup convened by the Maryland Health Benefit Marketplace to make recommendations for a Small Business and Nonprofit Health Insurance Subsidies Program. This new program would enable small employers and nonprofits to provide comprehensive health coverage to their employees through the state Marketplace.

• On September 29, 2022, a workgroup established by the legislation developed a report containing recommendations on how to provide the subsidies on October 1, 2022.

Background

The Maryland subsidy program proposal focuses specifically on improving the affordability of coverage for small businesses and nonprofits. When small businesses and nonprofits do not offer health care coverage, individuals may purchase coverage through the Marketplace (unless they are eligible for Medicaid or Medicare). This policy would encourage more individuals to purchase Marketplace coverage through their employer.

Sen. Katie Fry Hester (D), who sponsored the bill, said that small businesses and nonprofits “struggle to bargain as effectively” with insurance carriers and providers compared to larger companies. The lack of bargaining ability for small businesses often results in fewer and lower quality options for employees. In Maryland, 37 percent of small employers offer health coverage compared to 95 percent of large employers. The Maryland Health Benefit Marketplace Health Connection for Small Business currently offers tax credits to small businesses with 25 or fewer full-time employees who pay an average annual salary of less than $55,000 and contribute at least 50 percent to employee-only health insurance premiums. The credit is graduated such that the smallest businesses receive the greatest tax credit and can be claimed for any two consecutive years. The maximum amount of credit that can be received is 50 percent of the employer’s premium payments, or 35 percent for tax-exempt organizations.

Sen. Hester also highlighted that making coverage more affordable for small businesses would improve health disparities by reducing coverage gaps for racial and ethnic minority groups. Maryland has the highest rate of minority-owned small businesses per capita with nearly 42 minority owners for every 100,000 residents. As a result, improving access to affordable coverage for small businesses would have a particular impact on minority communities.

Summary

This legislation requires the Maryland Health Benefit Marketplace to convene a workgroup to study and make recommendations related to the establishment of a Small Business and Nonprofit Health Insurance Subsidies Program. The program would provide subsidies to small businesses and nonprofit employers to purchase health benefit plans.

The Workgroup – consisting of business and nonprofit representatives, health insurance representatives, consumer advocacy representatives, and other interested parties – was required to submit a report by October 1, 2022 and make recommendations specifically regarding:

• Coverage: The health insurance coverage needs of small employers, nonprofit employers, and their employees.

• Metrics: The objectives and target metrics for the program.

• Program design: Whether subsidies should be available to purchase coverage from qualified health plans offered to small employers both on and off the Marketplace, as well as subsidy eligibility and payment parameters.

• Implementation: The infrastructure investments required to implement the program, its duration, and the program’s administration cost.

The original version of the bill authorized a specified amount of $45 million in funding for subsidies and an additional $3 million in funding for business outreach. However, the version that passed more generally states that beginning in fiscal year (FY) 2024 and each year thereafter, the annual budget bill must include funding to establish and operate this program.

Final Report

The final report from the workgroup was published on September 29, 2022. The workgroup recommended postponing implementation of the Small Business and Nonprofit Health Insurance Subsidies Program until after the expiration of the ACA’s APTCs in 2025. In light of the extended federal tax credits, the Workgroup determined that it would not be cost-effective for the state to develop an additional subsidy program, but said that it could be revisited in 2024 if the credits are not extended again.

Maine: Subsidy Program

Maine: Subsidy Program

Upshot

• L.D. 1463 was cosponsored by Rep. Marianne Moore (R) and Rep. Denise Tepler (D) with some additional bipartisan support. It was considered in committee but died with the end of the legislative session on May 21, 2022.

• The bill would reinstate a fee imposed on health insurers that was repealed in 2020 to fund a new Health Care Affordability Fund. The fund would be used to provide assistance to reduce premiums or cost-sharing for individuals enrolled in the state’s Marketplace. The fee would have been imposed on 50 percent of net premiums above $25 million and 100 percent of net premiums in excess of $50 million and divided among health insurers based on their market share.

• The bill was initially intended to prioritize assistance for individuals subject to the “family glitch” or with incomes at or below 200 percent FPL. The Biden Administration has since finalized regulations to eliminate the family glitch beginning calendar year 2023.

Background

In 2021, Maine transitioned to its own state-based Marketplace. Called Maine Health, this resulted in a ten percent increase in enrollment. Four insurers offered plans in 2022. Premium rates have declined for the past three years, but there will be an average increase of 11.4 percent for 2023 for full price plans. Notably, research has found that 63 percent of adults in Maine experienced one or more health care affordability burdens in the past year, and that 42 percent experienced struggles paying medical bills.

The Main legislature sought to resolve affordability problems brought about by the “family glitch.” This issue prevents family members from accessing APTCs if an employee’s self-only coverage meets the affordability threshold. An employer-sponsored plan is considered “affordable” if it meets two requirements: 1) employee required contribution for self-only coverage does not exceed the 9.5 percent affordability threshold (as adjusted); and 2) an employer-sponsored plan provides “minimum value” to the employee, meaning it covers at least 60 percent of the total allowed cost of benefits and provides “substantial coverage of inpatient hospital services and physician services.” For plan years beginning in calendar year 2022, the affordability threshold is 9.61 percent of that employee’s household income. In 2021, about 34,000 Mainers were subject to the family glitch and about 30 percent of the population in Maine had incomes below 200 percent FPL.

President Biden signed an executive order to fix the family glitch on April 11, 2022. The Treasury subsequently finalized a rule on October 11, 2022 to fix the family glitch, which will take effect in calendar year 2023. The final rule applies affordability criteria to family coverage and applies the minimum value requirement for both employees and related individuals. Employer-sponsored plans will have to cover at least 60 percent of the total allowed cost for a beneficiary and their family and provide substantial coverage of inpatient hospital services and physician services.

The bill says that if the family glitch were to be fixed, the funding would instead be used to provide affordability assistance for individuals with incomes at or below 400 percent FPL and would prioritize assistance for those with the lowest incomes. Despite the inclusion of an alternative plan in the event of a fix to the family glitch, it is possible that President Biden’s fix decreased momentum within the state legislature for this bill.

Summary

This legislation would essentially reinstate the ACA’s Health Insurance Providers Fee. The bill would also establish the Maine Health Care Affordability Fund and an Affordable Health Care Advisory Group. Details on these provisions follow.

• Health Insurance Providers Fee: This program would reinstate a former federal fee on health insurance companies that was repealed in 2020. By reinstating this fee in Maine, the bill would use the revenue to fund programs to lower OOP health care costs for individuals impacted by the family glitch or who have incomes at or below 200 percent FPL. The federal fee would have been imposed on 50 percent of net premiums above $25 million and 100 percent of net premiums in excess of $50 million and divided among health insurers based on their market share.

• ·Maine Health Care Affordability Fund: The legislation would also establish the Maine Health Care Affordability Fund, financed partly by the health insurance provider fee along with other allocated money. The Fund would be used to lower premiums or reduce OOP cost-sharing for residents who are subject to the family glitch or have household incomes up to 200 percent FPL. Funds could also be used for other initiatives that increase health care affordability for individual policy holders or small businesses, improve access to coverage for the uninsured or reduce disparities in health coverage, and outreach and enrollment activities. The legislation stipulates that at least 85 percent of the funds must be used for the purposes discussed above unless federal financial assistance provided under the ACA is repealed, in which case 100 percent of funds must be used to replace that assistance. The funds would not be authorized to pay the state’s share of Medicaid funding. Also, if individuals who are subject to the family glitch become eligible for premium assistance tax credits, then the funding would instead have to be used for individuals with incomes at or below 400 percent FPL, with funding prioritized for those with lower incomes first.

  To fund these activities, health insurers would submit a report of their net written premiums for     the preceding year by April 1st each year. They would then receive a certified assessment of at    least 2.85 percent of the net written premiums, but not exceeding the amount that the entity would   have paid under the Health Insurance Provider’s fee, which the entity must pay and would be  deposited into the fund.

• Affordable Health Care Advisory Group: The bill would also establish the Affordable Health Care Advisory Group to support the development of rules to implement this program and the funded activities. The advisory group would:

  •  Identify barriers to accessing affordable health insurance coverage for residents, including those with incomes at or below 200 percent FPL;

  • Determine the most efficient and effective mechanisms to deliver assistance;

  • Determine the level of assistance needed to make health insurance coverage affordable; and

  • Establish outcome measures to evaluate the success of these activities.

California: Subsidy Program

California: Subsidy Program

Upshot

• S.B. 944 aims to increase health care affordability assistance and eliminate deductibles for individuals with incomes up to 600 percent FPL who purchase health care coverage on the state’s Marketplace. The proposal was based on a report done by the Marketplace in 2021, Bringing Health Care Within Reach, that developed options for improving health care affordability.

• The legislation passed both chambers on the last day of the legislative session but was vetoed by Gov. Gavin Newsom. In his veto letter, Gov. Newsom indicated that he intends to work with the legislature to make health care more affordable but said that he intends to reserve money that would have been spent on state subsidy until after the newly extended federal premium subsidies expire in 2025.

Background

California runs its own state-based Marketplace with twelve carriers. Approximately 1.8 million people enrolled in Marketplace plans during the 2022 open enrollment period. Rates in the market are stable and have only increased by about one percent over each of the last three years. Currently, state-based premium assistance for coverage purchased on the Marketplace is available to individuals with incomes up to 400 percent FPL. California law authorizes but does not require affordability assistance for individuals with incomes up to 600 percent FPL. The affordability assistance eliminates deductibles and is intended to reduce OOP costs for individuals enrolled in the state's health insurance Marketplace.

In 2021, in response to a health omnibus package, Covered California conducted a study to develop options for providing health care affordability assistance. One of the options the report recommended was a subsidy program that would provide additional assistance on top of existing federal subsidies. Gov. Newsom later said that, in light of IRA’s extension of the enriched ACA tax credits through 2025, it would no longer be cost effective for California to expand its own subsidies and subsequently vetoed the legislation.

Summary

The primary intention behind this legislation would be to require California’s health insurance Marketplace, Covered California, to implement options for health care affordability assistance. The financial assistance would reduce cost sharing – including copays, coinsurance, and maximum OOP costs – by establishing the Health Care Affordability Reserve Fund within the state’s Treasury. The bill would establish a program of financial assistance for California residents with incomes up to 600 percent FPL, eliminate deductibles, and require “other appropriate subsidies” to increase the affordability of health care. The program would be funded through annual appropriations.

The Marketplace would be responsible for carrying out the affordability assistance program. However, the text did not specify any additional details.