Background

The State of Maine has had two particularly significant health care policy developments since Governor Mills took office: the implementation of Medicaid expansion in 2019, and the ongoing transition towards an SBM. Both developments stem from the flexibilities granted to states in the passage of the ACA ten years ago. By financing state expansions of Medicaid eligibility, establishing health insurance marketplaces, and providing subsidies for individuals with qualifying incomes seeking health insurance on those marketplaces, the ACA’s implementation has had a significant impact on the accessibility of health insurance for millions of Americans. The ACA presents states with a number of decisions around marketplace structure and oversight of Qualified Health Plans (QHPs). In essence, states can decide between operating and overseeing their own SBM or relying on the federal marketplace and its rules governing QHPs. SBMs provide states with significantly greater flexibility and autonomy regarding health insurance marketplace management.

This section first presents an overview of the national context and recent developments for Maine’s marketplace and MaineCare. Next, we describe key demographic characteristics of Maine’s overall population and of marketplace and MaineCare enrollees. Finally, we outline a number of the reasons that states pursue SBMs and the challenges that an SBM transition entails. Marketplaces

Fourteen states and Washington, DC currently operate SBMs. Thirty states remain on the FFM, and six states operate an SBM-FP—Maine being a recent addition to this latter group, as of the OEP beginning November 2020. SBM-FP states continue to utilize HealthCare. gov’s technology platform and call centers but assume responsibility for certain marketplace activities, including plan management and oversight, consumer outreach, and marketing.

Nevada’s SBM launch in 2019 marked the first migration of a state to an SBM from an SBM-FP or the FFM since 2014.4 New Jersey and Pennsylvania have since followed suit, launching SBMs in November 2020. In March 2020, Governor Mills signed legislation that formally established the Maine Health Insurance Marketplace, enabling the State to transition to an SBM-FP and to explore the feasibility of establishing its own SBM.5 DHHS is responsible for leading this exploration phase and would oversee SBM operations. In August 2020, Maine submitted a blueprint application to the Centers for Medicare and Medicaid Services (CMS), confirming its goals to adopt an SBM-FP for plan year 2021 (i.e., by November 2020) and an SBM for plan year 2022 (i.e., by November 2021).6 In October 2020, Maine issued a request for proposal (RFP) for technology and call center partners to set up and operate an SBM.7 At the time of this writing, Maine has identified vendors and is currently in negotiations to finalize contract terms.8

In November 2020, the State officially transitioned to the SBM-FP. Like other states, Maine is funding these operations via 0.5% user fees charged on the premiums of plans sold on the marketplace (in addition to the 2.5% user fees which the federal government charges in partnership models).9

Medicaid Expansion

Court rulings since the ACA’s implementation have further opened up state flexibilities in health care provision. In particular, the Supreme Court’s ruling in NFIB v. Sebelius made Medicaid expansion optional for states.10 As of November 2020, Medicaid expansion has been adopted by 38 states and Washington, DC.11 Oklahoma and Missouri plan to implement their adopted expansion in July 2021. After Maine voters approved Medicaid expansion by ballot initiative in 2017, former Governor Paul LePage refused to implement the expansion, which was set to take effect in July 2018.12 In January 2019, Governor Mills instructed DHHS to implement Medicaid expansion, retroactive to July 2018.13 As of December 2020, about 67,500 Mainers14—one in four MaineCare members,i and one in twenty Mainers—were enrolled in coverage through the expansion group.ii

i Nearly 237,000 individuals were enrolled in MaineCare or CHIP as of August 2020. That same month, DHHS estimated that nearly 60,000 were enrolled through expansion. Source for total enrollment: Center for Medicare and Medicaid Services. “August 2020 Medicaid & CHIP Enrollment Data Highlights.” https://www.medicaid.gov/medicaid/program-information/medicaid-and-chip-enrollment-data/report-highlights/index.html. Source for expansion enrollment: Maine Department of Health and Human Services. MaineCare (Medicaid) Update: August 3, 2020. https://www.maine.gov/tools/whatsnew/index.php?topic=DHHS-MAINECARE-UPDATES&id=3010756&v=article. ii Expansion increased the eligibility threshold for parents from 105% of the federal poverty level (FPL) to 138% FPL and made most other adults with incomes up to 8 | BACKGROUND

At the same time, Medicaid expansion has accelerated changes in Maine’s individual market. For plan year 2019, about 71,000 Mainers—one in nineteen statewide—enrolled in a marketplace plan. In plan year 2020, this number dropped to roughly 62,000 Mainers, or one in twenty-two statewide, likely due to Medicaid expansion.15 The coronavirus pandemic and corresponding economic downturn has led to significant increases in Medicaid enrollment nationwide and has placed enormous fiscal pressure on state finances.16 Maine is no exception to this trend. By taking advantage of generous federal match payments available for the Medicaid expansion population, the State has succeeded in enrolling over 20,000 Mainers into expansion-group coverage since early March.17

Demographics

Governor Mills articulated a goal of making affordable health care available to more Mainers when she laid out plans for a potential SBM transition in August 2019.18 This section presents statistics on Maine’s marketplace consumers, uninsured residents, and broader population, to provide context for the challenges of increasing enrollment and affordability.

Broader Population

Many of the stakeholders we interviewed highlighted Maine’s unique demographics and geography as relevant to its health care landscape. Geography: Maine is a large state by area—larger than all other New England states combined.19 Its population is also rural: 40% of Mainers live in rural counties.20 These factors are relevant for a number of reasons. Rural areas tend to have higher premiums than urban areas21 and often lack enough physicians. Maine ranks second nationally for the number of primary care doctors in rural counties (99.5 per 100,000), nearly double the national rate for rural counties, but rural residents still find there are too few geriatricians.22 Many Mainers living in rural areas lack internet access: in 2018, an estimated 90% of Mainers had a smartphone or computer, but only 85% had internet access at home via those devices.23 Additionally, 83,000 Mainers had no access to the internet.24 Many Mainers in rural areas therefore rely on in-person or phone interactions to enroll (or get assistance enrolling) in health coverage, and those that utilize in-person services may face long journeys to access them.

Age: Maine’s population has the oldest median age of any state in the US, and 23% of its residents are aged 5064 (compared to the national average of 19%).25 Since older residents face higher health care costs, Mainers are more likely to struggle to pay for the health care they need. These issues are exacerbated by higher rates of disability in Maine (16%, compared to the national average of 13%).26 Race, ethnicity, and language: 93% of Maine residents are non-Hispanic white (compared to the national average of 60%). Only 6% of residents speak a language other than English at home (compared to the national average of 22%).27 This can pose challenges for Mainers that do not identify as white: language and cultural barriers may present obstacles for accessing coverage. Income: Maine has the lowest median household income in the Northeast.28 Disparities also exist within the state, with the poverty rate in the state’s rural areas 3.4 percentage points higher than in urban areas.29 Survey data suggests Mainers with low- and middle-incomes postpone needed treatments and ration prescriptions due to high health care costs in Maine.30

Marketplace Consumers

Data from plan year 2020 published by CMS sheds light on Maine’s marketplace consumers and the types of plans they select. • 51,400 applications for coverage were submitted, covering 77,700 individuals.iii • 8,200 individuals were assessed as eligible for MaineCare/CHIP and referred for OFI for determination. • About 62,000 Mainers enrolled on the FFM for 2020 coverage. • 84% of consumers were eligible for financial assistance.iv • 82% of consumers who were enrolled in a marketplace plan for plan year 2019 re-enrolled for 2020. • 61% of individuals enrolled in coverage on or after

December 8. 25% of consumers auto-renewed their coverage, and this figure likely includes many such consumers.

138% FPL newly eligible. According to DHHS, as of December 2020, 84% of the currently enrolled expansion group is this latter group of adults without children or caretaking responsibilities. iii Numbers presented in this section are rounded to the nearest hundred. Percentages are rounded to the nearest whole number; the denominator is the number of enrollees (62,031). Enrollees are referred to as consumers in this section. iv APTCs or CSRs

• Average monthly individual premiums after factoring in advance premium tax credits (APTCs) were $176 (compared to a sticker price of $642). • One-third of consumers were aged 55 to 64. Another one-third were aged 35 to 54. • 55% of consumers were from rural ZIP codes. • 9,200 consumers (15%) had household incomes between 100% and 150% FPL. This was down from 15,900 consumers in plan year 2019.v 13,400 consumers (22%) had incomes between 150% and 200%

FPL.

Uninsured Residents

Approximately 106,000 civilian noninstitutionalized Mainers were uninsured in 2019.31 Of those uninsured, about 29,000 had household incomes less than 138% FPL and about 55,500 had household incomes between 138% and 400% FPL. A significant proportion of uninsured Mainers are thus likely eligible for either MaineCare or subsidized marketplace coverage. Appendix Table 2 presents uninsured rates by demographic group. Adults under age 34, men, and nonwhite populations—particularly American Indian and Alaska Natives—are more likely to be uninsured than older adults (aged 35-64), women, and non-Hispanic white people, respectively. Health Equity

In every interview, stakeholders spoke about the rurality and age of Maine’s population. These factors contribute to health disparities, which are more pronounced with limited provider access, low population density, and high health care needs. SBM policies to address these disparities affect many Mainers, but especially historically marginalized groups. The groups most commonly discussed in our stakeholder conversations were:

• People with limited English proficiency, who represent 1.5% of Mainers.32 Languages with more than 1,000 native speakers in Maine include Spanish,

French (including Patois and Cajun), Chinese (including Cantonese and Mandarin), and Cushite.33 • Immigrants, who represent 3.6% of Mainers.34

Nine out of ten report speaking English well, over a third have a college degree, and more than half are naturalized citizens.35 However, the nature of their work makes them less likely to have employer-sponsored insurance; in 2018, 2,368 immigrant business owners accounted for 2% of all self-employed Maine residents.36 Lawfully present immigrants ineligible for

MaineCare due to their immigration status may be eligible for APTCs or cost-sharing reductions (CSRs), even if their income is below the FPL.37 • Black Mainers, who represent 1.7% of residents.38

Almost half are immigrants, the highest share in the nation, from nations including Somalia and the Democratic Republic of Congo.39 The latest five-year estimates, for 2014-2018, show the rate of poverty for

Maine children who are African American or Black at 46%, down from 53% for the five-year period ending in 2017. This rate is more than three times as high as the rate for non-Hispanic white children (15% in poverty) and nearly twice as high as that of Hispanic children (24% in poverty).40 • Migrant farm workers, who make up 62% of hired farmworkers in Maine. Eighty-three percent of migrant workers are foreign-born.41 A 2015 survey by the Maine Department of Labor found that 56% of migrant farmworkers were born in Mexico, 17% were born in the U.S., 10% were born in Haiti, and 8% were born in Canada.42 • Wabanaki Mainers, who represent 0.7% of the population.43 Their life expectancy is 54 years, considerably less than the 78-year life expectancy for the general population.44

Reasons to Build an SBM

Flexibility: SBMs offer greater flexibility to state governments, including more control over marketing funding, open enrollment timelines, SEPs, and health equity efforts.45 SBMs can also offer additional state-funded subsidies to improve plan affordability and increase marketplace enrollment, as Massachusetts, Vermont, California, Colorado, and New Jersey do.46 Greater autonomy additionally allows SBM states to experiment with display features that improve the consumer experience, such as default orders, search filters, and comparison tool designs. DHHS recently noted in a public announcement that “operating a State platform provides greater flexibility and opportunities to customize the Marketplace to Maine’s needs.”47 Protection: SBMs have some insulation from federal funding cuts and enrollment period restrictions, which have been common in recent years. CMS cut funding for outreach groups offering enrollment assistance, from $63 million in 2017 to $10 million in 2019, and halved the length of the OEP, from 90 days to 45 days.48,49 CMS also rejected proposals for an FFM SEP in response to the coronavirus pandemic.50 These decisions coincided with a 10% decline in individual market enrollment

nationwide from the peak in 2016 to 2020.51 Figure 1 shows that Maine, which used the FFM during this time, experienced a steeper decline. The decrease likely reflects these and other federal actions, such as the zeroing of the individual mandate penalty, more than shifts to other coverage, as the shares of Mainers on employer-sponsored insurance and on MaineCare were stable prior to Medicaid expansion in 2019.vi

Figure 1. Marketplace Enrollment, Maine (Plan Years 2014-2021)52

Source: Kaiser Family Foundation Data and Center for Medicare and Medicaid Services Data.

Stability: An analysis from economists at the University of Pennsylvania reports that states with SBMs experienced much slower premium increases and fewer carrier exits than states using the FFM.53 Capturing user fees: Rather than sending premium assessment revenue (3% of total monthly premiums in FFM states, 2.5% in SBM-FP states) to the federal government, SBM states can keep this revenue in-state, creating savings to allocate towards other cost-stabilizing policies.vii Data access: The transition to an SBM also improves state access to individual-level data, which can be used to guide outreach and improve insurance products.viii Coordination with Medicaid: SBMs are more closely connected with state Medicaid offices.54 This can (1) improve the experience of consumers experiencing churn between Marketplace and MaineCare coverage and (2) strengthen the “no wrong door” approach, where ineligible applicants to one program are guided to another program for which they are eligible. SBM states have the opportunity to build a single streamlined application that directs enrollees to marketplace coverage or to Medicaid, depending on their eligibility. Potential Issues in an SBM Transition

There are a number of issues that all states should consider before moving to an SBM:

Transitioning: There are significant one-time changes that carriers and others need to make, including but not limited to connecting enrollment functions with the new marketplace. Financing: Most states rely on user fees to fund the large majority of the costs of setting up and operating their SBM. States have legislative flexibility to set user fees as they choose, but political constraints make it difficult to set fees far above 3% of premiums. Small states may have difficulty spreading the fixed costs of SBM operations over their marketplace population.ix There is a risk that some SBMs, given their limited budgets, simply replicate core functions of the FFM.55 Technology risks: Setting up a technology platform that is integrated with a call center—and integrating both with the state’s Medicaid eligibility systems—is a significant task. Some states may try to do too much at launch, resulting in core functions not operating optimally. Accommodating stakeholders: Carriers and providers may oppose any actions which set the state on a path of increased regulation in the health care setting. Some may see the shift to an SBM as a precursor to further regulatory or administrative moves that constrain their actions or impact their business model. Internally, states may require significant resources from Medicaid eligibility offices, technology departments, or other state agencies.

Governance: Many states have flexibility in how their SBM can be established and operated under state law, including whether the SBM should be operated from

vi A slight increase in the estimated share of Mainers on Medicare also contributes to this trend. See: Kaiser Family Foundation. “Health Insurance Coverage of the Total Population - Maine.” KFF (blog), October 23, 2020. https://www.kff.org/other/state-indicator/total-population/. Also, see: Centers for Medicare and Medicaid Services, 2019 Marketplace Open Enrollment Period Public Use Files https://www.cms.gov/Research-Statistics-Data-and-Systems/Statistics-Trends-and-Reports/Marketplace-Products/2019_Open_Enrollment vii Pennsylvania, for example, intends to use funds from the user fees on its new SBM to finance its reinsurance program. See: Pennsylvania Insurance Department, “PA 1332 Waiver Frequently Asked Questions,” Pennsylvania Insurance Department, 2019, https://www.insurance.pa.gov:443/Coverage/Pages/PA1332Waiver-Frequently-Asked-Questions.aspx. Livingston, Shelby, “CMS Wants to Cut ACA Exchange Fees, End Silver-Loading,” Modern Healthcare, January 17, 2019, https://www.modernhealthcare.com/article/20190117/NEWS/190119916/cms-wants-to-cut-aca-exchange-fees-end-silver-loading. viii When New Mexico moved to an entirely state-run exchange, its leaders cited this as one of the top motivations. See: Garrity, Tom “New Mexico Makes Move to a State-Based Marketplace,” beWellnm, September 21, 2018, https://www.bewellnm.com/Blog/New-Mexico-Makes-Move-to-a-State-Based-Marketplace. ix Of the 15 states operating SBMs, only Vermont, Washington, DC, and Rhode Island have fewer residents (and plan year 2020 marketplace enrollees) than Maine. BACKGROUND | 11

within state government or by an outside organization with close links to state government. This decision has implications for the degree to which the SBM is subject to legislative oversight or reporting requirements or is at risk of having board members with conflicts of interest.

Plan management and oversight: The greater authority that an SBM grants state officials and insurance departments over plan management and oversight comes with greater responsibilities that require a host of decisions about permissible plan features, from marketing to network breadth to consumer-facing descriptions of coverage. This work may involve more regular and difficult conversations with carriers.