State Releases Key Health Benefits Exchange Planning Reports

Staff Writer
Aledo Times Record

                      The Illinois Department of Insurance on September 16 released reports

                      commissioned by the State of Illinois to aid in the

                      process of establishing a state-based health

                      insurance exchange (Exchange) in Illinois. Under

                      federal health care reform – the Affordable Care Act

                      (ACA) – health care exchanges are being developed in

                      states across the country to help more Americans

                      access and select health insurance. A health care

                      exchange is competitive health care marketplace

                      intended to provide greater choice, control, and cost

                      predictability for health insurance coverage for

                      consumers and businesses.

                      “We commissioned these reports to gather the

                      essential data we need to make the Exchange a

                      reality,” said Michael Gelder, the Governor’s Senior

                      Health Policy Advisor. “Federal health care reform

                      under the ACA and the Illinois Exchange will provide

                      much-needed health coverage for more than a million

                      state residents and help Illinois' small businesses

                      become more competitive. The reforms will also

                      bolster our overall health system – making it more

                      efficient by helping people access the health care

                      they need to avoid expensive emergency room visits

                      for preventable conditions and reducing uncompensated

                      costs for doctors and hospitals.”

                      In September 2010, the State received a $1 million

                      grant from the federal government to conduct

                      research, determine the needs of the state and plan

                      for the establishment of a state-based health

                      insurance exchange in Illinois. The State

                      subsequently commissioned two comprehensive studies

                      to examine Illinois’ health coverage marketplace and

                      the impact and costs of establishing a state-based

                      health insurance exchange in Illinois. The two

                      reports together will inform consumer and industry

                      groups, legislative and executive policy

                      decision-makers and other stakeholders as a new

                      health care marketplace in is established in Illinois

                      as required by the federal Affordable Care Act.

                      According to the reports, an Illinois Exchange is

                      projected to decrease the number of uninsured in

                      Illinois by almost half – from 12 percent of the

                      population to 7 percent. 1.4 million currently

                      uninsured Illinoisans will receive coverage through

                      the Exchange by 2020. The reports highlight the

                      significant role of the Exchange as the sole access

                      point for hard-working individuals, families and

                      small businesses to claim federal tax credits to

                      purchase private health coverage.

                      The reports also highlight the complex process that

                      will establish the new insurance marketplace in

                      Illinois, and the necessity of passing enabling

                      legislation to create the exchange by the end of


                       "These significant studies underscore how millions

                      of Illinois families and small businesses, who

                      previously had limited or no access to health

                      insurance coverage, will now have unprecedented care

                      options through the Exchange,” said DOI Acting

                      Director Jack Messmore. “We are continuing our

                      efforts in establishing an efficient, effective and

                      highly competitive marketplace for health coverage

                      that allows consumers more choices, more

                      accessibility and greater control over healthcare


                      The first report – Review of the Current Illinois

                      Health Coverage Marketplace: Background Research

                      (“Background Report”) – is a comprehensive assessment

                      of Illinois’ current health coverage marketplace, the

                      affordability of private health insurance, and

                      projections for the health coverage marketplace from

                      2011 to 2020.

                      The major findings in the Background Report are:

                      • The percentage of State residents without health

                      insurance will decrease from 12 percent in 2011 to 7

                      percent in 2020, as 1.4 million Illinoisans are

                      expected to be covered through plans purchased on the


                      • Medicaid enrollment as a share of the State

                      population will increase by one percentage point,

                      from 20 percent to 21 percent, between now and 2020.

                      Enrollment is estimated to increase significantly in

                      2014-15 due to expanded eligibility required under

                      federal law, enhanced outreach by the State to

                      eligible beneficiaries, and increased utilization of

                      coverage by eligible residents.  However, overall

                      Medicaid enrollment is expected to decline from 2015

                      through 2020 due to a projected future economic

                      recovery. Medicaid growth will also be partially

                      offset by an assumed transfer of persons from

                      Medicaid and other State programs to the new


                      • Over the last ten years in Illinois, employer-based

                      health insurance (the dominant source for insurance

                      coverage) has dropped by more than 16 percent.

                      • The affordability of coverage is the greatest

                      barrier to obtaining health coverage today, and the

                      majority of uninsured individuals in Illinois are

                      low-income.  An individual with an income at 200

                      percent of the Federal Poverty Level ($21,780)

                      without access to employer insurance today would have

                      to pay 19 percent of income to obtain insurance.  For

                      a family, the percentage is even higher.

                      The second report - Illinois Exchange Strategic and

                      Operational Needs Assessment Report (“Needs

                      Assessment”) – is intended to assist the State in

                      identifying the necessary resources and capabilities

                      required to establish and maintain an Exchange.  The

                      report was researched and compiled by Health

                      Management Associates (HMA) in consultation with

                      Wakely Consulting and CSG Government Solutions.  This

                      report provides background information on the federal

                      law and analyzes the State’s needs in setting up an

                      Exchange. The report further addresses mandatory

                      services and functions, projects start-up and

                      operating costs, and provides insight on policy

                      decisions the State will need to make in designing

                      its Exchange. This would include coordinating it with

                      the Illinois insurance market and integrating it with

                      existing Illinois public programs.

                      The Needs Assessment report notes that:

                      • The Exchange must be operational for an initial

                      enrollment period by October 2013 for plans effective

                      January 1, 2014.  States must submit comprehensive

                      plans to establish an Exchange to the federal

                      government by December 2012, or the federal

                      government will operate the State’s Exchange.

                      • The Exchange’s mandatory functions, including

                      developing a policy and financial model that

                      facilitates the transition to an Exchange, will be

                      separated into phases and will include outreach to

                      insurers and other stakeholders regarding consumer

                      protections, online shopping, eligibility

                      determination and other benefits. Cumulative total

                      expense to administer the Exchange beginning in 2014

                      ranges from 2 to 5 percent of health premiums,

                      decreasing over time, with two-thirds of the cost

                      attributed to IT infrastructure expenses. In 2014,

                      expenses are estimated to be between $32.1 million to

                      $46.7 million, or between $10.47 and $16.83 on a

                      per-member-per-month (PMPM) basis.  In 2015, expenses

                      are estimated to be between $57.3 million and $88.6

                      million, or between $8.92 and $13.47 PMPM.  Operating

                      costs will decline as enrollment increases.

                      • Medicaid and Children’s Health Insurance Program

                      enrollment will increase by 267,000 newly eligible

                      and 130,000 currently eligible Illinoisans by 2014.

                      At such levels, increased costs to the State would be

                      $224.5 million dollars in 2014.  After identifying

                      savings from reduced eligibility for populations now

                      able to access the Exchange, the report estimates a

                      net increase of $83 million in 2014; focus on

                      improved business processes through the overhaul of

                      eligibility IT systems and a close monitoring of

                      state agency staffing needs.

                      “Heath Reform will expand the Medicaid program and

                      create new private options for Illinoisans as their

                      income rises above Medicaid levels,” said Healthcare

                      and Family Services Director Julie Hamos.  “One of

                      our priorities – in addition to implementing this

                      expansion in an effective way – will be to make sure

                      that as people move back and forth between Medicaid

                      and these private options, we maintain continuity of

                      care.  Our goal is to improve health outcomes and

                      reduce costs by encouraging providers to do a better

                      job of coordinating care and employing longer term

                      preventive measures.”

                      The federal health care reform law, the Affordable

                      Care Act (ACA), was signed into law by President

                      Obama on March 23, 2010.  The insurance reforms of

                      the ACA culminate with the establishment of an

                      Exchange on January 1, 2014.  In recognition of the

                      unique market conditions and policy preferences that

                      exist across the nation, Section 1311 of the ACA

                      provides each state with the authority and funding to

                      design its own Exchange/healthcare marketplace.

                      Short summaries of the reports are attached, and

                      copies of these reports have been posted on the

                      Department of Insurance website, at: