Markets, Mergers and Exchanges:Markets, Mergers and Exchanges:

Considerations for State Consumer AdvocatesConsiderations for State Consumer Advocates

Kevin LuciaGeorgetown UniversityHealth Policy Institute

Market RegulationMarket Regulation Current ProblCurrent Problemsems

– Health insurance markets dysfunctionalHealth insurance markets dysfunctional– Too often coverage is not accessible, Too often coverage is not accessible,

affordable, adequateaffordable, adequate Consumers vulnerable when sickConsumers vulnerable when sick

– Consumers face health discriminationConsumers face health discrimination– Different rules state-to-state, market-to-Different rules state-to-state, market-to-

market, product-to-product market, product-to-product Differences are exploited to avoid high Differences are exploited to avoid high

cost individuals and groupscost individuals and groups AHP exampleAHP example

– Oversight, enforcement weak at all levelsOversight, enforcement weak at all levels

Market RegulationMarket Regulation Federal Federal ProposalsProposals

– Guaranteed issue, no pre-ex, modified Guaranteed issue, no pre-ex, modified community ratingcommunity rating

– Standard for minimum benefit, maximum cost Standard for minimum benefit, maximum cost sharingsharing

– Marketing rules, minimum loss ratios, vastly Marketing rules, minimum loss ratios, vastly stronger disclosure/transparencystronger disclosure/transparency

Senate market rules not air tightSenate market rules not air tight– ““Wellness” loophole permits underwriting Wellness” loophole permits underwriting – Possible market rule loopholes for non-QHPs, Possible market rule loopholes for non-QHPs,

student health insurance, etc.student health insurance, etc.

Merging MarketsMerging Markets

Individual and small group marketsIndividual and small group markets Eventual goal is single risk pool Eventual goal is single risk pool

– Common benefits and rulesCommon benefits and rules– Reduce possibility of risk segmentationReduce possibility of risk segmentation

Tricky:Tricky:– Transitional “winners and losers” when Transitional “winners and losers” when

merging dissimilar marketsmerging dissimilar markets– Lack of group market subsidies to offsetLack of group market subsidies to offset– Employers still have option to self-insure Employers still have option to self-insure

Timing is keyTiming is key

Merging MarketsMerging Markets

StatesStates– Worth evaluatingWorth evaluating– Market reforms first Market reforms first

Senate proposalSenate proposal– OptionOption– Advantage in ”harmonized” rules Advantage in ”harmonized” rules – Analyze mix of risk post-reformAnalyze mix of risk post-reform– Timing is keyTiming is key

Health Insurance ExchangeHealth Insurance Exchange

Offers an “Offers an “organized marketplace for organized marketplace for the purchase of health insurance”the purchase of health insurance”– Easier for consumer to compare optionsEasier for consumer to compare options– Reduce administrative/marketing costsReduce administrative/marketing costs– Improved accountability/transparencyImproved accountability/transparency– Administer subsidiesAdminister subsidies– More consumer assistanceMore consumer assistance– Improved competitionImproved competition

Distinguish from market regulationDistinguish from market regulation

Health Insurance ExchangesHealth Insurance Exchanges Functions Functions

– Certify and de-certify health plansCertify and de-certify health plans– Negotiate with health plansNegotiate with health plans– Provide venue for easy “apples-to- Provide venue for easy “apples-to-

apples” shopping experienceapples” shopping experience– Administer federal subsidiesAdminister federal subsidies– Consumer assistance with eligibility, Consumer assistance with eligibility,

navigationnavigation Must function well in standardized wayMust function well in standardized way

Other Advocacy Other Advocacy OpportunitiesOpportunities

NAICNAIC– Private OrganizationPrivate Organization– Members-State DOI CommissionerMembers-State DOI Commissioner– Model laws and RegulationsModel laws and Regulations

NAIC and Health Care NAIC and Health Care ReformReform

Expected role during Expected role during implementationimplementation– Guidance to statesGuidance to states– ““Consult” with HHSConsult” with HHS

NAIC NAIC Consumer Consumer Representative ProgramRepresentative Program

Follow NAIC proceedingsFollow NAIC proceedings Attend meetingsAttend meetings NAIC conference callsNAIC conference calls Submit written testimonySubmit written testimony Help set agendaHelp set agenda Direct voice for consumers heard Direct voice for consumers heard

by state commissionersby state commissioners