What is the current health insurance status of Coloradans? What are the characteristics of the state’s private health insurance market? How will these change as a result of recent state and federal health reforms? These questions and others were addressed at a special health policy roundtable for legislators and their staff. Presented to: 2011 Healthcare Roundtables for Legislators

1. The Private Market: The Foundation of Health Insurance Health Policy Roundtable March 10, 2011 Legislative Services Building

2. Colorado Health Institute: Our mission To serve as an independent and impartial source of reliable and relevant health information. CHI provides: Presentations and roundtables One-on-one briefings with legislators, caucus or staff upon request Succinct publications (LOT report) Custom research No spin, just the facts 2

3. Questions CHI is often asked How are Coloradans currently insured? How will that change under national reform? What are other options? What are decisions the General Assembly will make? What else can the state legislature do? 3

4. Four sessions will address these issues Thursday, March 10: The Private Market: The Foundation of Health Insurance Thursday, March 24: The Changing Landscape of Publicly Funded Insurance Thursday, March 31: A Profile of Your Community’s Health Thursday, April 14: The State Health Insurance Exchange 4

5. Today’s discussion Overview of the private insurance market and policy implications Frame current legislative issues in greater national and policy-oriented context Share how CHI can be a resource for your health policy interests 5

6. What is health insurance? The intended purpose of health insurance is to collectively pool risk to protect individuals from incurring large expenditures or losses associated with illness, injury or disability. 6

7. Why we are discussing health insurance today 14% of Coloradans have no insurance Nearly 700,000 people The cost of insurance is significant and rising Over past 5 years: Small group premiums up 20%, large group up 23% and individual policies up 56% Evidence suggests that insurance leads to better outcomes and more coordinated care 7

8. Insurance markets and spectrum of risk 8

9. Private insurance covers 71% of Coloradans 9 SOURCE: 2008-09 Colorado Household Survey, Colorado Department of Health Care Policy and Financing, analyzed by the Colorado Health Institute

10. Overview of private insurance markets in Colorado Individual market Individually purchased plans High-risk pools CoverColorado GettingUSCovered Employer-sponsored insurance Small group market Large group and self-insured plans 10

11. individual (non-group) health insurance market in colorado 11

12. Individual market in Colorado Individuals secure insurance directly with health insurance plans Few mandated benefits No guaranteed issue–plans can rate or reject individuals based on claims experience 12

13. CoverColorado: High-risk pool for individuals underwritten out of individual market State subsidized health insurance plan Individuals with pre-existing medical condition and rejected from individual market CoverColorado currently has 13,200enrollees Premiums are relatively high and may not be affordable 13

14. Individual market post-federal health reform Ban on lifetime limits and rescission (2010) Guaranteed issue for children (2010) 80% of premiums must be spent on medical care (2011) Guaranteed issue for adults (2014) GettingUSCovered high-risk pool (2010) Subsidies provided on exchange for people with incomes between 134% and 400% of FPL (2014) Individual policies can be purchased through state’s health insurance exchange (2014) Insurance policies (in all markets) must include essential benefits package (2014) 14

15. What is the “essential benefits” package? Comprehensive set of services approved by Secretary of Health and Human Services Limits annual cost-sharing to $5,950 individual, $11,900 family No annual or lifetime limits on coverage No co-pays for prevention Many individual plans will not meet new requirements (underinsurance) 15

16. Employer-sponsored coverage in Colorado 16

17. Why we have employer-sponsored insurance Result of WWII wage restrictions and freezes Birth of employee benefit packages 1954 employer contributions to employee health plans were exempt from taxable income 17

18. Health insurance offer rates by size of employer, Colorado, 2009 18 SOURCE: Medical Expenditure Panel Survey, 2008.

19. Employee-only premiums by firm size, U.S. 19 SOURCE: Medical Expenditure Panel Survey

20. small group market in colorado 20

21. Decline of small group market in Colorado 21 Covered Lives Annual Premiums

22. Small group health insurance market in Colorado 22 1-50 employees Mandated benefits Guaranteed issue and renewal Includes Business Group of One Premium rating based on smoking status, industry, age, family size and geographic location

23. Small group market post-federal health reform No employer penalties for small employers Tax credits for firms with 25 or fewer employees and average wage at or below $50,000 (2010) Must spend 80% of premiums on medical care (2011) Small Business Health Options Program (SHOP) exchange for small businesses to pool lives and purchase insurance (2014) Must include essential benefits package (2014) With federal subsidies for low- and middle-income workers, small employers may discontinue coverage and send workers to state’s health insurance exchange 23

24. Large Group and self- funded plans 24

25. Large employers and self-funded plans 38% of Coloradans with employer-sponsored insurance are in self-funded plans Employer assumes risk to pay health care claims May hire third-party administrator to process claims Usually includes stop-loss coverage Regulated by federal Employee’s Retirement income Security Act (ERISA) 25

26. Large group market and self-funded plans post-federal health reform Amendments to ERISA to bring all employers into conformance with market reforms Employers with more than 50 employees must provide affordable coverage or pay penalties Coverage must include essential benefits package (existing plans can be grandfathered) Temporary reinsurance program for early retirees Excise tax on “Cadillac” plans 26

27. Legislative Context 27

28. Where we differ Extent of insurance and how to provide access Lower total health care costs Improve quality of care Colorado – before and after reform – has grappled with these issues 28

29. One example: Pooling risk The question: To what degree should risk be shared? Last year: HB10-1008: Insurers cannot use gender to determine rates HB10-1021: Covering maternity and contraception HB10-1252: Covering mammography for those at risk 29

31. HB 11-1273 (Nikkel, Stephens, Kopp), Interstate compact to opt out of federal health reform

32. Health insurance exchange legislation (not yet introduced)30

33. Wrapping up Thank you CHI as resource for you Key insurance concepts at work Mechanics of the market Legislative environment and themes of the time 31

34. CHI as your resource How will certain legislation affect your district? How many constituents will be affected by the “individual mandate?” Does your district have the workforce to meet current and future health needs? What can I tell my constituents about the cost of reform? 32

35. Contacts 33 Allison Summerton Amy Downs Michele Lueck 303.831.4200 www.ColoradoHealthInstitute.org Twitter: @CoHealthInst