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Summary: Illinois Issues Feasibility Report For Coverage Affordability Initiatives
INSIGHT | government
On July 7, 2020, Governor Pritzker signed SB1864. The legislation instructed the Department of Healthcare and Family Services (HFS), in consultation with the Department of Insurance (DOI), together known as the Interagency Working Group, to oversee a feasibility study exploring policy options to make health insurance more affordable for low- and middle-income Illinois residents. This study was designed to provide policymakers with a menu of policy options to improve health care affordability, reduce the number of uninsured residents, and improve health equity.
The process was open to responses from all stakeholders, including the public by the end of February 2021. The Coalition of Insurance Agents and Broker of Illinois, of which I was a part of, representing Independent Insurance Agents of Illinois, along with the Illinois State Association of Health Underwriters and NAIFA of Illinois submitted a response. We stated our firm belief that every American should have access to affordable, comprehensive healthcare coverage and control over their healthcare choices regardless of their health status, income, or pre-existing conditions. We also explained the critical role Agents and Brokers play in helping individuals and businesses with carrier and plan negotiation and selection, member enrollment and education, claims advocacy and more.
In preparing our response we met with many stakeholders including representatives from hospitals, physicians, pharma and insurance carriers. We also met with NAHU and Big I National representatives who introduced us to other states who experienced or were in the middle of similar state actions. This provided a great base for our response.
After review of the responses, the Interagency Working Group released their Feasibility Study Report on April 2, 2021. They identified six policy options for inclusion in the study, each of which were considered separately, but could be pursued in various combinations. The Working Group directed Milliman to model outcomes.
Milliman did a very good job with their review in illustrating the pros and cons of each option and provided cost forecasts on several models. From my reading, it appeared no one option would solve the problem in full, that is, reduce the number of uninsured, increase affordability and improve health equities, but the study did suggest the pairing of options could help and at least produce lower costs.
A summary of the Feasibility Report follows:
Overarching goals of the plan:
-Reducing the numbers of uninsured -Increasing affordability, and -Improving health equity
The following priorities were to be considered:
-Improving affordability in terms of both premiums and cost-sharing -Aligning with existing systems and programs -Leveraging federal funding and -Minimizing market disruption
The Interagency Working Group identified 6 policy options for inclusion in the study:
1. Basic Health Program (BPH) – In lieu of Marketplace coverage for individuals with incomes up to 200% of FPL who otherwise be eligible for federal Advance
Premium Tax Credits (APTCs). i.Currently two states, Minnesota and New York have implemented a BHP. 2. State Premium and Cost Sharing Subsidies – States may build on the federal government’s APTCs and Cost-
Sharing Reductions (CSRs) by funding subsidies to lower premiums and / or cost-sharing for Marketplace enrollees. i.Currently five states, California, Colorado,
Massachusetts, New Jersey, and Vermont have committed state dollars to provide premium subsidies or premium and cost sharing subsidies for individual market health insurance. 3. Public Option Plan – A government-backed health plan which would compete on the Marketplace with private health plans. The public option may reduce costs through lower administrative costs and / or by paying lower provider prices. i.The state of Washington implemented a public option plan and several other states are considering legislation to create one. 4. Medicaid Buy-In – The state would make Medicaid, or
Medicaid-like, coverage available to consumers who are not otherwise eligible. The plan would reduce costs by leveraging a state’s existing Medicaid infrastructure and lower provider reimbursement rates. The targets could be narrow (only those up to 400% of the FPL who are ineligible for federal premium tax credits), or broad (anyone not already eligible for Medicare, Medicaid or
CHIP). No state has implemented a Medicaid buy-in program, but it is being studied by several. 5. Transitioning to a State Based Marketplace – Illinois could take over responsibility for operating the Health
Insurance Marketplace from the federal government. The state would run the eligibility and enrollment, consumer outreach and assistance, and plan management functions. Several of the above proposed policies would benefit from, if not require the state to transition to a
State-based Marketplace. 6. State Supported Marketing and Outreach – The state could increase its investment in outreach, education and enrollment assistance to consumers eligible for
Marketplace coverage and / or Medicaid.
Milliman was directed to provide a study that showed the impact of four of the six policy options. They were also directed to estimate the state’s cost of funding each program. The study was done reflecting a 7.1%
By Michael E. Wojcik
unemployment rate in calendar year (CY) 2022, with each policy independently modeled.
The Milliman Study revealed the following:
There were 906,000 non-elderly uninsured in Illinois with 330,000 being eligible for Medicaid, but not participating. Of the 906,000, 546,000 had a household income up to 200% of the Federal Poverty Level (FPL) and 260,000 had household incomes greater than 200% FPL. Administrative costs to implement and operate a state plan were not determined in this study.
Results:
1. Basic Health Plan. The Minnesota Model showed 135,000 would potentially enroll, most with a lower premium. However, the uninsured population would only decrease by approximately 23,000. New York’s model showed 139,000 would potentially enroll, most with lower premiums, and the uninsured population would only decrease by 27,000. The Zero Premium model used by New York’s Essential Plan was more generous and would produce lower premiums to members. An expected 188,000 would enroll with 72,000 being newly uninsured. Each model was expected to produce a comparatively large reduction in uninsured documented immigrants. All BPH options were projected to reduce premiums for nearly all enrollees, regardless of race, ethnicity, or geographic differences. Milliman estimated if BHP provider reimbursement rates were held to Medicaid levels, the combination of federal funding and enrollee contributions through premiums and cost sharing would be sufficient to fund the cost of coverage for the program in CY 2022 based on a steady state of enrollment. 2. State Premium and cost-sharing Subsidies. Milliman was asked to model four of the six variations of a statefunded coverage subsidy program: • Massachusetts model: Would provide premium and cost-sharing subsidies to enrollees with household incomes up to 300% FPL. • No FPL limit: This option would provide premiums subsidies to otherwise eligible individual with household incomes above 400% FPL. • California model: Would provide premium subsidies to federal APTC-eligible enrollees with household incomes from 200 – 400% FPL, and to otherwise eligible individuals with household incomes ranging from 400-600% FPL. • House Energy & Commerce Committee (HEC) proposal: Would provide premium and cost-sharing subsidies to federal APTC-eligible enrollees with household incomes up to 400% FPL, and premium subsides to otherwise eligible individual with household incomes above 400% FPL.
Milliman estimated each subsidy program option would increase enrollment in comprehensive individual market coverage relative to existing policy. The HEC model would produce the largest increase in enrollment among individuals currently uninsured projecting a pick-up of
106,000. The HEC model would also generate savings for the largest number of enrollees: about 423,000 would experience lower premiums and roughly 248,000 would see reduced cost-sharing. The estimated program costs for CY2022, excluding administrative costs, were projected to be $113 Million for the California model and $796 million for the HEC model. 3. Public Option Plan. Three scenarios for a public option were studied: 1) If there was a 10% reduction in premium for the Second Lowest Cost Silver Plan (SLCSP),
Milliman estimated a 6,000 uninsured pick up; 2) a 20% reduction: 13,000 pick-up and 3) a 30% reduction: 20,000 pick-up. Over 85% of the additional enrollment would come from people with a household income over 400% of FPL who do not qualify for Marketplace
APTCs. It was determined the public option plan would not play a significant role in reducing racial and ethnic disparities in uninsured rates as the new plan would benefit those with income greater than 400% of FPL, who are disproportionately white. Milliman also pointed to a potential risk around provider reimbursement levels and premiums to spur competition without prompting insurer exits from the Marketplace. 4. Medicaid Buy-In. Two broad eligibility variations were studied: a. Targeted Buy-In: Illinois residents not already eligible for Medicare or comprehensive Medicaid coverage, and up to 400% of FPL who are either an undocumented immigrant or in a family glitch would be eligible for this buy-in program. (Family glitch is defined as individuals with an affordable offer of employer-sponsored insurance would not be eligible for APTCs, regardless of whether they enrolled in such insurance), b. Broad Buy–In, Basic: All residents not already eligible for Medicare or comprehensive Medicaid coverage would be eligible, including those currently eligible for Marketplace subsidies and employer-sponsored insurance. Premiums would be 30% lower than assumed CY2022 premiums for the SLCSP, with premium contributions capped consistent with the federal maximums based on household income. c. Broad Buy-In, Balanced: Same as Basic, but cost sharing would be set up to 300% FPL, consistent with
Massachusetts plan.
Milliman estimated 535,000 Illinois residents would be eligible for the targeted buy-in option. Approximately 60,000 individuals of the approximately 187,000 uninsured who are eligible would gain coverage.
For the broad buy-in options Milliman estimated that approximately 6.2 million residents would be eligible. Of the estimated 580,000 eligible uninsured, Milliman estimated that approximately 72,000 or 12% would enroll in the Basic version and approximately 146,000 or 25% would enroll in the Enhanced version.
Undocumented immigrants would experience the largest reductions in unisurance rates across all three Medicaid buy-in variations, ranging from 30-40%. The Hispanic/ Latino population would see significant declines from 1025%, while Black or African Americans would see smaller declines, with only 2% in the Targeted and Broad Basic and 7.6% under the Broad Enhanced program. An approved 1,332 waiver would make federal passthrough funding available for the broad Medicaid buy-in models.
Milliman estimated state costs, including off-sets from federal pass-through funding to be approximately $289 million for the cost of the targeted buy-in coverage. For the broad-Basic buy-in option, a cost of approximately $274 million was estimated, and for the broad Enhanced option, a state cost of $1,052 billion was estimated. These estimates did not include state administrative costs.
Milliman Benefits and Risks of a Medicaid buy-in program:
The study indicated both the targeted and broad Medicaid buy-in programs would directly benefit populations identified by stakeholders as in need of intervention, including undocumented immigrants and individuals caught in the family glitch with incomes up to 400% FPL. The broad Medicaid buy-in program runs the risk of siphoning away a significant number of individuals currently enrolled in the individual market and could destabilize the Marketplace. Additionally, with approximately 80% to 85% of enrollees in a broad Medicaid buy-in estimated to transition from individual or employersponsored insurance, where provider reimbursement is significantly higher than Medicaid, some providers may be unwilling to voluntarily participate in a broad Medicaid buy-in at Medicaid reimbursement levels.
Transitioning to a State-Based Marketplace:
Marketplaces were designed to help organize insurance markets, promote competition, and help consumers more effectively compare their health plan options. The Illinois Marketplace has been run by the federal government since November 2013. In that time, the Illinois DOI has overseen Marketplace plan management functions.
In recent years, several states have transitioned, or are considering a transition from Federally Facilitated Marketplaces (FFM) to a State-Based Marketplaces (SBM). In the transition several have benefitted from significantly lower start-up costs and have been able to generate savings that could help subsidize other affordability initiatives, such as reinsurance.
Several policy options show the feasibility study would be best optimized if the state had its own Marketplace. In particular, having an SBM would ensure a more seamless consumer experience if the state implemented state-funded premium and / or cost-sharing subsidies. A public option with priority placement on the Marketplace website would help drive a campaign targeting the uninsured. Conversely, the Milliman study showed a Broad Medicaid buy-in option could provide a disincentive to transition to a full SBM. If significant numbers of Marketplace enrollees shift to the buy-in programs, it would likely result in a smaller pool of enrollees in the Marketplace, which in turn means a smaller base from which to finance operations. SBMs would be required to administer marketing and outreach including a “navigator” program. The study stated investment in such consumer assistance and marketing efforts have been found to improve both the size and health of the individual market risk pool. In Illinois, being that more than two-thirds of the uninsured population, including most uninsured individuals at lower incomes and the vast majority of uninsured Black residents are already eligible for subsidized coverage through Medicaid / CHIP or the Marketplace, this could produce substantial outreach in a manner that increases health equity.
Assessing the Menu of Policy Options: Considerations for Illinois.
Milliman concludes all of the policy options modeled for this study were projected to reduce the number of Illinoisans without insurance and / or make coverage more affordable for enrollees, compared to existing individual market health insurance options. They found most options would do both. The outcome and cost to the state would vary significantly by policy. The distribution of gains, by income level, race, ethnicity, immigration status, and geography, would also be different across options. It was also noted, if the state combined policy options, and considered Section 1332 waiver opportunities, it could enable the state to realize benefits from multiple policies with comparatively lower costs.
Given that the report was issued with less than six weeks remaining in the General Assembly’s spring session, we understand it is unlikely for the General Assembly to act on any of the options before they adjourn in late May.
To view the full report, go to https://insurance.illinois.gov/ Reports/04-02-21-Feasibility-Study-Report-Final.pdf.
Michael Wojcik is Senior Vice President for The Horton Group and former IIA of IL board member. He is a long- time benefits specialist on the IIA of IL Government Relations Committee is currently the IIABA Healthcare Liaison. Wojcik can be reached at mike.wojcik@thehortongroup.com.
