1. Health Reform Implementation Brian Webb National Association of Insurance Commissioners August 2, 2010

2. Reform Timeline 2010 2011 2012 2013 2014 2015 2016 2017 Temporary High Risk Pool Program Temporary Reinsurance Program For Early Retirees Immediate Reforms: • No Lifetime Limits • Restricted Annual Limits • Restrictions on Rescission • First Dollar Coverage of Preventive Services • Extended Dependent Coverage • Internal/External Review • No Pre-Existing Conditions for Children • Disclosure of Justifications for Premium Increases Medical Loss Ratios with Rebates/Rate Reform/Data Collection Exchanges Subsidies Individual/Employer Mandates Market Reforms • Guaranteed Issue • No Pre-Existing Condition Exclusions for Adults • Rating Rules • Essential Benefits Plan • No Annual Limits for Essential Benefits Co-Op Plans & Multistate Plans Risk Adjustment Individual Market Reinsurance Program & Risk Corridors 2010 2011 2013 2014 2015 2016 2017 2012

3. Medical Loss Ratio • PPACA Requires: • Beginning January 1, 2011, issuers shall, each plan year, pay rebates to enrollees if the Medical Loss exceeds: • 80% in the non-group market • 80% in the small group market • 85% in the large group market • NOTE: A state may set a higher percentage – The Secretary may set a lower percentage in a state if the non-group market is destabilized or adjust the rates due to volatility caused by the Exchanges. • By December 31, 2010, the NAIC shall establish uniform definitions and standardized methodologies for calculating the components included in the Medical Loss Ratio. This is subject to Secretary certification.

4. Medical Loss Ratio Components of the Medical Loss Ratio: Reimbursement for clinical services + Expenditures to improve health care quality ____________________________________________ Total premium revenue – Federal and State taxes and licensing or regulatory fees (and accounting for risk adjustment, risk corridors and reinsurance) • The issuer must provide an annual report to the Secretary on the above expenditures/revenues and other non-claims costs, including and explanation of the nature of such costs.

5. NAIC: Other Issues • Rate Review • Definitions of “unreasonable” and “excessive” • Forms and processes for filing rates for review • Uniform Fraud Reporting Form • Consumer Information • Uniform Enrollment Form • Standardized Explanation of Coverage • Definitions • Data Collection • Risk Adjustment/Risk Corridors (2014) • Medigap Reforms (2015) • Standards for Interstate Compacts (2016)

6. Questions? Contacts at the NAIC Brian Webb Josh Goldberg Manager Health Policy and Leg Analyst Health Policy and Legislation jgoldberg@naic.org bwebb@naic.org 202-471-3984 202-471-3978