ARC 3348C

ARC 3348C

INSURANCE DIVISION[191]

Notice of Intended Action

Twenty-five interested persons, a governmental subdivision, an agency or association of 25 or more persons may demand an oral presentation hereon as provided in Iowa Code section 17A.4(1)"b."

Notice is also given to the public that the Administrative Rules Review Committee may, on its own motion or on written request by any individual or group, review this proposed action under section 17A.8(6) at a regular or special meeting where the public or interested persons may be heard.

Pursuant to the authority of Iowa Code chapters 505, 513C, and 514E, the Insurance Division gives Notice of Intended Action to amend Chapter 82, "Iowa Stopgap Measure," Iowa Administrative Code.

These proposed rules augment the rules adopted as Chapter 82 on August 4, 2017 (see ARC 3281C, IAB 8/30/17). Chapter 82 primarily allows for implementation of the Iowa Stopgap Measure that has been developed by the Insurance Division upon request by the Governor. The Iowa Stopgap Measure is intended to provide an innovative solution to temporarily stabilize Iowa's individual health insurance market. The Iowa Stopgap Measure was first submitted by the Insurance Division on June 7, 2017, to the Centers for Medicare and Medicaid Services (CMS) as a waiver application under Section 1332 of the Patient Protection and Affordable Care Act (ACA) (42 U.S.C. Section 18052). The Insurance Division worked with CMS to develop the waiver application and submitted the application on August 21, 2017.

The instability of Iowa's individual ACA-compliant market was first marked with the liquidation of CoOportunity Health, Inc., which began with an order of rehabilitation on December 23, 2014, and the market has seen continued instability. On April 25, 2016, UnitedHealthcare notified the Insurance Division that it will not offer individual ACA-compliant plans in 2017. Then, on March 30, 2017, Wellmark, Inc.and Wellmark Health Plan of Iowa, Inc.notified the Insurance Division that they will not offer individual ACA-compliant plans in 2018. On April 6, 2017, Aetna, Inc.notified the Insurance Division that it will not offer individual ACA-compliant plans in 2018. Finally, before Iowa's rate filing deadline, June 19, 2017, Wellmark Value Health, Wellmark Synergy Health and Gundersen Health Plan, Inc.informed the Insurance Division that they will not offer individual ACA-compliant plans in 2018.

On June 19, 2017, Medica, a Minnesota-based health insurance company that first sold individual health insurance policies in Iowa in 2016, filed ACA-compliant plans for approval by the Insurance Division to be available on the ACA-compliant individual health insurance marketplace in 2018 in all of Iowa's 99 counties. The premium rates that Medica filed with the Insurance Division have an average increase of 43.5 percent over Medica's 2017 rates. No other carriers filed rates for the ACA-compliant individual health insurance marketplace for 2018.

The premium rates filed by Medica will drive healthier, younger, and middle-aged individuals out of the market, which will sink Iowa's market further into collapse. This dramatic proposed premium rate increase will mean that, for some consumers, premiums will increase almost 100 percent from their current 2017 premium rates. It is likely that many individuals who are not currently receiving federal subsidies (those whose household income is above 400 percent of federal poverty level) will be unable to afford the cost of the Medica rates as filed and thus will drop from the market. The Insurance Division estimates that the health insurance premium costs for a family of four with a total household income at this federal poverty level (which is approximately $98,000) would be almost $24,000 under the rates filed by Medica for 2018. These rates simply are not affordable for a working class family or small business owner. It is plausible that individuals could refuse a promotion, quit a primary or secondary job, or take other steps to lower their household income in order to be eligible for federal subsidies. These rates will directly impact the ability of small business owners, the majority of whom participate in the individual commercial health insurance market, to continue to sustain and grow their own businesses.

Governor Kim Reynolds asked the Insurance Division to develop a solution to provide temporary stability to the individual health insurance market and ensure that the approximately 72,000 Iowans currently covered through the individual health insurance market would have coverage options for 2018. The Insurance Division, in response to its directive from the Governor and under the authority of Iowa Code chapters 505, 513C and 514E, developed the Iowa Stopgap Measure as a proposed Section 1332 application to CMS and the Department of the Treasury to waive certain provisions of the ACA.

The federal government, through CMS and the Department of the Treasury, has the authority under Section 1332 of the ACA to grant to a state a waiver to implement innovative strategies to provide the state's residents with access to high-quality, affordable health coverage. These waivers allow states to implement innovative ways to provide access to quality health care that: (1) are at least as comprehensive and affordable as would be provided absent a waiver; (2) provide coverage to a comparable number of residents of the state as would be provided coverage absent a waiver; and (3) do not increase the federal deficit.

The Iowa Stopgap Measure is designed to facilitate the implementation of a reinsurance program; a per-member, per-month premium credit mechanism; and a standardized health benefits plan to be offered to all eligible Iowa consumers for the plan year 2018. Iowa's waiver application asks CMS to use the Insurance Division and the existing Iowa Individual Health Benefit Reinsurance Association (IIHBRA) as administrators of a pass-through of the federal funding that would be allocated to Iowa consumers via the existing Advanced Premium Tax Credit (APTC) and Cost-Sharing Reduction (CSR) funding under the ACA to be used by Iowa for a reinsurance program and per-member, per-month premium credits. That is, federal funds allocated by CMS would be paid to the Insurance Division or IIHBRA, and the Insurance Division would, in compliance with the Iowa Stopgap Measure, disburse the funds accordingly. The Insurance Division intends that this program will be completely funded by the federal funds allocated to Iowa.

The Insurance Division worked diligently with CMS to develop and finalize the waiver application, which was submitted August 21, 2017 (the full application is available here: https://iid.iowa.gov/iowa-stopgap-measure). The Insurance Division developed the Iowa Stopgap Measure, with advice and support from several insurance companies and other entities, to establish conditions which would support reentry of insurance carriers into the individual health insurance market and at rates that are affordable to consumers. The Iowa Stopgap Measure has three primary means of doing this.

First, it implements a reinsurance program under the IIHBRA to support the costs associated with consumers enrolled in the Iowa Stopgap Measure who have annual claims costs of over $100,000. Providing support for these high-cost claimants will help the carriers keep monthly premium rates down for all consumers under the Iowa Stopgap Measure.

Second, the Iowa Stopgap Measure will replace the current premium subsidy structure with a per-member, per-month premium credit that will be available for all eligible Iowa consumers based on their age and income. These credits will be paid directly to the carriers via funds paid by the federal government and passed through the Insurance Division or the Iowa Comprehensive Health Association (HIPIOWA), and are intended to keep monthly costs low to entice young and healthy individuals back into the individual health insurance marketplace.

Third, the Iowa Stopgap Measure would allow for a single, standard health benefits plan to be offered to all eligible Iowa consumers for the plan year 2018. Having a single, standard health benefits plan that provides coverage for all of the essential health benefits defined by the ACA as well as all Iowa-mandated benefits ensures that consumers will be able to purchase coverage as comprehensive as that which is currently offered in the individual health insurance marketplace. The use of a single plan also provides administrative simplicity which, given the implementation timeline, is critical to entice health insurance carriers back to the individual health insurance marketplace.

The Insurance Division made its proposal for the Iowa Stopgap Measure public on June 12, 2017, opened a formal public and tribal comment period on July 13, 2017, and accepted public comments on the Iowa Stopgap Measure in writing by mail and through a Web form through August 16, 2017. These materials are all available on the Insurance Division's Web site at https://iid.iowa.gov/press-releases/iowa-seeks-federal-approval-of-health-insurance-stopgap-measure and https://iid.iowa.gov/press-releases/notice-of-public-hearings-for-iowa-stopgap-measure. As part of the formal public comment period, the Insurance Division held four public hearings on the Iowa Stopgap Measure: Council Bluffs on July 19, 2017; Des Moines on August 2 and 14, 2017; and Cedar Rapids on August 10, 2017.

As the Iowa Stopgap Measure, upon approval by CMS, would utilize federal funding that would be allocated to Iowa consumers via the premium tax credit mechanism of the ACA, no state funds will be used for the premium credits or reinsurance program. If the Iowa Stopgap Measure is not approved by CMS, the Iowa Stopgap Measure will not be implemented.

Any interested person may make written suggestions or comments on the proposed amendment on or before November 2, 2017. Such written materials should be directed to Ann Outka, Iowa Insurance Division, Two Ruan Center, 601 Locust Street, Fourth Floor, Des Moines, Iowa 50319; fax (515)281-8813; e-mail ann.outka@iid.iowa.gov.

Also, there will be a public hearing on November 2, 2017, at 10 a.m., at the offices of the Iowa Insurance Division, Two Ruan Center, 601 Locust Street, Fourth Floor, Des Moines, Iowa, at which time persons may present their views either orally or in writing. At the hearing, persons will be asked to give their names and addresses for the record and to confine their remarks to the subject of the amendment.

Any persons who intend to attend the public hearing and have special requirements, such as those relating to hearing or mobility impairments, should contact the Division and advise of specific needs.

These rules do not include a provision for the waiver of the rule because the Insurance Division's general waiver rules of 191—Chapter 4 apply.

This amendment was also Adopted and Filed Emergency and is published herein as ARC 3349C. The purpose of this Notice is to solicit public comment on that submission, the subject matter of which is incorporated by reference. Because the amendment that is Adopted and Filed Emergency is incorporated by reference in the Notice of Intended Action, it is not included in the Notice of Intended Action. The Insurance Division adopted this amendment on September 14, 2017.

After analysis and review of this rule making, no impact on jobs has been found.

These rules are intended primarily to allow for implementation of the Iowa Stopgap Measure that has been developed by the Insurance Division upon request by the Governor. The Insurance Commissioner has filed these rules under his rule-making authority of Iowa Code chapters 505, 513C, and 514E.

This amendment became effective on September 14, 2017. If CMS does not approve the Iowa Stopgap Measure, it will not be funded and there will be no coverage available under these rules.