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ILLINOIS COVERED CHOICE. Reinsurance Institute Washington, D.C. July 19, 2007. ILLINOIS COVERED -- OVERVIEW --. EXPANSION OF PUBLIC PROGRAMS Targets Working Parents, Workers w/ Disabilities, Adults Below 100% FPL ILLINOIS COVERED REBATE
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ILLINOIS COVEREDCHOICE Reinsurance Institute Washington, D.C. July 19, 2007
ILLINOIS COVERED -- OVERVIEW -- • EXPANSION OF PUBLIC PROGRAMS • Targets Working Parents, Workers w/ Disabilities, Adults Below 100% FPL • ILLINOIS COVERED REBATE • Subsidize Purchase of Employer-Sponsored Insurance, Including Covered Choice • Up to 400% FPL, Premium Cap (Varies Based on Income) • ILLINOIS COVERED CHOICE
COVERED CHOICE HEALTHY NY MODEL, ILLINOIS PLAN
ELIGIBLE SMALL EMPLOYER • 25 or Fewer Employees • Contributes 70%+ of Employee Premium • 2/3 of Employees < 400% FPL • 50% Eligible Employee Participation
ELIGIBLE INDIVIDUAL • Unemployed • Employed But No Employer-Sponsored Insurance for 18 Months • Not a Covered Choice Eligible Employee (Works <25 Hrs. p/wk) • Solely Self-Employed
FUNDING SOURCES • Employer Assessment • 3% Gross Payroll Assessment if Employers with 10+ Employees Spend Less than 4% Gross Payroll on IL Employee Health Care • Estimated $1.3 billion • CHIP Baseline Assessment • If Enough High Risk Pool Enrollees Take Up Covered Choice, State Will Use Some High Risk Pool Assessments to Fund Covered Choice • Estimate Uncertain
New York Guarantee Issue Community Rating No High Risk Pool Illinois No Guarantee Issue No Rating Structure (NEW RULE PROPOSED JULY 2007) High Risk Pool REGULATORY DIFFERENCE-- INDIVIDUAL MARKET -- KEY MARKET DYNAMIC Healthy Lives in IL Can Purchase Cheaper Products
New York Guarantee Issue Community Rating Illinois Guarantee Issue Liberal Rate Bands (+/- 25%) REGULATORY DIFFERENCE-- SMALL GROUP MARKET -- KEY MARKET DYNAMIC Healthy Lives in IL Can Purchase Cheaper Products
INDIVIDUAL MARKET GUARANTEE ISSUE Source: Kaiser Family Foundation
AVAILABLE RATES • Illinois • 30/male/non-smoker/Chicago • $135.67 BCBS PPO ($1000 deduct – 80/20) • $196.78 BCBS PPO ($1000 deduct) • $301.72 BCBS PPO ($0 deduct) (Data Collected June 2007)
Illinois 59/male/non-smoker Chicago $409.80 BCBS PPO ($1000 deduct – (80/20)) $741.07 BCBS PPO ($1000 deduct) $1136.25 BCBS PPO ($0 deduct) AVAILABLE RATES (Data Collected June 2007)
CHIP High Risk Pool Strategy – Isolate High Risks Enrollment = 16,543 CHIP Rates 30/male/non-smoker/Chicago $345 CHIP PPO ($1000 deduct) $390 CHIP PPO ($0 deduct) 59/male/non-smoker/Chicago $1,037 CHIP PPO ($1000 deduct) $1,134 CHIP PPO ($0 deduct) RATES FOR “UNINSURABLES”-- Isolating High Risks -- (Data Collected June 2007)
CHALLENGE: REINSURED PRODUCT IN NON-CR MARKET • Diverse Risks Must Take-Up Reinsured Product • Significant Reinsurance (80% of Claims Above $40k) and Subsidies (Illinois Covered Rebate) • Covered Choice = Cheapest Comprehensive Coverage • Limited Rate Variation • (e.g., Age =+/- 25%, Minimum 5-Yr. Age Brackets) • Aggressive Marketing • Flexibility to Adjust to Unanticipated Market Dynamics • Retain Necessary Rulemaking Authority • Adjust Eligibility, Benefits and Reinsurance Corridor • New Health Insurance Rules = Better Market Data • Insurers Must Fairly Price Reinsured Product • Base Rate Review Considers Loss Ratio and Surplus
MANAGED CARE NETWORK CHALLENGES • Ensure Meaningful, Statewide Coverage • Illinois HMO Penetration Low, Particularly Downstate, So Product Delivered Through HMOs and PPOs • Address PPO “Network” Challenges • Provide Access to All Networks • Providers Otherwise Contracted as Network Provider Must Be A Network Provider for Covered Choice • “Adequate Network” Burden Remains with Insurer • Manage Provider Costs • Regulate Provider Reimbursement Rates
BIG-PICTURE ISSUES • ERISA and Employer Assessment • Retail Industry Leaders Assoc. v. Felder (4th Cir. 2007) • HIPAA Group Availability Requirement • 42 U.S.C. 300gg-11(a)(1)(A) • Free Market Rhetoric • Inter-Department Coordination
