tv Health Insurance Markets - Part 1 CSPAN July 14, 2018 2:38am-4:27am EDT
era after the civil war. america, theeal silent french film dedicated to america's efforts in world war i. sunday at 2:00 eastern, the world war museum symposium marking the anniversary of saving private ryan. on american artifacts, the u.s. army heritage and education center annual living history event. watch american history tv this weekend on c-span3. a new report by the brookings institution looks at insurance markets in 10 states. and how the affordable care implemented in different parts of the country. the three-hour event held in washington, d.c., the study's author presented findings and health policy analyst within the state of health insurance
>> to really understand how the ac is playing out, you have to go out to localities and look at their data and talk to the people there. such field research is the essence of the project that is the focus of this conference, led by mark hall and the foundationne by the and the usc brooking shafer initiative for health policy. aca project tapped into the implementation research network at the rockefeller institute of government. goal was to interview leaders involved in the individual and small group insurance markets and 10 carefully suggested states. i want to get particular
mentions of richard nathan, created and leads the research network. he played in important role in this project. he could not be here in person but is watching on the webcast. introduce your busyspeaker, we've been running meetings and we have two of them next week. on wednesday, we are having a conversation with scott gottlieb. similars and we have an outstanding panel of three experts to react to his remarks. that's going to be on wednesday afternoon at one -- 1:30. at the end of the week, we have a conference on the experience to remember what mips stands for. those who remember know it very well.
we have policy options to discuss its shortcomings. let me introduce mark hall. [applause] that makes my slides project. oh, there they are. thank you very much. a quite interesting project and i appreciate the support we've gotten from the tookings institution administer the program and also to the leader in generating the structure to allow me to do this work. as you look over the ark of five years or so of open enrollment, once the web problems were dealt
with, there was a good amount of competition in most states. carriers,arriers, new and prices were remarkably low. it turns out they were underpriced. the market was pretty vibrant for the most part. trouble started to emerge in 2016 as carriers realize they had overpriced and were more competitive which built big price hikes. wasan to 2017, the question was that going to continue. there was sense of the market was reaching a new equilibrium with fewer carriers and higher prices the one that could sustain itself. began to sense that destabilizing versus were still at play through policy shifts under the trouble missed ration. the sense of destabilization first arriving from the fundamental market dynamics and then moving into the policy shift arena gave impetus for the
study, to see was happening in a variety of states. efforts to maintain or improve stability. where effects of destabilizing influences. just to remind us what those policy shifts are, the latest round of challenges to the ending the payments for cost-sharing reductions was a big blow to the market. that's a large amount of funding stream that was built in and assumed by carriers pricing and it was suddenly going to go away. repealing the individual mandate which to now had been seen as fundamental to the structure of the aca and therefore, how could the market function without that? of greateroduction availability of noncompliant aca plans. the idea that you would have regulated and unregulated market unfolds side-by-side.
short-term plans are what we focused on the you can also talk about association help land. plans.ciation health there were other important changes and a variety of minor changes. secondary changes that shorten the open enrollment. -- open enrollment time and made it more difficult. outreachpending for and just this week reduce late -- greatly reduced spending for navigators. a set of measures that were introduced early in the count missed ration labeled as stabilization measures that provided more flexibility to carriers in terms of how they set the standardized plans or how they were of us -- how they were set for those. kind of as a first suite, lot
went on over the past year. how did all that play into the underlying market dynamics? this reminds me of the metaphor of three legged stool. don't take in the details but the idea is you start with a three legged structure. you have subsidies to purchase was necessary by the mandate. or still gets to be wobbly -- is to be wobbly. maybe you can still stand but you don't know. these are the things i mentioned that are somehow meddling with regard to the aca replacement bill. aren't actually current but you can visualize your own version of that. that gives rise to what do we
mean by stabilize? stabilizes in the eye of the beholder. the market had reached a stable point, it's a much different marketable least about with. stable my being less competition. we defined in this way we allowed others to use terms the way they wanted to. covering all the market is important to stability. prices are always going to one metric for that would be prices increasing the way they are for other kinds of insurance. hopefully they are avoiding steeper declines enrollment. death spiral is a frequently used term. is the market getting weaker?
all these points are up for discussion in question but i'm laying up the premise. here are the 10 states that we chose. here's a quick rundown. states with and without medicaid expansion. i won't go through all the details but there they are. i should say in terms of the report, a summary has been distributed in a full copy is online. for those who want an autographed copy, i will be signing of the back on the way out. have a small set of the full version on hard copy on west. starting with enrollment.
as you probably all know, folks in this room are up to speed. surprised byantly the absence of any big dip in enrollment given all the uncertainty about the future of the aca, the controversy over its repeal and replacement, cutting open roman and half, cutting outreach funding by however amounts. many people expected a big drop off but we didn't see a drop off, we saw an increase. these are the latest figures. attention howy these pieces of data there for from other sources. when you get to the people who pay their first month and have not yet been kicked off for , using that as a
measure, your insurance actually taking effect, we saw almost a 5% increase this year over last year as of the end of february. study, doesin our this give me a pointer? can you see this pointer? no. i can see it here. move, is that bad? it is. quite a range. increases, have big some states have a big drop. we will learn more about why that is. on the right-hand column is how things went the year before. you can see minnesota had a big increase. arizona had a big drop last year
and a big increase last year and i will tell you more about that. this relative success continuing enrollment is attributed to a number of things area number one, the publicity itself about the aca was not to have brought in. the idea that it might be in jeopardy so if you needed and wanted, you better get signed up. it was a motivator. the amount of free press, earned media, you work for it but don't have to pay for it is the concept. it shot way up. the media firms measured a hundred 25% increase in publicity about the aca and open enrollment. but helped bring people ,lso the fundamental resilience
the word resilience was used over and over again, of the subsidy structure. the idea that most enrollments in the exchange are subsidized and over half are highly subsidized. as prices go up, subsidies go up. it's just a good deal. if you have limited open enrollment, people know they better get signed up. that structure seems to be working quite well keep the basic boat afloat. that was only with respect to the subsidized portion. for the unsubsidized portion, things are quite different. as prices go up, they pay the full cost. over and over again and when i say i i am channeling my your researchers who took detailed notes. i've means we. i heard that the market did surprisingly well for the subsidized portion before the
unsubsidized, it's really in trouble. enrollment is dropping off quickly and this is where you are more likely to hear impending death spiral and things like that. technically it wouldn't be a death spiral because the single risk pool means the prices are the same across subsidized and unsubsidized. those prices become increasingly affordable. the idea is that the subsidies cap the cost of insurance at roughly 10% of household income up to 400% of poverty which is roughly $100,000 a year for a family of four. being at this order of subsidized and unsubsidized would make much of different. 10% of your income is what insurance would cost without the subsidies area you might get a
little bit of benefit for being just below the subsidy level but you would lose much of your just above. insurance prices have basically doubled more or less since the beginning. so now insurance costs 10,000 for single or 20,000 for family. the $5,000y lose $10,000 subsidy. uneconomic.dinarily it was a structure put in place initially. everyone thought things would be revisited and revised. given those percentages, it no longer works well. given the prices we have. if you're above the subsidy cliff but at risk -- or at risk you can say i'm safely at 380% of poverty sign cap the 10% but when you do your tax return you end up at 410% and you suddenly oh $820,000
subsidy reform bill. i'm not quite sure how all that works. if you're anywhere close to the borderline, you're going to think very carefully about the full sticker cost and that's really sticker shock was happening. we heard that over and over again. , just released just within a week, the drop off and unsubsidized enrollment. here, we are at only aca plans. the lamppost only shines on the aca market. , we see ahe aca plans 20% national drop off in one year. a 30, 40,ates, we see noweven 70% drop-off area we are in death spiral territory. with if you have 50 or 60% rate increases.
the top line shows subsidizing roman holding steady. the bottom line shows the dropping off starting 2017. the rate increases start to go in. trying to extrapolate on to that, rough estimate of the non-aca plans would be the top bar, making the drop off even sharper. you have this split between subsidized and unsubsidized and you also have a less common it still split between state based in federal exchanges. the states that have run their own exchanges have done somewhat better than those that are rely on the federal exchange. enrollmentegard to increase and loss of unsubsidized enrollment.
this potentially due to a number of reasons that we heard from from the field interviews. state-based exchanges invest more in making the market work area they have money on their own to pay for the outreach and navigation. there's also the social political climate. these exchanges tend to be and more of the blue states that embraced the principle. federal exchanges tend to be more hostile states. basiclays out in terms of political and social dynamics. the state-based exchanges were more likely to not allow transitional plans. those things build up over time. they're not dramatically different. cover a lot of ground to
in a party used over half my time sunday to start moving faster. drop-offs and insurers but the major drop-off was the year before in the drop-off in 2018 was about half as much. various versions of that story in various other states. drop-offone with a big , you will hear more about that. is, insurers enter and insurers leave and we had a big retrenchment around 2016 into 2017 that returns continued to some extent in 2018. we hear now it has leveled off. we are not hearing about baron counties or it withdraws. among reasons that insurers left was the ability to sustain profitability but here's a conceptual chart.
think in terms of market wide averages, what we saw in various themes and i will elaborate more, is that on the whole, enrollment has caused steadier increase or prices in general have been on a steady and in steep decline in leveling off. but for a particular insurer, they can experience quite a bit of cyclical volatility. thats due to the fact change in the reference plan for the subsidy can differ each year. in the first couple years, from's a lot of shakeout the ppo plans to more narrow network make it -- hmo plans. that theyill find would get a big influx in enrollment. it was hard for actuaries to pack the numbers they need.
thatthe kind of volatility the risk core doors were intended to buffer. when those were defunded, it made the amplitude of these changes even greater. they said we don't know if he can find a sustainable price that is competitive or not. we try to we couldn't. a smaller set of insurers seem very committed to the market. there are the subsidized enrollees that will come back year after year plus the state regulators have let them get the rate increases that they need to maintain profitability. if you have eight or 9 million subsidized people and you can price of a level that's responsible, why not stay in the market if you're in a position
to have a competitive price? that's the gist. 2019, we see the market reenter. the blue cross plans that had rigorously rolled back are either reentering are suggesting eventhey might reenter alaska, you have the potential of a reentry by a previous market entrant. in some states, we see a story where the market settled in on a single carrier structure. one carrier for most of the rural areas and 81 arts in the urban areas. that seem to be more stable for a while.
there is some subscribers, charge what you need to, money can be made. the prospects of their accounting don't seem very likely. the question is will there be multiple insurers and most the state. one of the issues is market structure is it really conducive to a large number of insurers competing side-by-side and i think were still kind of open on that. this is a lot of data but let me stress the premiums because that reflects what happening in the unsubsidized part of the mac it. -- part of the market. they tend to go for the gold package and not the silver premium. the gold premium is going up less for reasons you are already aware of. he see a wide variety across the different states.
you see premium reductions in alaska and arizona for particular reasons but significant increases in colorado and the rest. the point is, two years in a row amid 20% increases, this is not sustainable. the question is what happens in the future. one result of these increases is that insurers have become profitable and perhaps handsomely profitable. it shows that insurers in the individual market are now more profitable than they were prior to the aca. they are earning a larger margin than they were before entering it a lot more people. that, theieved function is that premiums could begin to level off at the rate of general medical inflation as
long as things don't get rocky again. it's capable for this market to achieve a delicate balance between the right type of competition in the right type of ,ising but the point of this the market is still on thin ice and it wouldn't take much to disrupt it. is, are the disruptive signs ahead? and there were. it was the sense from another -- yeah, i thinkthat we are having a stable place. i think it's ok to come back into the market or next year will be better. since then, the department of totice said there not going enforce the rating roles. or they're not sure these risk-adjusted payments are going be done right sort is going to suspend 10 main dollars in
payments. this year's new best this week's news on navigator funding. .nsurers just don't know they have to price for what they know as well as of they don't know. what is the actuary to do? as far as the cycling of your , andlees in the risk pool not just not what the religious -- what the rule is, you're going to have to have rates roughly six months in advance.
it makes it hard enough for normal actuary sizes but you throw in political signs or something and it really makes it quite difficult. point, this was the market disruption or the story had a somewhat happier ending. they said they could load that increase other silver plans only in that happened in the great majority of states. it happened in the phenomenon the people heard about which this actually increases the subsidy because the silver plan determines the subsidy. i will take the time to go to these numbers but it's a phenomenon where the silver plan subsidy goes up and you can get a gold plan cheaper than last year and perhaps cheaper even in the silver plan and your bronze land perhaps is now free.
your subsidy would from $500 to $650, an increase good in the actual increase in prices. as a result, you can see the effect of the silver lining on the shark. -- on this chart. the unsubsidized premiums went up close to 20% on average. we see that pattern in most the states except for colorado which didn't have the silver loading or alaska and arizona which had great decreases. in the other seven stay to see this pattern of the gold increase been significant in less than the silver increase. alternately, many of the subsidized people are better off using a free bronze plans are they could buy gold the same price. unsubsidized are largely unaffected, these had to go through the hoops to moving from on the change to off exchange.
there are further complications because if there are income changes in the middle of the year, they are trapped. optionslly, they had that reflected what they had previously. the federal government and of spending $30 billion more because subsidy amounts went up. , insurers are comforted to hear that the silver loading would be allowed for this year. was proposed in congress that we restore the cost-sharing funds that everyone storyd the loss of, the was very -- i don't know -- in trysting -- interesting. mandate repeal was less destabilizing never one thought would be because focuses sign up for subsidies and the mandate
was not shown to begin with. everyone already thought the enforcement would be weaker than it had been there were a number of its actions and things. day, perhaps the it will add 10% of premiums. that may end up driving a million out of the market because -- and that's -- that significant. you can have several million fewer insured people with is the one part of my study. that's not to say the mandate was important in a number of people thought the man they could be helpful and if there's any flaw it's that it was too weak and we could've used a stronger mandate. in a is some interest report yesterday summarizing all assumptions about
behavior responses. you can get a wide range of estimates. there is some interest in having an replacement for the mandate but none of our states were pursuing that. what about reinsurance. can they come in and fix the market? the aca had reinsurance for three years. enough thats rocky more than three was reasonably needed. sorry,d, medicare, i'm it's a much more stable market than the aca so there's certainly a good reason to have reinsurance nunnelee for a longer transitional time but for a permanent future. thatcould help deal with uncertainty. and in the areas what is less actuarial data. insurers to enter,
and remain in more of the rural areas. and particularly attractive to can use the waiver to get supplemental funding called master payments whereby the state-funded reinsurance reduces the federal subsidy. it will free up that money to add to the reinsurance pool. you get a small multiplier effect. there were problems. if you modeled it at the amounts realistically proposed, you're only looking they tend to 20% rollback and otherwise increases. that would be just a one-time effect. what about the other years? saying, stop the cap or mandate or something. there was a sense that it would be the final fix. there was a fair amount of
frustration with the federal review process that was encouraging than bog down for a lot of technical reasons. the realization that to get your rates, the state needs to invest in the program in states that are hostile to it are reluctant to do it. insurance reminded policymakers that they lost the risk of ending, who knows what else is going to come through next. the waiver process wasn't as easy as promised. we put all this investment into it and the federal government any yank the football once again, i think they called down of it but there is some sense in maine that they didn't
want actually implemented because they looked around and will the federal government really follow through? that was a serious concern that was expressed. another issue was is reinsurance the best way to do it? it lowers the price market wide but most of those are subsidized so it's effect, what if we took the same money and reduce the prices for the unsubsidized. and so, let me get to my final topic and borrow five minutes and i'll give it back to my other presentation. we have these noncompliant plans of a mention. did hear a fair amount of concern about destabilizing
market segmentation based on adverse selection. that the repeal of the individual mandate penalty. now you don't the pay the penalty syria makes it even more othertive to explore states or other informants, their mixed use all the states. thought this might be worth trying. at least this gives them something. extent the prices to increase in the regulated market, you have the ring and subsidies to shelter most of that. the simulation model actually the plans are less expensive because they are less protected, still the number of people signing up will actually go up by million or so and the
rest is are all of the board but they don't show an overall increase -- decrease in the number insured. the rate increase might be moderate all things considered. ,his leaves the final thought this leaves a real fork in the road of the potential for a split our get. -- for a split market. marketaces with the fairly stable may want to accept it. troubled,things are this might be the least worst path forward. is what about the unsubsidized uninsurable. idea that i bright read somewhere, what if we tax
the noncompliant plans to help subsidize those that otherwise would not qualified. it's becoming a high-risk pool. way,u think about it that it may be some type of way to deal with split markets. it could be the best path forward for some states. theme ofuces a final uncertain path forward. i will draw on this long because my time is up at the bottom line , it sure would be nice if we could take the politics out of this and work together to see if we can make these markets better. good open things up for honest discussion. thank you.
nathan, who has been mentioned as the father this kind of field research, recognized when the affordable passed thatt -- this would be a huge opportunity to observe the national experiment in expanding health insurance coverage to a large group of uninsured people. and a novel way. the expansion of medicaid was not novel but what was novel was creation of these exchanges or marketplaces on which people could go and look for what options they had for buying health insurance and also what subsidies they would get under the new act and would cost them to buy out the charts.
a very moderate an interesting idea. the stakes are very different in this country. insurance regulation is a state function. the federal government has not been a regulator of insurance. it was clear that this law was going to play out very differently in different states both because the state set , they could expand medicaid are not, they can run their own exchanger rely on the fed and because they are very different in a very different histories of how they have handled health insurance. opportunity and he had the wisdom to see we should seize it and set up a network of experts in as many
states as possible and get them feeding back information about how this experiment was working. is one of several that have benefited from that insight. now we will get a chance to look detail.tates in some we could have had 10 people appear, is too many, they wouldn't fit and you don't want to listen to that many people statesso we selected for that were quite different in a number of dimensions. we're going to talk first about colorado and we are lucky to have louise with us. she's a health care writer and she also sells germans area
she's been on the ground and she knows how to do this stuff. , it'she writes about it in a number of national ,ublications but in this case she was our expert on the ground in colorado. next from brad wright. he's a professor into departments at the university of iowa, both health management and public policy and has a long publications of writing about health insurance. is going to talk to us about iowa which is actually less happy story in colorado area lynn, who will talk
to us about minnesota. she is a professor of health policy at the university of minnesota. published widely about all sorts of health insurance matters and then on the front lines both in minnesota and here in washington as a -- his health coverage expanded. whoill hear from our call has already been introduced. he hangs out at wake forest where he is a professor of law , but he's health going to talk to us about arizona. we thought we needed a fourth stated he had worked on all of them.
let's go to police first. louise first. in colorado, we have a pretty stable market. we had some significant rate increases that we have seven insurers in our exchange of us same we had last year and enrollment was highly higher for 2018 that wasn't what is printing. i want talk about colorado has gone both long-term and more recently to facilitate that market stability. have a hands-on, proactive approach to health care reform and that has been long-term. aca required maturity coverage and band gender rating, colorado had ari done that. for many years, they have limited short-term plans.
and you can't get a short-term plan if you had more than one in the previous 12 months. it's preventing people from stringing together a series of short-term plans to substitute for regular health insurance. as soon as the aca was implemented, colorado expanded medicaid and set up a state run exchange. theyas soon as the aca was terminated grandmother plans international plans after two years. we did allow grandmother plans to continue in 2014 and 2015 but that point. at there were about 75,000 people who if they wanted to remain insured had to switch to the aca complaint market. that point. at this point now, there are still about 30 states that are still allowing transitional plans to continue and continue all the way to 2019. those plans early was part of colorado strategy to
stabilize the market. for 2018, if you look back to summer there was a lot of justifiable concern on the part of insurance carriers on what was going on the federal level. stanceo took a proactive to reassure the insurance company that, hey, we know is a lot of and certainty but we will do whatever we can to implement regulations and communicate effectively so you know of the state level we are doing all we can. they worked with the insurers all summer last year to keep them in the market. as mark mentioned, colorado is one of the few states that did not do the silver loading. loaded.they brought they had insurers added to all the plants. that was part of their strategy to and -- to indicate that
early. we had some states where silver loading was happening but it was happening in october. but regulators want to do is make sure the insurance companies new back when it was very uncertain what was going to happen, we have a strategy for you. you can add the cost of csr and out to all your plans because they weren't sure at that point if cms would let them attitudes over plans and they didn't want to leave the insurers hanging. so even though was a broad load what helpe know now consumers as much this overload, it helped to stabilize our market because we knew there was a strategy. then colorado was also very early out of the gates announcing they would extend open a roman for 2018. they kept it all the way through must mid-january. our enrollment did end up
slightly higher than it was in 2017. 2019, ourlooking at rates are being published today. our insurance commissioner has said that the rate filings indicate a stable market. the risk adjustment issue could be an issue with that. for now, it does look stable and we are switching to a silver loading strategy for 2019 which will first are -- stabilize the market. people find their bronze plans and gold plans of digital most -- gold plans are the most expensive. it's looking pretty good but it's not all sunshine and roses. there are still issues with
affordability for people who don't get premium subsidies. we are a purple state. we have a democratic majority in the house and a republican majority in the senate. there were additional measures that were considered this year during the legislative session. lawmakers in the house passed that would accredit a state-based subsidy. that second bill was considered in 2017 as well. bills passed the house but did not pass the senate and when i talked with lawmakers, there's a general reluctance to commit funding to help people that are in more .han 40% of the poverty level there's a feeling that people are well enough that they don't
need help but if you look at their pain for -- look at what they are paying for health insurance, there's some very expensive areas. if you live in expensive area and you are older, we have people spending in excess of 35% of their income on health insurance if they want aca complaint coverage. although we have a pretty stable market, the issue of affordability for people who don't get premium subsidies is still an issue. ideally, he would be addressed on the federal level. think you'll see colorado continue to address it on the state level. thank you very much, the wheeze tell us about iowa. -- brad, tell us about iowa.
fun to have this much attention focused on us. granted, i am here sharing what i would call bad news. not great news. for a while, people have asked what is going on with iowa with regard to marketplace, and i of the most noteworthy, notorious stories blue shield made their disclosure and possible youngviolation about the man in iowa who has this rare form of human if yulia and was -- hemophilia and that is one of those stories that gets headlined. that is not really the story of what is wrong with iowa. it is less sensational than that to thereally comes down
fact that iowa's marketplace has been unstable from the beginning. different was four insurers that participated in our marketplace at the start, but you may remember that our co-op opportunity health, which was the first to go under in the country -- we have that distinction -- we are not alone. all of the rest of them folded out shortly after, but we were liquidated that first year. of the story of what is wrong with iowa is geography, so as a rural state, there are issues -- mark talked about the problem of smaller rating areas, so insurers hesitating to go into those areas. also, their ability to negotiate with providers. communitynly one hospital within reasonable driving distance. it makes it pretty difficult to exclude that hospital from your network. those things combine and drive
up prices because insurers aren't able to negotiate lower reimbursement rates, but that is a small part of the story. the bigger part of the story gets into so she'll political and political -- social and political. our governor, now the ambassador to china, was an opponent of the the short version is he essentially deliberately underinvested in outreach and enrollment efforts. runre one of the federally exchanges and that lines up with the data you have seen. the enrollment of individuals l for our- eligible marketplaces lowest of any state in the country at 20%. that figures from 2016, the kaiser family foundation. on alipside of that
related issue, we have a really high number of individuals in noncompliant plans, grandfathered transitional plans. the national average for people who are purchasing coverage on the individual market sits at around 9%, in iowa that is between 50% and 60%. we have many more individuals covered that way and have never been in -- and in our marketplace. all of those individuals are for the most part insured by well mark. it is worth noting that welmark sat out of the enrollments in 2015 through 2016 and addicts their toe in the water in 2017 and talking about going back in 2019. i've may talk about what that is about toward the end of my remarks. these broader dynamics have set
up what faintly resembles, though technically is not a death spiral. -- especially those not getting subsidies to leave the marketplace. has also driven insurers to leave, so we have a total of nine insurers who have participated in our marketplace at some point since 2014 that have since left. it looks like we will -- would have no insurers at all this year when medica said we will ensure folks in the marketplace in iowa, but do that by hiking premiums 57%. it is a good job if you can get it, because you don't have any competition. you can set prices where you need them to be to make money. one of the people who why won't name, when i was doing this research, i wouldn't be ica brings $100d million in this year. unfolding, it
looks like we might be a bear market, we pursued a 1332 waiver to do the stopgap measure. that was going to do two things. one was reinsurance. at whatlooking minnesota, oklahoma, others were talking about at that time and saying we will do that soto, but we will get rid of our marketplace because what we want off exchangeblish purchase of insurance and it will be one type of plan. any insurer who wants to participate in this "scheme" can do so, but this is the one plan they can offer. the rationale being, we won't have a lot of time between approval and the open enrollment period, so let's streamline that. reasoning goes off exchange is they wanted the change from the subsidy model to premium credit model, which would be
available to any iowa and -- iowans, but is adjusted for age and income. pretty much anyone who was following this said this doesn't version guard railed -- so they wondered if it was approved, would we be set up for battles in the court? we don't get to know the answer to that because iowa withdrew its application, and the story there -- i have heard mixed reports. from folks at the state, it was cms informed them that if this startednd if enrollment to increase in the marketplace, they weren't going to get any additional federal dollars. iowa will have to pick up all -- cost andess cot they weren't willing to do that so they went through their waiver. that is the story they tell. other stories in the news were president trump went and talked
to seem a verna -- verna and was repealinge the aca and could this be a further way to sabotage? know't know, but what i do is iowa has had roughly double the cuts in enrollment dollars from the federal government that other states have been -- experienced and we have had more cuts pronounced this week, so we seem to be getting picked on a little in that respect. the upshot is that iowa has a terribly segmented market and mark talked about this a lot, about the subsidy cliff. the iowa insurance division has put out some numbers on this. i'll give you an example. a couple at 55 that live in iowa city who is earning $64,798 a year, 399% poverty, because
their premiums are cat at 9.96% bump that-- if you up, if they earn an additional of4, that puts them at 401% poverty, now there is no premium cap to protect them. 2720 premiums would go to four dollars a month, approximately 50% of their household income for the year. that is obviously a problem. especially in a place like iowa where we have farmers who have variable incomes. how they want to handle that so they don't get surprises come tax time. an obvious fix would the for insurers to continue their grandfathered plans, no more transitional plans. there was an analysis that said if you do that, your enrollment will go up between 55 and $85,000 and the premiums will
decrease 8% to 18%. it would be a step in the right direction. what we are likely to see is going to exacerbate the issues, rather than a meliorate them. recent is the passage of a law to allow farm bureau to sell health plans that are not considered health insurance. to -- if you pay $55 to become a member of farm bureau, you get access to these plans which will be cheaper because they are not as robust of a product, bottom line. that may be great for individuals that are out here above 400% poverty and not subsidized. i don't have a crystal ball to tell you what will happen to some of the younger and healthier people in the subsidized market and want to move to a cheaper plan, but that is where we are headed. to finish up as i am over time, said it is going
back and the marketplace in 2019, partnering with farm bureau off of these plans. what that suggests to me is they to figuring out, how to play both the subsidized and unsubsidized market. a can potentially and their transitional plans and for the group that would be qualified for subsidies, they can pursue them in the marketplace, but for other individuals who are in maybe shape and younger, not subsidized, they can go after them through these farm bureau plans. i'll leave it there. >> thanks, brad. what is the matter with kansas? do the sequel, what is the matter with iowa? this in 10try to do minutes. minnesota has had a very volatile individual market.
we are a very small market, so we started when we started with daca implementation, -- aca implementation has diminished. it is unique. we arewho are smaller -- rural, so we have 300,000 people compared 1.5 million in california's individual market. it creates a different dynamic. smallersmaller number, problems, but very volatile with not enough numbers to spread the risk. it becomes important to think about minnesota and iowa and others who are very small, very rural. we also had one of the highest -- largest high risk pools in the country. it doesn't sound like a lot, but when you think about our market, 30,000 people is a lot of people and that transitioned into our
individual market, which has played a part in the discussions of what is going on and contributed to the volatility and risk. we also have a basic health plan in minnesota, that is the apa option. that is aas a bhp percent of the poverty level, funded by the federal government through 95% of what have gotten into the individual market. 95 percent of what their premium tax credit would be. that is financing the bhp, about 80,000 people. that is not in the risk pool for the individual market. you can see how this gets complex quickly even with a small market. also creates very strange incentives because the financing is based on the areium, because the aptc based on premiums. as premiums go up, we get more money for our bhp from the
federal government. stabilizing premiums give us -- gives us less money for bhp. people who want funding for low income populations, let's get the federal subsidy in if you are doing a federal maximizing strategy. it creates weird incentives. that is not good public policy for all you young people. is in contrast to two different opposing incentives there. sr, the we have the c cautionary reduction is not a big issue for minnesota. there is no co-pay through deductibles, we don't get csr's for those. when other states were worried about the csr reduction, with -- it is not an issue for minnesota. only 13% of people in the qhp .arket got ca sars -- csr's
minnesota has an active environment, very proactive in now, we areh right not keeping ahead of changes, but we are reacting to changes and so over the last couple of years, the legislature and insurance department have been active in terms of what changed, what can we do to familiar rate -- and get coverage to people? we started with some of the lowest rates in the country and had to play catch-up. in 2017, the premiums in the individual market increased between 50% and 60%. this was a shock to everybody because we hadn't had those levels of rate increases. was finedized market because they received subsidies from the federal government but those outside of 400% faced
increased directly with no subsidy. has --, the legislature passed a rebate program to allow for a 25% rebate for those above 400% of the individual market. fix.was sort of a quick both republicans and democrats agreed and the governor signed was an opportunity to help people above 400%. one-time deal. they all located general fund money to support it. the problem was, it wasn't passed in time and was right at the end of open enrollment, so the take-up wasn't as great as it could have been but there is also the precedent of talking about a rebate as an option. credit-funded rebate tax for those of a 400%. that legislation, we have republicans on the senate and house side who added in to
allow for-profit health plans in minnesota. we have been a very closed market and not allowed for profits. we are the only state in the union that has had that regulation, so all of our health pans are not-for-profit. we now allow for-profit plans and that has not been an issue yet, but united is certainly poking around, and so is etnaq. we anticipate another changing impact and that was a part of the package with the rebate and that was a debate between republicans and democrats to let basco -- that go. we also provided for agriculture co-ops tied to the industry. co-ops, for agriculture which are still insurance, but they are more like a self-insured product. they are still traditional insurance product, land o'lakes
has one and there is another one and they are marketed around the healthier parts of the state, i'll have to say. a did get some take-up. not a lot, about 1500 people. strategies to get people affordable coverage. that is 2017,e -- those activities and the legislature authorized departments to apply for reinsurance. , the 1332nce waiver waiver. that was approved in the fall. to 250,000 corridor the 80-20 coinsurance. that went into effect for 2018 rates. it went out late august, so the rate filings were -- across the country were with or without withoutn ms. oda it was or with reinsurance.
it was with or without reinsurance. the state contributed a portion to fund the reinsurance. that had an effect of this creasing -- decreasing the increase in the rates by about 20% and had an impact on the market. also demonstrated one of the things we learned talking to the insurance companies. a demonstrated the state was willing to work with the insurance companies and could figure out solutions, so again, it is this active regulatory and legislative infrastructure that and awork as a community public-private partnership to figure out what we will do and actually doing -- passing legislation. -- with the approval of
our reinsurance, we also -- the bhp funding we get with -- we asked for that to continue. when premiums went down, we lost funding for bhp. we asked our reassurance that that be continued and that was not approved. blow -- a significant and our governor called it "nightmarish," as we gained federal financing for reinsurance, but lost a significant amount in our bhp financing. that weird dynamic of incentives not being aligned. to subsidize the insurance companies, but we lost money to subsidize programs for low-income populations. was too late in the process to change anything in the
legislation or we were stuck with it, basically. it was a significant amount. i think $150 million. for minnesota, that is a lot of money. on other thing that is going -- most reinsurance is financed by an assessment on insurance. that is typically how reinsurance is financed. in minnesota, we used a state designated fund that is called our health care access fund, financed through our provider tax. that was also controversial. used toa tax that was support our state-funded programs. minnesota care, and because we had our federal funding hadn't had to use that money so it is piling up and when the legislature are doing their things, they see a big pot of money. oh, we can take and use that. that was used to finance reinsurance. we only financed it for two
years. that is a 2% provider tax funding reinsurance for the state. this is going to come up in the next legislative session of, is that appropriate use of state dollars? is there a better way to finance it? we will be probably talking about a rebate, or there was a proposal introduced last year to do a tax credit. aptc. state patc, -- but it would be state financed. we have stateng money and that provider tax expires at the end of 2019. if we don't have that resource, i think a lot of -- we will be very limited in what we can do and we will not be as proactive. that leads me to the midterm elections. a lot depends on what happens. governor's race and
our previous governor is reentered from the republican side and very contentious. we are considered a tossup state , so it really depends what midterm.in this even in conclude, minnesota with our collaborative approach and history of working public-private partnerships, there is increasing division between the republicans and democrats, and i am hoping as a short-livedhat is and moved back toward a more collaborative approach. i think there are pressures from both sides to go into your own camp and not talk to each other, and work at opposite ends. i think we have shown that we
can be active and proactive in terms of reacting to the changes, and i think insurance companies -- one of the things they said is we could be stable if they would stop changing the rules. every few months, something changes and so, i think everyone is waiting for things to settle down and let's figure out how we can move forward. thank you. >> it is reassuring to hear about a place where republicans and democrats have worked we've got a said problem, how do we solve it? were that it would happen here. mark, tell us about arizona. one of the more interesting states that couldn't be here today, but i used to live in arizona. i started my teaching career there and i have a lot of credentials. everything i bring to you is learned from our field
researcher there. arizona has some similarities to iowa. statea pretty deep red that was pretty hostile to the governor -- hostile, the governor to obamacare, but they did expand medicaid. also had a lot of grandfathered and transitional plans in place. land, bute lay of the things have varied a lot year-to-year in arizona in interesting ways. starting out, arizona had some of the lowest rates in the country. bit lower than the national averages, and they had a lot of insurer competition. there were seven or eight insurers from the get-go across the state. certainly in the major metropolitan areas, phoenix and but there the most,
were four or five even in rural areas. impressivellys quite -- was really quite impressive and kept rates low. they were too low. the co-ops failed catastrophically. the first year, the co-op priced way too high, 50% above the market and it got by some accounts 1000 enrollees. the co-ops only business market is the aca, so they were desperate too, and came in with huge rate reductions. they reduced rates quite a bit from what they had been and now came in 40% to 50% below the market. of course, this caused a huge swing in enrollment. most people had been with the blue cross plan, which he looked at your options and one of the
issues was with prices that low, the subsidies weren't as attractive and so when you had a lowballing insurer -- i hate to use the word because it seems pejorative in terms of a purposeful business strategy, but for whatever reason, lower than the rest of the market and they have a couple of different products out there, that sets the target premium for the subsidies and that makes other coverage is more expensive. that leads to the big enrollment swing. they have this big enrollment swing, but it wasn't sustainable. by year three, they had to leave the market. they declared receivership and such. the other thing that happened was the market started out with a traditional ppo plan, blue tna united had developed for their group market, but some other insurers had established themselves in
the market based on fairly narrow networks across provider systems, particularly in phoenix and tucson area. in arizona, you have good competition between health care systems in phoenix and to a lesser extent in tucson. products that formed around those competing systems could a network basis that were considerably favorable to the traditional broad ppo networks. weekly over the space of year, all the ppo plans dropped out and it was just hmo plans, which caused further movement of enrollees. someone had a blue cross, ppo, decided where do i go? blue cross hmo or do i switch over to health net, now owned by that received a lot
of enrollment. that caused further turmoil and that wase competition excessive looking back because they were suffering huge losses, so by 2016, the insurers -- two things happen. most insurers left except blue and the health net product and there were gigantic rate increases. increases and suddenly on the arizona went from almost having a bear county, the first was in 2016, county between two -- tucson and phoenix, it looked like they might not have a carrier and the largest increases, so it was the first poster case of the market going down the tubes.
they got all the counties covered, but now the prices were exceptionally high. what interests me is it settled into the following pattern. the two carriers, blue cross and , had basically split up the state and blue cross left the urban areas that had these narrow network-based problems and only concentrated on the rural areas where the ppo structure was to its advantage. was left with the attractive markets in phoenix and tucson without competition. based on that, rates were actually steady for 2017 and 2018 both. it seemed to have settled into this kind of single carrier companies but dovetailing market areas and being willing to stay in the market because they achieved profitability and had reached
i am trying to use a invokeat doesn't authorities, but strategic positions dovetailing coverage which suggests to me that >> that might be the stabilizing solution for some states, i don't know. o insurersrs -- tw plan to enter 2019. it will be interesting to see if they follow through and if that will cause further disruption with the established insurers. -- antrast with the others state in contrast with the others, and a very distinctive story that continues to unfold. >> thanks, mark.
we have had a lot of discussion about the so-called cliff, the problem that arose with the subsidies cutting off at 400% of poverty. that is a really good example of an unanticipated public policy problem. there has been quite a few in one if you --this at the time that law was written it seemed reasonable to income test the subsidies and to gradually phase them out, and it was gradual, and 400% of poverty is a reasonable living standard for most people. -- there did not seem to be a cliff problem, but one has arisen because of the
premium increases. --anted to ask each of you if you are asked what were you do -- what do you do to fix this, what would you say? is athink in theory there simple solution, just no one i ammore than 10%, and wondering what others think. can it be put in a way in which we are not subsidizing the 400 to 500, wherever 10% kind of meets the income level, that is where your subsidies phaseout. that was the original design, to given whatphase out insurance premiums were, you needed to get up to 400. that phases out at 500 or whatever, you are just saying as a general principle that should not have to pay more than 10%.
>> i would agree. basically covers everybody, and even with our current structure, especially a few years ago, there are people of then less than 400% poverty level who do not get any subsidies at all, because coverage is already affordable as a percentage of their income even though they do not earn more than 400% of the poverty level. if you just what to say -- because right now it is a lot smaller percentage than 10% of your income if you are well under 400% of the poverty level. it is a little below 10% if you above 300 or 400. you would have people in some areas who maybe get a little bit of a subsidy over 400% of the poverty level, but maybe do not get any. you would have people in other
areas who would get a premium subsidy at 1000% of the subsidy level -- poverty level. paying it -- have a family of four and $30,000 -- ng $30,000 ai year for their health insurance. you would cast a wide net and catch everybody. the one downside to that is that there is not any sort of restriction on costs there. by just saying that we will -- you get money, you get money, and you get money, you're not doing anything to bring down the premiums. you are helping the people who are suffering, but you are not addressing the root cause of the problem, which is the cost of health care. think that is exactly right.
none of this addresses health care spending or costs. to pay $1500 or 2700 for health insurance is kind of crazy. something is not working. i would just throw out a very radical, but why not pull the individual market and put it out for bid. have it be its own pool. right now we are selling to individuals. there is no monitoring of care, no disease management, it is not managed. you buy insurance and maybe it is indemnity insurance. why don't we pool it, maybe even with a small group market, say here are my people, when hundred 60,000 people, but it up for bid 0,000 people, put it up for
bid. >> and then you would have a single carrier that won the bid. >> yes. >> and if -- that is an interesting idea. reactions to that? [laughter] >> go for it. [laughter] familygo back to the and the mountain town of colorado -- in the mountain town of colorado that would be charged $30,000. that is the problem of very sparsely populated rural areas, and we have got a lot of those in this country. if you were designing a system that was basically sticks with the -- if you are amending the affordable care act lot, -- a
law, what would you do to mitigate this problem but -- of sparsely populated rural areas? >> one thing colorado has considered is combining the state into one rating area. the bulk of our population is along the i-25 corridor, but if you go into the mountains or into the eastern plains you have much more rural areas, you know, you are hospitals, not as many -- fewer hospitals, not as many providers. area, the our rating rates are all over the map really. the mountains and the eastern plains are really high. there was a study on it should we merge everybody into one rating area, and they actually came out and said note, -- no, because there was too much resistance to it along the
populated area. everybody there said that means our rates are going to go up to bring the rates of the lower populated areas down. the state stopped short of recommending that and instead recommended that we pursue other avenues to try to bring down the cost of care. you do have in the mountains everything is more expensive. the cost of providing care is more expensive, your overhead costs more expensive. unless you -- i mean come of that's, i don't know, i guess that's the million-dollar question. >> you could have done it. it was the states that set up the rating ever get. >> if i recall -- rating area. >> mark? >> if i recall a nifty idea was set up the insurance formula so it was more generous to the rural areas to give added relief
to those areas. >> also, the state subsidy bill they were considering what have only apply to people in our three most expensive rating areas had to pay more than 20% of their income for health insurance. we have considered some targeted things to address the specifically high-cost areas but have not done it yet. >> anyway, in particular for reinsurance, there is no given reason it has to be the same formula throughout the state. a varied formula. >> before we throw this open to audience questions, let me ask if you wereto say what ise in your state the most important thing you would do to stabilize the markets going forward? idea.hink i gave my
>> yes. [laughter] >> ok. >> i would love to see those two pieces of legislation passed. i know funding is an issue and there is no free money, but if a reinsurancement program and provide some state funding to help out the people who are a little over 400% of the poverty level, i would like to see those bills implemented. wo very simple things, simple does not mean i have a magic wand to make this all happen. the grandfather and grandmother plans, and get those individuals into the marketplace, for one. and then i think to revisit the stopgap measure and get rid of all the things that are not reinsurance, and are the reinsurance piece. i think that would be helpful. >> for me i think it would be
the capping insurance at 10% for everybody, plus the thing we heard repeatedly, just leave us alone for a while. [laughter] stop making these changes. into audience questions -- let's throw this open to audience questions. yes? >> this has been a great panel. i have a question, i am curious if you have any thoughts on whether the way i what did its -- iowa did its medicaid affect eitherany destabilizing or a positive effect? >> that is a good question. i did not talk about our medicaid expansion at all. i don't think i can tell you kind of one way or the other, other than to say i think the fact we have the medicaid
expansion means there are some individuals that would have been sort of in the 100-138 that are in our medicaid program instead of the marketplace. they started out in the marketplace and got moved over. called aut being marketplace choice, then the co-op shutdown and there was no choice. now we have moved everybody over into managed care, which is -- we can have another panel on a different day about that. it is hard to get a read, but i think it might contribute somewhat, because you have a group of individuals that at this time that are not in the marketplace that would have been. >> is that true in colorado? medicaid --expended expanded medicaid. >> yes, the people between
100%-100 30% of the poverty 100%-138% of the poverty level are --. people fromhave diverse parts of the country. part of the affordable care act was that employers offering different plants in different plans inlans -- different states. my question to you all is what insight do you all have into what is happened with the employer component of the markets in your various states, and to what degree that reinforces the rural versus urban divide, whether or not present employer coverage has increased or decreased in your states? that sort of thing. >> thank you.
>> so one thing is we did not really take a close look at that, although we have experts in each of the states. i am not an expert, so i don't know. nationally it has been notable that the employer market place -- marketplace has not been strongly affected by the affordable care act. onre was a lot of attention market stabilization and all. prior to the affordable care act we were talking about the smaller group market, and can we fix them with state-based small group performs. there has been almost no mention of a small group markets since the affordable care act. whatever it did to that market it seems to have taken in stride. more so for the large group market, it seems to be driven more by the overall economy than the aca. it will be interesting to see with this numeral on association
health plans, i think it will have a much stronger affect on the small group market than that of a new -- and the individual market. onhink we need to stay tuned the small group side of the employer market to see if it continues to -- it's not like it's vastly better than it was before, but does not seem dramatically worse either. >> any other reactions to that? >> i would say our small group market in colorado was already colorado had already gone through forms a decade ago for community ratings from the small group market. that market has been stable. we have not releasing the volatility that we see in the individual market. aside from an insurance brokerage standpoint, a lot of big insurance carriers in colorado have stopped played desk stop thing -- -- stopped paying --.
they still have a solid broker support staff for their smaller group market. they are very happy to still be selling small group plans. our small group market is good. >> good. other questions? yes, back here. and tell us who you are. >> i am from duke university. the flux ofioned different numbers of insurers in the state -- effects of different insurers in the state -- a different number insurers in the state. have 14 counties -- 64 counties in the states, and 14 that have one insurer. that is a lot of the areas in western colorado. up and down the front range 2-6, so with range from
the denver metro area has 4-6. and is mostly correlated with population. -- that depends and is mostly correlated with population. >> there is a sense that we want competition in the market but signaled thatwith just having the one insurer was sufficient. it is an option for people. your question to the on whose perspective you're talking about -- really depends on whose perspective you are talking about. theomething you said about plans in the individual markets in minnesota. you said they are kind of indemnity like plans. i was under the impression given the data on the proportion plansally of individual
that are exchanged in the narrow network, i was under the impression it is a highly managed environment. is minnesota unique? or is that something across country? >> i may have used that term --sely, but i would not say i would say matters -- minnesota is unique. they are still negotiating discounted fees. that is how a lot of our managed care negotiate prices with providers. that is what i meant. it is basically just paying the bills and not managing the care. >> yes? >> hello, i am a high school student from arizona. i had a question for you. how do you think the largest
native american population plays into the market in arizona? do you think that has any effect at all? >> that is a weakness in my coverage of arizona. the population is quite large and the rural's are somewhat -- rules are somewhat different for them. i don't have a good sense of that. maybe she does? or if you do. field research. i kind of blanked on that. i really don't know. >> i think, and i don't have the notes on that front of me, but i'm fairly sure blue cross blue shield of arizona was the only insurer that i saw lester and the rate filings that actually at a cost of c.s.r.'s for native american populations back into their premiums. in most states it was sort of cost.rs to state, that i am fairly sure it was blue cross blue shield arizona that addressed the issue.
>> back here? hey. i was curious, there is a lot of flexibility in what you can apply for an 81332 waiver -- a 1 332 waiver. why have so many states decided to pursue reinsurance in their waivers instead of another solution? >> one of the main reasons is that once price was the secretary he sent a letter to all governors thank pursue reinsurance -- saying pursue reinsurance. [laughter] it was a signal, you can reinsurance, or a high risk pool . they mentioned both of those
options. i think that was one of the -- that was the signal to do. the other thing in both alaska and minnesota, they had already built an infrastructure from their high-risk pools. they used their legislative -- they already had legislation on high-risk pulls. they used their infrastructure. we already had a high risk pool board, and high risk pool entity. it was a ready organized. that was another reason. we could build on existing infrastructure. that is why i think alaska and minnesota were out first. >> one key reason is that the math works under 1332. brad mentioned
say the state can redistribute the money as long as nobody is worse off. no one were soft and someone better off -- no one were soft offsome better off -- worse and some better off. reinsurance has this magic quality where if you can reduce more -- rates market wise, that frees up otherwise subsidy money that can be put into reducing rates more market wise. it does not go on forever, it reaches a new equilibrium. money materializes out of thin air quality. >> we can take one more question. excuse me, we can take when more question, and then you have all earned -- one more question, and that you have all earned a copy break. let me go -- coffee break.
let me go over here. >> under the last couple of years under the trump administration there has been a decrease in funding and focus on promotion during the enrollment period. i know in most states enrollment has stayed stable or increased. what strategies for promoting enrollment have worked in the past? what are some strategies and you will focus on in the future to keep enrollment up? >> good question. >> i can start out on that. california is notably not one of our study states partly because it has been profiled a good bit to a large extent by itself. [laughter] because they are proud of their success, but they should be. they have a study out showing that there is a very favorable return on investment and more advertising. you enroll more people -- in more advertising. you in moral -- enroll more people and help your people.
overtime time the risk pool -- healthier people. over time the risk pool tends to degrade. the other thing is that in our study states we sought, even the states that were federally-based exchanges like florida, which has a very high take-up, one of the highest rates of sign-up and as a result a larger enrollment pull the california because they pool than enrollment california because they did not expand medicaid. previously those were supported also by federal grants for navigators and a sisters -- assistors. a good number of them connected either with legal aid or with community health centers c.r.'s -- community health centers. >> other questions -- reactions?
>> i think it would be a great idea to do some outreach enrollment in the state of iowa. [laughter] >> and mark's report, which you interesting it was -- and i don't know which state aware this was -- or where this was. just the constant aca and the barrage from the national level, we will repeal and replace. that has an impact of ringing people into the market because people are aware of it. it is sort of that unearned media, which is kind of interesting to me. it is on the top. was not outreach enrollment strategy, but just that it was part of the new cycle was interesting that it was able to keep people aware. i think states are going to have to step up and do their own enrollment and outreach. i would imagine insurers are