Health Insurance Reform and The Affordable Care Act Affordable Care Act Implementation in Illinois: Year One

1. Health Insurance Reform andThe Affordable Care ActAffordable Care Act Implementation in Illinois: Year One ILLINOIS Department Of Insurance April 27, 2011

2. Overview of Presentation • Overview of the Affordable Care Act (ACA) • Benefits to Illinois Families and Employers • Implementation of the ACA in Illinois Illinois Department of Insurance – April 20, 2011

3. Overview of Affordable Care Act Affordable Care Act (ACA) reforms will benefit Illinoisans in every coverage situation: • For the currently insured, additional safeguards and reforms to strengthen existing coverage. • For the currently uninsured, new coverage options and subsidies to ensure access to affordable care. • For small business owners, tax credits to lower the cost of providing coverage to employees. • For Medicare recipients, improved coverage for prescriptions drugs and better access to preventive care. Many ACA reforms will not take effect until 2014, but immediate benefits are already being implemented. Illinois Department of Insurance – April 20, 2011

4. Overview of Affordable Care Act 2010 • New consumer protections, including: • Prohibitions on preexisting condition exclusions, rescissions • Free preventive services • Restrictions on lifetime and annual dollar limits • Expanded appeal rights • Coverage for individuals with preexisting conditions 2011 • Premium value, protections against rate increases Illinois Department of Insurance –April 20, 2011

5. Overview of Affordable Care Act 2014 • Transparent online marketplace (“Exchange”) • Including online Medicaid eligibility and enrollment • Additional market reforms • Prohibition against discrimination based on health status, gender • Coverage for essential health benefits, limits on cost-sharing For detailed information about ACA reforms: • insurance.illinois.gov/HIRIC • healthcare.gov Illinois Department of Insurance –April 20, 2011

6. Benefits to Illinois Families - Highlights Issue: Rescissions • Prior to the ACA, Illinois law allowed rescissions for any “material” reason, regardless of intent • From 2004-2008, Illinois led the nation in overall number of rescissions, with 40% more than California. • One teenager’s coverage was rescinded due to failure to disclose a “congenital deformity” – she wore braces. • The ACA prohibits rescissions except in cases of fraud or intentional misrepresentation. Illinois Department of Insurance –April 20, 2011

7. Benefits to Illinois Families - Highlights Issue: Preexisting Condition Exclusions • Prior to the ACA, Illinois law allowed insurers to deny coverage for any reason other than “race, color, religion or national origin,” and to exclude coverage based on the presence of a “preexisting condition.” • Coverage is denied to children who were sick, are sick, or might become sick. • Under the ACA, insurers cannot impose preexisting condition exclusions—including denials of coverage—to children under 19. • Beginning in 2014, preexisting condition exclusions are prohibited entirely. Illinois Department of Insurance –April 20, 2011

8. Benefits to Illinois Families - Highlights Preexisting Condition Exclusions (continued) • The ACA established federally-funded “high risk pools” to provide transitional coverage for uninsured individuals with preexisting conditions in each state. • Most frequent ICHIP premiums: $12,000-$16,000 • Illinois Preexisting Condition Insurance Plan (IPXP) Premiums and coverage details are available at: insurance.illinois.gov/IPXP. • More than 1,200 Illinois residents have already enrolled. Illinois Department of Insurance –April 20, 2011

9. Benefits to Illinois Families - Highlights Issue: Premium Value • Prior to the ACA, Illinois law did not require health insurers to expend on health care a defined percentage of hard-earned premium dollars paid by families and employers. • Illinois has an exclusively for-profit health insurance market. • The ACA requires insurers to spend at least 80% of each premium dollar on health care for individual/family and small employer plans, and 85% for large employer plans. • Insurers that fail to meet these requirements must provide rebates to policyholders in 2012. Illinois Department of Insurance –April 20, 2011

10. Benefits to Illinois Families - Highlights Issue: Annual and Lifetime Dollar Limits • Prior to the ACA, Illinois law allowed non-HMO plans to establish annual and lifetime dollar limits. • Individuals with chronic or costly health conditions have been forced to forego needed care or pay out-of-pocket. • The ACA prohibits annual and lifetime dollar limits for essential health benefits. • Prior to 2014, health insurers can establish restricted annual dollar limits ($750,000 in 2011, $1.25 million in 2012, and $2 million in 2013). Illinois Department of Insurance –April 20, 2011

11. Benefits to Illinois Families - Highlights Issue: Free Preventive Care • Prior to the ACA, Illinois law did not require health insurers to provide coverage for important preventive benefits such as physicals, immunizations, and cancer screenings. • The ACA requires insurers to provide coverage for preventive services without cost to the policyholder. • The full list of preventive services is available at http://www.healthcare.gov/center/regulations/prevention/recommendations.html. Illinois Department of Insurance –April 20, 2011

12. Benefits to Illinois Families - Highlights Issue: Coverage for Young Adult Dependents • The ACA expands on existing State law allowing parents to add coverage for young adults up to the age of 26. • Improving on the State law, the ACA: • Applies to “self-insured” plans; and • Allows coverage for married young adults and those no longer living at the same permanent address as a parent. Illinois Department of Insurance –April 20, 2011

13. Benefits to Illinois Families - Highlights Issue: Direct Access to OB-GYNs • The ACA expands on existing State law allowing women to visit OB-GYNs without the need for a referral or prior authorization. • Improving on the State law, the ACA: • Applies to “self-insured” plans; • Does not require women to designate a “primary” provider, instead allowing women to visit any in-network OB-GYN. Illinois Department of Insurance – April 20, 2011

14. Benefits to Illinois Families - Highlights Issue: Prescription Drug Coverage for Seniors • Prior to the ACA, Illinois seniors were required to pay 100% of prescription drug costs that fell in the Medicare Part D coverage gap, or “donut hole.” • Under the ACA, more than 100,000 seniors who reached the coverage gap in 2010 received a $250 rebate check. • The coverage gap will be eliminated entirely by 2020. • Beginning in 2011, seniors will receive a 50% discount on covered brand-name drugs. Illinois Department of Insurance –April 20, 2011

15. Benefits to Illinois Families - Highlights A complete list of ACA insurance market reforms, effective dates, and applicability to “grandfathered” and self-insured plans is available at: http://insurance.illinois.gov/HealthInsurance/ppaca_reforms.asp Illinois Department of Insurance –April 20, 2011

16. ACA Implementation in Illinois – To Date • Illinois Preexisting Condition Insurance Plan (IPXP) • www.insurance.illinois.gov/IPXP • Federal Implementation Grants • Premium Review - $1 million • Exchange Planning - $1 million • Consumer Assistance - $1.45 million • Education • Health Insurance Reform Implementation Center: www.insurance.illinois.gov/HIRIC • Webinars Illinois Department of Insurance –April 20, 2011

17. ACA Implementation in Illinois – To Date • Enforcement • State Legislation • Rate Review Web Portal, ACA “Endorsement Template” • National Participation through NAIC • Model legislation – Health Insurance Exchanges • Guidance/recommendations to HHS • Illinois Health Reform Implementation Council • www.healthcarereform.illinois.gov Illinois Department of Insurance –April 20, 2011

18. ACA Implementation in Illinois – Future Milestones and Continued Efforts • Rate Review – HB 1501 (Rep. Greg Harris) • Leading health insurers have accumulated a combined 2010 surplus of $28,353,715,566, even while individuals and families in Illinois have paid a cumulative average rate increase of 181.8% since 2005. • Public hearings to be scheduled for this Spring. • Health Insurance Exchange • State must demonstrate sufficient progress to ensure continued federal funding. • Exchange will add efficiency to Medicaid program, support small employers in purchase of health care. Illinois Department of Insurance –April 20, 2011

19. ACA Implementation in Illinois – Future Milestones and Continued Efforts • DOI-Led Working Groups • Agents/Brokers • Healthcare providers • Insurance Companies • Employers • Patient and Family Advocates • Public meetings; details available at http://insurance.illinois.gov/hiric/ Illinois Department of Insurance – April 20, 2011