AFFORDABLE INSURANCE EXCHANGES: SIMPLE, SEAMLESS AND AFFORDABLE COVERAGE
AFFORDABLE INSURANCE EXCHANGES: SIMPLE, SEAMLESS AND AFFORDABLE COVERAGE
MEDICAID, CHIP AND THE AFFORDABLE CARE ACT
Starting in 2014, individuals and small businesses will have access to the same kind of affordable insurance choices as Members of Congress and will be able to purchase private health insurance through Affordable Insurance Exchanges. Exchanges offer Americans competition, choice, and clout. Insurance companies will compete for business on a level and transparent playing field, driving down costs. In addition, long standing gaps in eligibility for Medicaid for the lowest-income Americans will be closed. Through the Exchanges, individuals will be able to find out if they are eligible for advance payments of premium tax credits or other health programs like Medicaid and the Children’s Health Insurance Program (CHIP) and enroll promptly and easily in the appropriate program.
New Proposed Rules
The U.S. Department of Health and Human Services (HHS) along with the Department of the Treasury released three proposed rules on August 12, 2011, to build on existing momentum toward Exchange development in States. This fact sheet explains one of those proposals, the Medicaid and CHIP Eligibility proposed rule. This rule expands and simplifies Medicaid eligibility and promotes a simple, seamless system of affordable coverage by coordinating Medicaid and CHIP with the new Exchanges. It also proposes State options for accessing the new federal funding linked to newly eligible individuals.
Medicaid, CHIP and the Affordable Care Act: Establishing a Simple, Streamlined System of Affordable Coverage
Under the Affordable Care Act, millions of uninsured Americans will gain access to affordable coverage through Affordable Insurance Exchanges and improvements in Medicaid and CHIP. These insurance affordability programs will use consistent standards and systems to seamlessly and efficiently meet consumers’ needs, improve quality, and lower costs.
The new rules propose a simple, streamlined system of affordable coverage for all Americans through:
- Expanding access to affordable coverage with significant federal support. Today, most low-income adults who are not offered affordable health insurance through their job are not eligible for Medicaid. The Affordable Care Act fills in current gaps in coverage for the poorest Americans by creating a minimum Medicaid income eligibility level across the country. Most adults under age 65 with incomes up to 133 percent of the federal poverty level (FPL) – $14,500 for an individual and $29,700 for a family of four in 2011 – will be eligible for Medicaid. Children will be eligible for either Medicaid or CHIP at higher income levels based on the eligibility standards already in effect in their State. The proposed rule also implements the policy to provide significant federal funding for States to fill in gaps in coverage for low-income people. The rule proposes:
◦A new Medicaid coverage group that will cover adults with incomes up to 133 percent of the FPL. For example, an uninsured 55-year old woman with no children who is a server in a restaurant that does not offer insurance would qualify for Medicaid under this new coverage group if she earns less than $14,000 in a year.
◦New federal matching rates that will provide 100 percent federal funding for newly eligible individuals for three years (CY 2014 – 2016), gradually reduced to 90 percent in 2020, where it remains permanently. The rule also proposes the new federal matching rates for “expansion States” – those that expanded coverage in Medicaid for adults before enactment of the Affordable Care Act. The proposal offers States a choice of new approaches for how they can access new federal funding for newly eligible individuals. Rather than require them to track who would be eligible before and after the health reform law passed, the proposal lets States opt to use “proxy” rules for who is newly eligible, statistical sampling, or data-driven estimates of the proportion of spending associated with newly eligible individuals. The rule solicits other ideas for approaches that will assure accuracy while reducing administrative burden.
- Simplifying Medicaid and CHIP. Under the proposal, complex eligibility rules would be replaced by simple income-based rules and systems for processing applications for most Medicaid applicants. Annual renewals of eligibility would be modernized, and outdated, obsolete policies and procedures would be eliminated. These proposed changes build on successful State efforts (see text box) to streamline eligibility, enrollment and renewal processes and apply these simplifications nationally. The proposed rule would:
- Simplify financial eligibility by relying on “Modified Adjusted Gross Income” (MAGI) for determining eligibility for most Medicaid and CHIP enrollees (children and non-disabled adults under age 65. The rule notes that MAGI rules which do not count a portion of Social Security as income for Medicaid purposes could lead to higher State Medicaid costs. The Administration is concerned and is exploring options to address it.
◦Eliminate obsolete eligibility categories and collapse other categories into four primary groups: children, pregnant women, parents, and the new adult group. For example, the rule consolidates six possible Medicaid eligibility categories for pregnant women into one group.
◦Allow States to enroll people in the new simple, income-based category without having to first screen for eligibility under categories that involve eligibility criteria other than income (e.g. disability).
◦Modernize eligibility verification rules to rely primarily on electronic data when available, and provide States flexibility to determine the data sources they will rely on. The rule also proposes that the federal government will perform some of the data matches for States (e.g. with Social Security and Homeland Security) further relieving State administrative burden.
◦Codify current policy so that eligibility is renewed by first evaluating the information available through existing sources. Renewals would be conducted once every 12 months unless the individual reports a change or the agency has information to prompt a reassessment of eligibility, consistent with the highest standards for program integrity.
◦Present options for States to determine the appropriate federal matching rate without having to simultaneously operate their pre-Affordable Care Act eligibility rules to determine who is “newly eligible”.
- A Seamless System of Coverage. Together, the three proposed rules establish a high degree of coordination across Medicaid, CHIP and the Exchanges. The Medicaid and CHIP proposed rule would:
◦Establish streamlined, coordinated eligibility determination systems for premium tax credits, Medicaid and CHIP that allow people to apply on line, in person, by mail or by phone through one simplified streamlined application.
◦Create a system whereby Exchanges, following State-established Medicaid rules, will conduct eligibility determinations for Medicaid as well as for advance payment of premium tax credits. The systems would also facilitate enrollment in to the appropriate insurance affordability program. Like the banking and travel industries, Exchanges will use standards for information technology to make the system easy for consumers while encouraging innovation and competition.
◦Make coordination easier to achieve by aligning across Medicaid, CHIP and Exchange policies regarding financial eligibility and other rules, such as the definition of State residency.
States Leading the Way
Many States and families are already benefitting from the kind of simplifications included in the proposed rule:
- Utah’s e-Find system enables eligibility workers to search multiple databases through a State “data warehouse” to verify eligibility for health coverage. More than 18 sources, including Social Security, SNAP, motor vehicles and vital statistics, can be checked in just three minutes, increasing the ease and efficiency of the eligibility determination process.
- Louisiana renews coverage for a majority of children’s cases without requiring families to submit a renewal form and by checking available databases to verify continued eligibility. An automated phone system also provides convenience for families that need to report changes in circumstances. The percentage of children who lose coverage at renewal has been reduced from 16 percent to less than 1 percent.
- Wisconsin is among the 32 States that allow individuals to apply for health coverage online. The State’s ACCESS system includes the ability to complete the application with an electronic signature and features a personal account function so beneficiaries can report changes and renew coverage.
Building on Exchanges Momentum
This proposed rule is another step towards building Affordable Insurance Exchanges:
- New Proposed Rules for a Seamless System: On August 12, 2011, HHS also issued a proposed rule regarding Exchange Eligibility and Employer Standards, and the Department of the Treasury issued a proposed rule regarding premium tax credits for the purchase of coverage through Exchanges. The proposals seek to create a path to a simple, seamless and affordable system of coverage.
- Support for States: On August 12, 2011, HHS awarded $185 million to 13 States and the District of Columbia to help them build Affordable Insurance Exchanges. Already, 49 States and the District of Columbia received Exchange Planning grants, and more than half of all States have taken additional action to establish an Exchange.
1This proposed rule complements the Exchange proposed rule and Premium Stabilization proposed rule issued on July 11, 2011, which offer a framework to assist States in setting up Exchanges and give States significant flexibility to build an Exchange that works for them. In addition, Secretary Sebelius sent a letter on August 12 to Governors outlining the options and resources for States to work with HHS to set up Exchanges while making more efficient use of shared resources.
2.Public Input: All of these proposed rules build on over a year’s worth of work with States, small businesses, consumers and health insurance plans. In drafting these proposals, the Administration examined models of Exchanges and consulted closely with State leaders, consumer advocates, employers, and health care providers and insurers, among others, to develop policy.
For more information about the Exchange Eligibility and Employer Standards and other proposed rules issued today, visit www.HealthCare.gov/news/factsheets/exchanges08122011a.html.
Outreach to Stakeholders
In the weeks ahead, HHS will conduct an aggressive outreach campaign and solicit public comment on the three proposed rules from employers, consumers, State leaders, health care providers and insurers, and the American people. In addition to accepting written public comments for the next 75 days, HHS will hold forums in:
- Atlanta, GA
- Chicago, IL
- Denver, CO
- New York, NY
- Portland, OR
- Sacramento, CA
These forums will help ensure more Americans have the opportunity to share their views regarding the establishment of Affordable Insurance Exchanges. We expect to modify these proposals based on the feedback we receive from the public.