NAIC Spring Meeting Update: Health Committee Highlights

Monday, April 6, 2015
Michael Gomes
BenefitMall

Last weekend, the National Association of Insurance Commissioners (NAIC) held its spring meeting in Phoenix, AZ.  For over 100 years, NAIC has been the standard-setting and regulatory support organization created and governed by the chief insurance regulators from the 50 states, the District of Columbia and five U.S. territories.  This blog highlights key activities and reports associated with several work groups associated with the NAIC’s Health Insurance and Managed Care (B) Committee.   

Former Senior Federal Official Weighs in on King Case and Private Exchanges

If the U.S. Supreme Court rules in favor of the plaintiffs in the King v. Burwell case and eliminates subsidies offered through the federally-facilitated Exchanges, Joel Ario, the former federal regulator in charge of Exchanges, predicted a “train wreck” and a likely “premium death spiral” if more healthy individuals pull out of the marketplace.  He made his comments before the NAIC’s Health Care Reform Regulatory Alternatives (B) Working Group. 

When assessing the potential different legal outcomes of the King case, Mr. Ario noted that private Exchanges have done very well in placing coverage over the past year and could help alleviate some of the pressure points.  In fact, he stressed that private Exchanges should have a role in helping to stabilize the marketplace no matter how the U.S. Supreme Court rules sometime in late spring or early summer. 

Mr. Ario’s comments certainly represent a vote of confidence for private Exchange models like BenefitMall’s.  Not only is he the former Pennsylvania Insurance Commission, but Mr. Ario also served as the director of the Office of Insurance Exchanges for the Department of Health and Human Services (HHS) after the Affordable Care Act (ACA) was adopted.  During his tenure at HHS, he led efforts to develop the regulatory framework for the Exchange system and helped state government officials with efforts to expand coverage and safeguard consumers.  

NAIC Work Group Mulls Over ACA 2016 Premium Rate Options

During Mr. Ario’s presentation at the NAIC conference, state regulators discussed potential outcomes on how health plans should file their premium rates in response to potential verdicts associated with the King v. Burwell case.  Wisconsin Insurance Commissioner Ted Nickel led a discussion where several options were entertained, including:  1) filing dual rates to cover both legal outcomes --  i.e. either upholding or overturning the right to offer subsidies through the federally- facilitated Exchanges; 2) filing one rate assuming that the subsidies are upheld; 3) quickly re-filing the rates if the King decision eliminated the subsidy option; and 4) still living with how the original rates were filed if the subsidies are struck down.

Under option 3, discussion ensued about whether it was feasible to file new rates over several months to still meet the November open enrollment period.  The general consensus that the timeframes would be very, very tight.  

The Future of CO-OPs

During the Health Insurance and Managed Care (B) Committee, which serves as the parent committee for most health insurance-related working groups, two representatives from the National Alliance of State Health CO-Ops spoke. 

Both Kelly Crowe, the Executive Director, and Martin Hickey, the CEO of the New Mexico Health Connections, testified that CO-OP enrollment was brisk for 2015, with over one million covered lives, which is double the enrollment from last year. They also noted that most of the 22 CO-OPs are in a much better financial position, and their respective operations are peer-reviewed by actuaries. 

Several insurance regulators, including representatives in New York and Wisconsin, questioned the long term viability of the CO-OPs in their states.  In part, the discussion was driven by several CO-OP solvency issues that emerged last year. A spirited discussion ensued on how best to ensure the ongoing financial integrity of these consumer-based ACA plans.  

Federal Update

The NAIC (B) Committee also received an update from Amanda Schnitzer, who serves as a Health Insurance Specialist at the Centers for Medicare and Medicaid Service’s (CMS) Consumer Information and Insurance Oversight (CCIIO) division.  She noted that 11.7 million Americans have enrolled through the 2015 open enrollment period.  Of those that enrolled, 8.4 million came from the federal Exchange system and 2.8 million from state-based Exchanges.  She did not mention where the other 500,000 enrollees came from.  

Ms. Schnitzer also observed that “operations are getting smoother, but more needs to be done.”  She highlighted three goals that HHS is emphasizing going forward: 1) improve consumer experiences (e.g., beyond enrollment); 2) maximize product value (e.g., justify premium rates); and 3) achieve operational excellence (e.g., better provider directories).  

During the question and answer period with Ms. Schnitzer, several regulators raised concerns about allowing states to change the cutoff for small groups from 100 employees back down to 50.  Insurance regulators said this would change the risk pool and potentially hurt small employers.  NAIC also has gone on record in the past noting that some mid-size employers with more than 50 employees but less than 100 would likely self-fund if their premium rates increased too dramatically.  The main takeaway from this discussion was that if HHS is going to change its guidance on this matter, they should do it now so health plans can adjust accordingly before they submit their 2016 premium rates.  

In a related story, published in early March, the U.S. Chamber of Commerce and over a dozen other trade associations asked HHS to delay moving businesses with 51 to 99 employees from the large group market to the small group market in 2016 because the larger employers in this potential pool don’t want to participate in the small group market. 

Stay Tuned

Stay tuned as BenefitMall continues to report on issues affecting Brokers.

The views expressed in this post do not necessarily reflect the official policy, position, or opinions of BenefitMall. This update is provided for informational purposes. Please consult with a licensed accountant or attorney regarding any legal and tax matters discussed herein.