Date: 07/15/2015
Final
Discussion of Changes to Current System by Utilizing Section 1332 Innovativ
HEALTH CARE EXCHANGE
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09:31 AM -- Discussion of Changes to Current System using a Section 1332 State Innovation Waiver
Jeff Bontrager, Colorado Health Institute, Richard Cauchi, National Conference of State Legislatures (NCSL), and Kevin Patterson, Connect for Health Colorado, came to the table for a panel discussion on Section 1332 waivers. Mr. Cauchi began his comments and provided a packet of material to the committee concerning 1332 waivers (Attachment D). He highlighted the material in the packet from various experts for the committee. He discussed the process for states to pursue a 1332 waiver and various considerations that states could take into account. He mentioned that there is not currently federal guidelines about the process that states must follow when pursing a waiver. He discussed the Center for Medicaid and Medicare Services' (CMS) process to review and approve state waiver plans and the role of state legislatures in the process.
150715 AttachD.pdf
09:42 AM
Mr. Patterson began his comments. He discussed how a waiver could be an option to meet certain goals and improve aspects of the exchange. He mentioned how improving the customer experience is a priority for Connect for Health Colorado as the state considers different options for the future. He discussed Connect for Health Colorado's collaborations and conversations with other states, which have touched on the topic of waivers. He stated that CMS will likely look more favorably on waiver proposals if all organizations and stakeholders are on board in the state. Mr. Bontrager referred back to his prior comments and presentation concerning 1332 waivers.
09:48 AM
Senator Roberts began the question-and-answer portion of the panel discussion and outlined the process for legislators to ask questions of the panel. Senator Kefalas asked about the idea of moving away from an employer-based insurance system to a more market-oriented approach for individuals. He talked about how this could potentially save money for businesses and promote individual responsibility. Mr. Bontrager responded that it could be done, but stated that upwards of 60 percent of Coloradoans receive insurance through their employers, which would mean that it would be a substantial shift. He outlined concerns about cost and budget neutrality for such a waiver proposal. He then discussed the tax implications for employer-provided insurance, as well as TABOR impacts in Colorado. Senator Kefalas lauded the improvements to date in expanding coverage, but highlighted some areas for improvement.
09:57 AM
Representative Sias asked what services are provided by the exchange that are not provided by brokers. Further, he asked why is there a requirement that there must only be one exchange, rather than competing exchanges. Mr. Cauchi responded that there could be multiple exchanges in a state, such as regional exchanges, as well as multi-state exchanges. He noted that these arrangements have not been pursued and explained that all state exchanges are single, state-wide exchanges. He stated that such arrangements do not require a waiver. Representative Sias then asked why the exchange must be a public entity. Mr. Cauchi stated that PPACA requires exchanges to be a state agency or entity, or a nonprofit organization contracted with the state. Mr. Bontrager elaborated on the potential for private exchanges.
10:03 AM
Representative Ryden asked about a system where employers contribute on a tax deductible basis, but where the employee have control over selecting and purchasing health insurance. Mr. Cauchi replied that prior to PPACA, employers were allowed to voluntarily contribute to or provide health insurance. He stated that the elimination of the employer mandate would return the United States to a pre-PPACA landscape. Representative Ryden then asked about the single entry system for purchasing insurance and problems with Medicaid eligibility determination. Mr. Patterson responded by discussing the shared eligibility system and the alignment of eligibility criteria. Representative Ryden highlighted the need for brokers in helping people navigate the system and find the right health coverage.
10:08 AM
Senator Lundberg stated that he is not interested in pursing waivers because the system is not functional. He stated that he is interested in listening to the committees comments, but that he wants to seek solutions that will work. He then discussed alternatives to the PPACA model. He discussed private exchanges and the lack of efficiency of Connect for Health Colorado.
10:11 AM
Senator Aguilar discussed her involvement in a ballot initiative to implement a single payer health system. She stated that some people are unable to afford health insurance and that many people are underinsured or do not think they need coverage. She discussed rising health care costs and the administrative costs under PPACA. She stated that all Coloradans should have options for robust health care coverage. She asked if a citizen-initiated constitutional amendment would count as a legislative action for the purposes of pursing a 1332 waiver. She then outlined the provisions of the "Colorado Care" proposal. Mr. Cauchi stated that he could not comment on the specific legality of such an arrangement, but mentioned the need for a certain level of detail in a waiver proposal.
10:16 AM
Senator Roberts asked about the logistics and timing of pursuing a 1332 waiver. She stated that there may be difficulties meeting certain deadlines by 2017. Mr. Cauchi responded by citing the Arkansas example and stated that there is not a deadline for states to request waivers. States can pursue waivers any time after 2017. Senator Roberts asked whether pursing a 1332 waiver at the current time is advisable when there are so many issues facing the exchange. Mr. Patterson stated that his primary focus is improving custom service and aligning eligibility. He expressed concern about pursuing changes while the current system is still working on improvements. Senator Roberts then asked about difficulties with Colorado Benefits Management System (CBMS) and whether that was an impediment to improvement. Mr. Patterson discussed the difficulty of making large system changes and stated that they have a clear idea of what needs to be done.
10:22 AM
Representative McCann asked if the members of the panel had recommendations about pursuing a 1332 waiver. Mr. Bontrager pointed out that the state needs to know what the problem is that a waiver is trying to solve. He stated that many changes can be pursued without a waiver. He discussed some ideas for waivers that are currently being discussed by states and the main challenges facing Colorado's exchange and insurance market. Mr. Cauchi did not have any specific recommendations and discussed the role of NCSL in providing information to states. He highlighted the cost neutrality requirement for waivers and stated that it is a key consideration. Mr. Patterson stated that his focus is on improving the customer experience heading into the next open enrollment period. He said that considering changes for 2017 is possible, but that he does not want to rush any decision to pursue changes.
10:28 AM
Senator Martinez Humenik asked if there were waiver options that could attract more young and healthy individuals to purchase insurance through the exchange. Mr. Bontrager discussed the example of Indiana moving clients into health savings accounts and high-deductible plans. He stated that a 1332 waiver could potentially be used to incentive such plans. He then discussed the issue of under-insurance and burdens of high cost sharing if pursing such an option. Mr. Cauchi discussed the current ability of young people to stay on their parents' insurance until age 26 and to purchase catastrophic coverage through age 30. He mentioned adjusting these age ranges as a potential option. Mr. Patterson discussed the difficulty in moving young people into the insurance market. Senator Martinez Humenik then asked about tax changes through a waiver. Mr. Cauchi responded that the federal Department of Treasury does review waiver proposals.
10:32 AM
Representative Primavera asked about the sustainability of the health exchange and how some states have converted to the federal exchange or sold their information technology model. Mr. Bontrager discussed federally supported state-based exchanges, which are a relatively new model that some states are using. He discussed the challenges and benefits of such an option. Representative Primavera then asked about the different changes pursued by other states and whether a waiver could include multiple options. Mr. Cauchi stated that some states have pursued multiple pilots in their states. Representative Primavera then commented about cost sharing and cost transparency in the insurance market.
10:39 AM
Senator Roberts then opened the discussion up to follow-up questions. Senator Kefalas directed his question about moving away from employer-based insurance to Mr. Cauchi. Mr. Cauchi responded that other states are pursuing different ideas and noted complexity for employers who operate in multiple states. He stated that this could be a central issue that states look at when considering waiver options. Senator Kefalas asked about revenue neutrality if fines on employers who fail to provide insurance are eliminated. Representative Sias then commented on the large number of products on the exchange and asked if navigators are able to properly advise people about products and whether a waiver could somehow address this issue. Mr. Patterson responded and discussed the factors that navigators and brokers look at when directing clients to health insurance products. Mr. Bontrager stated that states have wide discretion in setting up navigator programs and that it may not be an area where a waiver is needed. Representative Ryden then asked about difference between state and federal exchanges. Mr. Cauchi discussed the experiences of various states in setting up their own exchanges and switching to the federal exchange. Mr. Patterson highlights some of the successes of Colorado setting up its exchange. Representative Ryden commented on the rising costs of insurance and health care and asked if other states have had success in controlling costs. Mr. Cauchi discussed state rate review procedures before and after PPACA.
10:53 AM
Senator Aguilar commented on high-cost populations and the incentives for other people not to purchase health insurance. She stated that Colorado needs to look at these issues and look at where the system should be going. She commented on funding for the Colorado Commission on Affordable Health Care and how it can play an important role in this discussion. She then encouraged the committee to look at prior legislation from 2009 that created a tiered system of health care payments. Senator Roberts commented on the "young invincible" populations and the potential for a medical catastrophe. She asked if there was a product that could appeal to this population and if they are needed in the health insurance risk pool. Mr. Bontrager stated that he would like to look into the current situation for catastrophic coverage in more detail. He stated that a 1332 waiver could be used to eliminate certain coverage requirements, which could potentially decrease the cost of insurance and make it more appealing to younger populations. Mr. Patterson commented that the population served by the health exchange included younger people. Mr. Bontrager mentioned a Kaiser Family Foundation study that concluded that persons aged 18 to 34 should make up about 40 percent of the risk pool, in line with their percent of the overall population. Discussion then ensued concerning the Colorado Commission on Affordable Health Care. Mr. Bontrager discussed how Minnesota implemented a basic health care plan for people with incomes up to 250 percent of the poverty level. Representative Primavera commented about the shift under PPACA from health care being "sick care" to being more health- and wellness-focused care. She then discussed essential health care benefits and coverage options, and asked about waiver options in this area. Representative Primavera then asked about health care costs and the experiences of other states.
11:14 AM
Senator Kefalas asked about administrative costs in the health care and insurance area and ways to reduce these costs. Mr. Bontrager mentioned the Clean Claims Task Force and Mr. Cauchi mentioned some research by NCSL in this area. Representative Sias asked about the 2016 rate determinations, which may result in significant premium increases. He also asked if there was a way to address price increases using a waiver. Mr. Patterson responded that rates will be approved by the Division of Insurance. He then discussed different types of products that could potential be sold on the exchange. Mr. Bontrager discussed the rating areas used by the Division of Insurance. Representative Ryden asked about employers with fewer than 25 employees and whether a waiver could address this population. Mr. Cauchi stated that there are subsidies under PPACA for newly insured employees in business with fewer than 25 employees. He stated that a 1332 waiver could be relevant if the employee threshold were to be changed for this subsidy. Mr. Patterson discussed how businesses access the subsidy and how smaller employers with less than 10 employees may not have incentive to take advantage of the subsidy. Senator Aguilar asked whether the committee would want to consider asking the Colorado Commission on Affordable Health Care to examine waiver options. Senator Roberts stated that motions and legislation can be addressed at a future meeting. She then asked about the process for determining cost neutrality of waiver proposals. She also asked about governance structures for the exchange. Mr. Bontrager stated that states are waiting on guidance from the federal government around cost estimates. The panel did not know of any limitations on governance concerning 1332 waivers.
11:34 AM
The committee recessed for a 15-minute break.