Wednesday, March 16, 2011

#whchpi Preparing for CHURN: Medicaid and Private Plans in the Health Insurance Exchange

Cindy Gillespie
Managing Director
McKenna Long & Aldridge 

 View Biography

Brian Wheelan
Vice President, Strategy and Corporate Development
Beacon Health Strategies, LLC 

 View Biography

Background is in designing a State-based insurance exchange in MA.

MA built on work done over 30 years. Many states are starting from nothing. 

States view population as:
- 30% Uninsured
- 30% State Subsidy (Medicaid/CHIP)
- 30% Private Insurance (Employer Sponsored Insurance, Individual)

But State has no real knowledge of Private Insurance. most knowledge is around Medicaid responsibility.

Individual Market - No Section 125 Cafeteria Plan (ie. will be paid from post tax dollars)

SHOP Market - Section 125 Cafeteria Plan allows Pre-Tax Treatment (ie. can be paid from pre-tax dollars and groups start at 1 person)

% is of Federal Poverty Level = FPL

Medicaid - 0-133% Fed Poverty Level
Individual - 134-400% - Subsidies in 2014
Employer - 1-Unlimited people - 
SHOP - 1-100 no subsidies.

Medicaid redesign will happen. States need to Re-design the continuum.

Medicaid Eligible 0-133% FPL
Medicaid Optional 134% - ???
Exchange Subsidy 134-400%

Churn will be volatile and sit in 100-150% FPL.

4 common options. All are complex:

1. Give Medicaid population a subsidy to purchase on the exchange. Volatility of Medicaid payment to Commercial insurers as people's eligibility changes.

2. SHOP side offer Medicaid ESI Subsidy

3. ESI offer Medicaid subsidy

4. Individual - Only offer Medicaid plans on the Exchange. Will a Medicaid Exchange be attractive.

State Design Decisions:

MA  Experience: 66% of newly insured are in public programs.

10% churn on a monthly basis. Moving between exchange and Medicaid.
75% of disenrolled members were re-enrolled within 90 days.

Churn settled at 5% when re-enrollment was corrected for.

Coverage expansion is Mental Health intensive.

Commercial plans have no experience with uninsured mental health population.
Many Medicaid plans have no experience either but they are better equipped to handle them.

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