Iowa Stopgap Measure

To alleviate the collapse of Iowa’s individual health insurance market, Iowa is requesting that the Centers for Medicare and Medicaid Services (CMS), the United States Department of Health and Human Services (DHHS), and the United States Department of Treasury consider this request for emergency regulatory relief to provide, at least temporarily, stability to the health insurance market by allowing Iowa to implement the Iowa Stopgap Measure described herein.  Iowa requests that the federal government exercise its authority granted by President Trump’s Executive Order Minimizing the Economic Burden of the Patient Protection and Affordable Care Act Pending Repeal 1   to allow Iowa to facilitate the implementation of a reinsurance program, per-member per-month premium credit mechanism, and a standard health benefits plan to be offered to all eligible consumers for the plan year 2018.

Iowa submits this proposal under the Affordable Care Act (ACA) Section 1332 as an innovation waiver seeking additional federal cooperation and partnership to allow for the creation of a viable commercial health insurance market for 2018 via Iowa’s Stopgap Measure.   In the alternative, should CMS not find Iowa’s Stopgap Measure to be a sufficient Section 1332 waiver, or find that any request within the Iowa Stopgap Measure or parts of requests within the Iowa Stopgap Measure to not be waivable, then Iowa requests that CMS consider this to be a formal request for emergency regulatory relief as permitted by the referenced Executive Order. 

With great concern for the estimated 72,000 Iowans covered with individual ACA-compliant health plans in 2017, Iowa devised an innovative solution to reinsure the most vulnerable individuals, which in turn helps control healthcare premium costs and stabilizes the long-term viability of Iowa’s individual health insurance market.  Approval of Iowa’s Stopgap Measure and CMS granting emergency regulatory relief would be an example of a successful state-federal partnership during a time of extraordinary instability in the individual health market – a partnership in which flexibility recognizes the uniqueness of state markets and the accessibility of insurance is preserved for Iowans needing to purchase individual health coverage.

Although the ACA’s Medicaid expansion program resulted in additional coverage for nearly 150,000 Iowans, the ACA has caused the individual commercial market to collapse.  Because insurers had limited claims data on the uninsured population, many insurers initially underestimated premiums.  After 2014, it became apparent that many of the newly insured individuals in Iowa’s individual ACA-compliant market were much sicker, older, and more costly than previously estimated.  This occurred across the ACA-compliant markets throughout the country, forcing premiums to skyrocket.  Iowa’s individual ACA-compliant premiums have increased between seventy (70) and one-hundred (100) percent over the first three (3) years of the ACA.  Consequently, this has resulted in declining enrollment of healthy individuals along with meager uptake by the younger population. 

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. 2   Iowa’s individual ACA-compliant market has seen continued instability since that time.  On April 25, 2016, UnitedHealthcare notified the Iowa Insurance Division that they would not offer individual ACA-compliant plans in 2017. 3  

Then, on March 30, 2017, Wellmark, Inc. and Wellmark Health Plan of Iowa, Inc. (“Wellmark”) notified the Iowa Insurance Division that they would not offer individual ACA-compliant plans in 2018. 4    On April 6, 2017, Aetna, Inc. notified the Iowa Insurance Division that it would not offer individual ACA-compliant plans in 2018. 5    Finally, before Iowa’s rate filing deadline, June 19, 2017, Wellmark Value Health, Wellmark Synergy Health and Gundersen Health Plan, Inc. informed the Iowa Insurance Division that they will not offer individual ACA-compliant plans in 2018.   On June 19, 2017, Medica filed ACA-compliant plans to be available on the Exchange in all ninety-nine (99) counties.  6   No other carriers filed rates for 2018 for the individual health insurance market.  Significantly, the rates filed by Medica for 2018 have average premium rate increases of forty-three (43) percent over its 2017 rates.  

As Medica’s silver level plan was already more expensive than that sold by Aetna,  individuals that had Aetna plans in 2017 may see actual rates increases of up to 100% in 2018 for a Medica silver tier plan.  These anticipated premium rates will likely price out nearly all individuals currently on the individual health insurance market except for those who are fully federally subsidized or those who must incur these steep costs to ensure coverage for their serious illnesses or medical condition.   As it is, in 2018, Iowa will no longer function as an individual commercial market and this circumstance is not sustainable.

CMS has the authority to grant a state innovation waiver under Section 1332 of the ACA to allow the state to pursue innovative strategies to provide the residents with access to high quality, affordable health coverage.  7   These waivers allow states to implement innovative ways to provide access to quality health care that: 1) is at least as comprehensive and affordable as would be provided absent the waiver, 2) provides coverage to a comparable number of residents of the state as would be provided coverage absent a waiver, and 3) does not increase the federal deficit. 8

As noted above, President Trump issued an executive order instructing the Secretary of the DHHS and the heads of all other executive departments and agencies with authorities and responsibilities under the ACA to “exercise all authority and discretion available to them to provide greater flexibility to States and cooperate with them in implementing healthcare programs.”  9 A copy of Executive Order 13765 (the “Order”) is attached to this proposal as Appendix A.  

President Trump made clear in the Order that he expects his Administration to “take all actions consistent with law to minimize the unwarranted economic and regulatory burdens of the Act, and prepare to afford States more flexibility and control to create a more free and open healthcare market.”  10 Further, the Order grants the Secretary of DHHS the authority and responsibility to “waive, defer, grant exemptions from, or delay the implementation of any provision or requirement of the Act that would impose a fiscal burden on any State or a cost, fee, tax, penalty, or regulatory burden on individuals, families, healthcare providers, health insurers, patients, recipients of healthcare services, purchasers of health insurance, or makers of medical devices, products, or medications.”  11

CMS previously displayed its ability to be flexible in its adherence to the provisions of the ACA in its continued extensions of the transitional relief program requested by former President Barack Obama as related to grandmothered plans.   CMS created a ‘transitional policy’ allowing for health insurance carriers to continue to offer certain non-compliant ACA policies to existing consumers.  This continued policy position demonstrates that CMS does have authority to be accommodating and adaptable in its interpretation and implementation of the ACA.

Iowa requests CMS support in its development and implementation of the Stopgap Measure, which would be available to all eligible Iowa consumers for the plan year 2018.  Iowa proposes to provide the following:

1) A single, standard plan available to every eligible Iowa consumer from each participating carrier,

2) Flat, per-member per-month premium credits based on age and income, and

3) A reinsurance program to support high-cost claimants.

According to a recent estimate published by Milliman, Iowans will receive approximately $194 million in Advanced Premium Tax Credits (APTC) and $48 million in Cost Sharing Reduction (CSR) payments in 2017.  As premiums increase each year, the required funding for APTCs correspondingly increases as premiums are capped for those receiving APTCs.  Furthermore, due to Aetna’s decision to exit the market and Medica’s position as the sole carrier who has filed rates for 2018, the filed standard silver premium plan rates increased significantly from the 2017 rates.  As filed, the premium rates for 2018 show an average increase of forty-three (43) percent.  Given this increase in premiums, Iowa estimates that the required APTC funding for the 2018 market will be [amount to be determined estimated between $350 - $500 million] and the CSR funding to be [amount to be determined].  12    

The Iowa Stopgap Measure would divide the total APTC and CSR funding allocated to Iowa between a reinsurance program and flat, per-member per-month premium credits.  In doing so, Iowa will be able to provide an affordable and comprehensive health insurance program that is budget neutral to the federal government and will improve market stability.

[Given the uncertainty at the federal level regarding funding and payment of CSRs, Iowa is unable to finalize the decision on whether to include the CSR amounts as part of its waiver application calculation and whether to request a waiver for pass-through funding of those CSR amounts.  The ACA authorized CSR payments, but no appropriation for the funding was made in the statute.  Upon a challenge by the House of Representatives, the United States District Court for the District of Columbia held that paying out these reimbursements without any appropriation violated the Constitution.  See United States House of Representatives v. Burwell, 185 F. Supp. 3d 165, 174–75 (D.D.C.), appeal held in abeyance, 676 F. App'x 1 (D.C. Cir. 2016).    This decision was appealed by the Obama administration, and recently the Trump administration asked for the case to remain stayed for an additional three months while the legislative process played out.  However, the current administration continues to make the CSR payments, with the decisions seemingly occurring on a monthly basis.   As the recent House and Senate bills were in conflict on CSR payments, it is difficult for Iowa to make a decision regarding whether to request a CSR waiver and further address cost-sharing at this juncture.] 

It is unlikely any federal legislative changes to the ACA will be enacted in time to alleviate the collapse of Iowa’s individual commercial health insurance market and provide relief to the impacted Iowa consumers for 2018.  The rates filed by Medica for 2018 are unsustainable, and will drive more healthy and young people out of the commercial individual health insurance market.  

The program described herein would become effective immediately upon CMS approval to allow insurance carriers to decide whether to offer the standard plan under the Iowa Stopgap Measure for the 2018 calendar year and for all parties to begin implementation.  Any carrier who wishes to participate in the commercial individual health insurance market, including any that may have filed rates for 2018, would only be able to sell the standard plan developed as part of the Iowa Stopgap Measure.   Iowa requests that this proposal be granted as soon as possible and be effective for an initial period of one year to allow for coverage through December 31, 2018.   Iowa requests authority to have the option to request renewal of the program for calendar year 2019 if necessary.

Existing Iowa law and regulations provide considerable authority and flexibility to implement the requested waiver.

First, and most broadly, Iowa Code section 505.8(19) provides Iowa’s Insurance Commissioner with the authority to “propose and promulgate administrative rules to effectuate the insurance provisions of the federal Patient Protection and Affordable Care Act, Pub. L. No. 111-148, as amended by the federal Health Care and Education Reconciliation Act of 2010, Pub. L. No. 111-152, and any amendments thereto, or other applicable federal law.”

Second, and more specifically, Iowa law contains an existing mechanism to design and administer the Iowa Stopgap Measure.  In 1996, Iowa developed the individual health benefit reinsurance association (IIHBRA). 13 .  IIHBRA was established as part of the Individual Health Insurance Market Reform Act, which was enacted to “promote the availability of health insurance coverage to individuals regardless of their health status or claims experience.”  14 .   The IIHBRA is a non-profit organization whose work is managed by the board of directors established by the Iowa Comprehensive Health Association (the “Association.”) The Association also facilitates the Health Insurance Program of Iowa (“HIPIOWA”), a state-wide high risk pool.

The board of directors of the Association (the “Board”), with the approval of the Commissioner, is authorized to adopt the form and level of coverage of the standard health benefit plan for the individual market, which is required to provide benefits substantially similar to the current state of the individual market.  15 .   For calendar year 2018, Iowa is developing a standard plan which will provide benefits substantially similar to those currently offered in the individual health insurance market.  The standard plan will be modeled after coverage offered to Iowa consumers in 2017, and the Commissioner will recommend that the Board adopt the standard for 2018.  The Commissioner will promulgate rules to set forth eligibility, benefits and other requirements.  16 .  A listing of the proposed rules is attached as Appendix B.

For 2018, the IIHBRA and Association would utilize pass-through funding of Iowa’s share of federal APTC and CSR payments to supplement an existing reinsurance program and establish a monthly premium credit program for individuals who purchase the standard plan.  This mechanism would utilize federal funds as a mechanism to lower premium costs and support a reinsurance program for high claim individuals who purchase the standard plan.  While the reinsurance mechanisms for IIHBRA typically involve spreading costs among a number of carriers providing health insurance coverage for individuals, here, the reinsurance will take the form of a program funded by the federal government and carried out by agreement with Iowa to be run through IIHBRA and funded by CMS.  

Carriers will price the standard plan based upon the individual’s age and rating area, and Iowa will utilize the systems already in place at the Iowa Department of Revenue and the Iowa Department of Human Services to verify income and other eligibility criteria.  Premium credit payments will be paid to the carriers from a vendor contracted by the state of Iowa in a similar manner as APTCs are currently paid to carriers by the federal government.

No state funds will be used to fund either the premium credits, reinsurance program, or administration of the Iowa Stopgap Measure.  However, as discussed below, additional state departments and resources will be involved in the income and eligibility verification required under the Iowa Stopgap Measure.    If CMS does not approve the Iowa Stopgap Measure and thus does not authorize the requested pass-through funding, Iowa will not move forward with the Iowa Stopgap Measure.  

Goal of Stopgap Measure

The Iowa Insurance Division developed the Iowa Stopgap Measure to provide temporary stability to the individual health insurance market in Iowa for 2018. 

Federal Regulations Requested to be Waived

As an initial matter, and in light of President Trump’s Order, Iowa is requesting relief from strict compliance with the Section 1332 waiver requirements.  The requirements of Section 1332 present a significant challenge given Iowa’s market collapse; the timing requirements alone would prohibit any meaningful relief.    

As originally contemplated, Section 1332 is intended to allow states to develop an innovative solution to improve its existing individual health insurance market.  The breadth of requirements prohibit it from being applicable as a crisis management mechanism, which Iowa now requires to stabilize its individual health insurance market from collapse.  However, CMS has the authority granted to it by President Trump’s Order to provide flexibility in its execution of the Section 1332 waiver process.  Iowa requests that CMS waive several requirements of Section 1332 in order to allow Iowa to timely implement the program proposed below.  Attached as Appendix C is an annotated version of the checklist provided to Iowa by CMS with further explanation and detail regarding Iowa’s inability to complete the requirements in time to stabilize its collapsed market for 2018.  

In addition to the strict requirements of Section 1332, Iowa is requesting relief from the following provisions of the ACA:

• 26 U.S.C.A. § 5000A (26 I.R.C. § 5000A) to allow Iowa to reinforce the individual mandate provisions with a continuous coverage requirement built into the Iowa Stopgap Measure.  In 2018, the standard plan under the Iowa Stopgap Measure will be available to any and all eligible Iowa consumers. However, Iowa is seeking a continuous coverage requirement for special enrollment periods for 2018. 

• [Similar to the comments above regarding the inclusion of a waiver for pass-through CSR funding, Iowa is similarly undecided on how to address the individual mandate provisions of the ACA in light of the political uncertainty regarding the enforcement of the provision.  We note that in February, in response to President Trump’s January 20, 2017 Executive Order, the I.R.S. decided to make changes that would continue to allow electronic and paper returns to be accepted for processing in instances where a taxpayer doesn’t indicate their coverage status. 17 If individuals are not required to submit this information, it implies that the I.R.S. will not take any affirmative steps to ensure compliance with the mandate.   Thus, a waiver of this provision would have no financial impact because no funds would be derived from enforcement of the mandate.  Given the uncertainty with the federal legislation, Iowa has not decided whether to formally seek waiver of this provision.]

• 26 U.S.C.A. § 36B (26 I.R.C. § 36B) to allow Iowa to reallocate the described federal funding into the development of per-member per-month premium credits to lower the monthly premiums for all Iowans who would purchase the standard plan.  A portion of these funds would also be allocated to the reinsurance program described in the program to offset the high cost claimants and provide an overall reduction in premium costs.
• 42 U.S.C.A. § 18071 to allow Iowa to reallocate the described federal funding into the development of per-member per-month premium credits to lower the monthly premiums for all Iowans who would purchase the standard plan.

• [Please see the comments included above regarding CSR funding as relates to Iowa’s outstanding decision as to whether it will request a waiver of this provision.]

• 42 U.S.C.A. § 18022(d) to allow Iowa to require carriers to only offer a single, standard plan, similar to that of the current silver tier.  The plan would be required to have between sixty-eight (68) percent to seventy-two (72) percent actuarial value.  Iowa does not seek a waiver of any essential benefit requirement under this section.  The waiver is intended only to allow carriers to offer a single plan at the silver tier level.

While additional provisions of the ACA may be affected by the implementation of the Iowa Stopgap Measure, at this juncture Iowa does not anticipate any negative impact on the non-waived provisions.  

Background on Iowa’s Individual Health Insurance Market

Prior to the ACA, Iowa had a stable individual market with some of the lowest premium levels in the nation. Iowa has a population of just over 3 million people, and nearly sixty-six (66) percent of Iowans had access to employer-sponsored insurance.  18 .     Prior to the implementation of the ACA, Iowa had one of the highest health insurance coverage rates in the nation with less than 9.7 percent of its residents being uninsured. 19  

It must be said that while under the ACA, the number of uninsured individuals in Iowa has decreased, the number of Iowans actually purchasing policies in the individual market has also decreased. 20 .   This is, in large part, due to the bipartisan, tailored version of the Medicaid expansion implemented by Iowa.  The program, known as the Iowa Health and Wellness Plan, provides coverage to nearly 150,000 low-income, childless adults, many of whom were previously uninsured.  21    However, when the ACA was implemented, many Iowans chose to take advantage of the grandfathered plans that were allowed as part of the ACA and transitional plans which were allowed in response to recommendations from the Center for Consumer Information and Insurance Oversight (CCIIO) and President Obama saying that “if you like your health plan you can keep it.” 22 .   With the strong market pre-ACA, over 85,000 individuals, year after year, have chosen not to enter the Marketplace and remain on their pre-ACA plans. 23      

Those individuals who did enroll in the ACA-compliant individual market tended to have a high utilization rate resulting in a more concentrated risk for carriers.  This caused significant rate increases in the individual risk pool. For calendar years 2016 and 2017, Wellmark received rate increases of 26.5 and 42.6 percent respectively for its ACA compliant, off Marketplace plans.  24 .  Aetna (formerly Coventry Health Care of Iowa, Inc.) received rate increases of 19.8 and 22.58 percent for the years 2016 and 2017 for its ACA compliant plans on and off the Marketplace.  25 .     The carriers suffered substantial losses even with the continued rise in premium rates.   

The liquidation of CoOportunity Health was the first indication of the instability of the Iowa individual ACA-compliant market.  The effects of that liquidation are still impacting the stability of the market in Iowa and continue to compound the problems. Prior to its liquidation, CoOportunity Health developed the programs pursuant to the federally mandated guidelines under the ACA and entered into loan agreements with the federal government to fund those programs.  Despite assurances to the Iowa Insurance Commissioner, DHHS and CMS specifically did not fully fund the risk corridors program for the calendar year 2014, resulting in a debt to CoOportunity Health of approximately $130 million, contributing to the failure of CoOportunity.  As of the date of this proposal, these funds have not yet been paid by the federal government and Insurance Commissioner Ommen, as liquidator for CoOportunity Health, has been forced to pursue a claim against the federal government in federal claims court.

CoOportunity, UnitedHealthcare, Wellmark, and Aetna have all reported very substantial losses in this market.  Although legislation is moving, the indecisiveness in the legislative process at the federal level has further debilitated the Iowa individual health insurance market.  This uncertainty also prevented Iowa state legislators from enacting legislation during its session that might have supplemented any solutions from the federal level on this issue.       

At this critical juncture, given the uncertainty at the federal level and the market conditions discussed above, the individual commercial health insurance market is in collapse.    For 2018, the Iowa Insurance Division received a single filing from a health insurance carrier for ACA-compliant plans.   Medica filed its intent to offer coverage in all ninety-nine (99) counties, with an average rate increase of forty-three (43) percent.   This increase will likely be too expensive for those who are not fully federally subsidized thus driving out young and healthy individuals whose involvement is critical to stabilizing the commercial market. It will leave only those subsidized individuals, as well as consumers who will be forced to incur these costs to ensure they have coverage for serious illnesses or medical conditions. 

Iowa developed the Iowa Stopgap Measure to provide temporary stability to the individual health insurance market.  The Iowa Stopgap Measure would include a reinsurance program, per-member per-month premium credit mechanism, and a standard health benefits plan to be offered to all eligible consumers for the plan year 2018.

Waiver Proposal

1. Implementation of a Standard Plan

Iowa will require each carrier, as a condition of receiving reinsurance funding through the Iowa Stopgap Measure, to offer the single, standard health benefits plan.   The Iowa Insurance Division has engaged in detailed conversations about the Iowa Stopgap Measure with several insurance carriers and anticipates that one or more of these carriers will commit to offering the standard plan as part of its participation in the Iowa Stopgap Measure for 2018.  

1. Standard Plan Benefits

Iowa requests relief to allow insurance carriers in the state to sell a single, standard health benefits plan to consumers under the Iowa Stopgap Measure.  The standard benefits plan would meet the silver tier requirement of having an actuarial value between sixty-eight (68) percent to seventy-two (72) percent.  The single, standard plan will include the essential health benefits required by the ACA as well as all applicable state mandated benefits.  26

Given the standard plan as part of the Iowa Stopgap Measure will be in compliance with essential health benefits and the silver tier actuarial value requirements, the federal risk adjustment program can be utilized to facilitate risk adjustment and high-cost risk pooling between carriers.  In the event that multiple carriers join the Iowa Stopgap Measure in 2018, participating carriers will be required to comply with the federal risk adjustment program as directed through the Federal Notice of Benefit and Payment Parameters.

Once the Iowa Stopgap Measure is approved by CMS, with the exception of the grandfathered and transitional plans, the standard plan as part of the Iowa Stopgap Measure will be the only individual health benefits plan available for carriers and consumers in the 2018 Iowa individual health insurance market.   This program would supersede any filings that have been made for carriers to offer coverage in 2018. 

1. Eligibility Requirements and Verification

Any Iowa resident who is eligible may purchase the standard health benefits plan under the Iowa Stopgap Measure.  For 2018, the standard plan will be offered on a guaranteed issue basis and will not have any annual or lifetime limits.  Individuals who wish to purchase the plan must purchase it during the open enrollment period of November 1, 2017 to December 15, 2017. The standard plan will have a [amount to be determined] deductible for each individual, and a [amount to be determined] deductible for a family.  The amount of co-pays associated with the standard plan will be the same regardless of the carrier. 

Eligible individuals will purchase the standard plan directly from the participating insurance carriers.  27   The Iowa Insurance Division is working with various state departments as well as interested insurance carriers to develop a standard application, similar to CMS’ single-streamlined application, which the carriers will use to collect the specific information that can be used to determine eligibility for federal funding under the plan.  Electronic and paper applications will be made available by the carriers, who may also sell the standard plan through their existing agent and broker networks.  

At this juncture, the application will request information sufficient to establish the following:

• That the individual is an Iowa resident;
• That the individual is a citizen or national of the United States, or is considered an alien lawfully present;
• That the individual is not eligible for Medicare, Medicaid, or CHIP;
• That the individual does not receive minimal essential coverage; and
• That the individual for whom insurance is being sought is not currently incarcerated.

The individual will be required to submit the projected 2017 income for themselves and any eligible taxpayer in the household.  The applicant will be required to provide an attestation that the information submitted is correct and accurate subject to penalty of perjury. 

[More specific details about the eligibility requirements and eligibility verification will be forthcoming, as Iowa continues to engage in discussions with CMS on these requirements and processes.  Iowa is working to develop these processes in a way which will be administratively feasible given the emergency timeframe as well as provide coverage to as many Iowa consumers as possible in the circumstances.  The Iowa Insurance Division is also continuing to work with the other state agencies discussed herein to develop eligibility verification systems.]

The information provided by the applicant will be subject to verification, which will be completed electronically by various state agencies in conjunction with the participating carriers and a third-party vendor.  An individual will be permitted to begin coverage upon submitting a completed attested application.  Subsequent data-matching will be completed by state agencies and the vendor to determine eligibility and individuals may be prospectively terminated if they are determined to be ineligible.   There will be no retroactive accounting to the insurance carriers for premium credits or reinsurance allocations for individuals terminated based on ineligibility for the program after the completion of such data matching.

While the specific details regarding data sharing have yet to be finalized, it is anticipated that these departments will utilize their current systems to perform the verification.  However, as part of this Iowa Stopgap Measure, Iowa requests that these agencies are allowed to expand their current agreements with applicable federal agencies to verify information for individuals wishing to enroll in the Iowa Stopgap Measure.  While the state systems will have the procedure to perform the verification, they will check the information against several federal databases, including those at the Social Security Administration. 

The Iowa Insurance Division and the Association, through HIPIOWA, will provide information to consumers regarding which carriers are selling a standard health benefits plan through the Iowa Stopgap Measure in which counties.  A consumer will be able to purchase from any carrier selling the Iowa Stopgap Measure standard plan in their county of residence, and can contact the carrier directly to receive information on the monthly premium costs, prescription coverage, and provider network.  Consumers may also be able, depending on the carrier, to work with a local agent or broker to purchase the plan. 

1. Special Enrollment Period Eligibility

The carriers who sell the standard health benefits plan under the Iowa Stopgap Measure would allow for enrollment outside of the open enrollment period if the individual seeking health insurance coverage would apply for one of the special enrollment periods as follows:

• Loss of qualifying health coverage as defined in 45 C.F.R. §155.420(d)(1);
• Change in household size due to marriage, adoption, birth, divorce, legal separation, or death;
• Change in primary place of living as defined in in 45 C.F.R. §155.420(d)(7);
• Loss of eligibility for Medicaid or the Children’s Health Insurance Program;
• Gaining membership in a federally recognized tribe or status as an Alaskan Native Claims Settlement Act Corporate shareholder;
• Leaving incarceration;
• Change in citizenship status; or
• Related to domestic abuse or spousal abandonment requiring new coverage.

To qualify for a special enrollment period, an individual must show that he or she has not been without minimum essential coverage for more than sixty-three (63) days in the immediately preceding twelve (12) months.   The continuous coverage requirement will not be enforced for a special enrollment period arising from one of the following qualifying events: birth, adoption, gaining membership in a federally recognized tribe or status as an Alaskan Native Claims Settlement Act Corporate shareholder, and a change in citizenship status.

[As with the eligibility requirements discussed above, the Iowa Insurance Division continues to work with CMS to finalize eligibility and verification requirements for a special enrollment period.  Consumers will be encouraged to enter the market during open enrollment, as access to special enrollment periods is intended to be limited.  All eligible consumers who purchase during open enrollment will begin coverage effective January 1, 2018, and coverage will be provided guaranteed issue.]

Individuals who seek enrollment via a special enrollment period will apply directly with one of the insurance carriers who have agreed to offer the standard health benefits plan developed for the Iowa Stopgap Measure.   While the individual will be required to provide an attestation regarding the circumstances for which they require a special enrollment period, the individual may also be required to submit documentary evidence in support.  

1. Age and Income-based Premium Credits

Iowa requests to use part of its share of the proposed federal funding to provide age and income based premium credits to eligible Iowa consumers who purchase the standard plan. Iowa proposes to use [amount to be determined] of the total [amount to be determined between $350 - $500 million] in APTC funding and [amount to be determined] of CSR funding to be used to provide per-member per-month flat premium credits.   The total amount of APTC and CSR funding will depend on the number of individuals who enroll in the Iowa Stopgap Measure.  

All individuals who purchase the standard plan will be allotted a monthly premium credit that will be paid directly to the carrier to lower the individual’s monthly premium costs.  The premium credit will be a defined flat dollar credit based on projected 2017 household income, as a percentage of federal poverty level (“FPL”), and the individual’s age.  The household income for each individual and/or family will be provided as part of the application, and will be verified by the Iowa Department of Revenue. 

The Iowa Insurance Division will work with a third-party vendor to determine the amount of premium credit for an individual based on their age and income.  No federal funds will be paid directly to the consumer, as payments will be made directly to the carriers to lower the individuals’ monthly premium costs.  Carriers will then bill the consumer for the remainder of the monthly premium cost, after the flat monthly credit has been applied.  

The tables below serve as an example of how the age and income monthly premium credits would be applied but do not necessarily reflect the final amounts. 

While the flat monthly credit will be the same for each carrier participating in the Iowa Stopgap Measure, the amount of monthly premium rates may vary by carrier.   These monthly premiums may vary depending on the individual’s age and rating area.   Attached as Appendix D is a more detailed description of the proposed subsidy program as relates to the various age and income brackets.  The table is provided merely as an example, and does not reflect filed and/or approved premium rates as of the date of this application.  

1. Reinsurance

Iowa proposes to utilize a portion of its share of federal funding to supplement its existing reinsurance program.  Iowa’s proposed reinsurance program will reimburse the carriers for high cost individuals who incur claims greater than $100,000 on an annual basis; an attachment point set to control the costs of premiums for all consumers.   

The program will provide eighty-five (85) percent coinsurance protection for claims between $100,000 and $3,000,000.   By having a $100,000 initial attachment point, carriers are forced to be actively engaged in successful care management to drive down costs.  And, as part of this reinsurance program, carriers will be required to agree to care management protocols.  

Additionally, this program will operate in conjunction with the Federal High-Cost Risk Pooling Program, which provides federal reinsurance at an attachment point of $1,000,000 with coinsurance payments of sixty (60) percent.  Accordingly, for claims between $1,000,000 and $3,000,000, the Iowa Stopgap Measure will provide coinsurance of twenty-five (25) percent, which when combined with the Federal High-Cost Risk Pooling Program will total eighty-five (85) percent total coinsurance protection.  Once an individual claim reaches $3,000,000, the Iowa Stopgap Measure will provide the carrier one-hundred (100) percent coinsurance protection.  We anticipate that the Iowa Stopgap Measure will coordinate reinsurance reimbursement with the Federal High-Cost Risk Pooling Program (FHCRP), to the extent adequate funding for the FHCRP exists, with sixty (60) percent from to the FHCRP, and forty (40) percent coinsurance from the Iowa Stopgap Measure.  In the event sufficient funding for the FHCRP does not exist to contribute the sixty (60) percent share, any shortfall shall be paid to the carriers from funding for the Iowa Stopgap Measure.

This level of reinsurance above $3,000,000 in annual claims is necessary to protect consumers from having to subsidize the costs of catastrophic claims.  By providing reinsurance at this level, carriers are able to keep consumers from paying increased premiums due to catastrophic claimants. 

Iowa will engage with a third-party vendor to facilitate the reinsurance program.  It is anticipated that a third-party vendor will annually review the claims information from the carriers. Claims information will be submitted to the vendor for purposes of this review consistent with Edge Server submission requirements currently in place for ACA risk adjustment determinations pursuant to 45 C.F.R. 153710(a) and implementing guidance released by HHS.  The vendor will determine the reinsurance amounts to be paid to the carriers once the designated attachment points are reached.   These payments would be made annually consistent with the existing federal reinsurance verification and payment process as provided in the ACA and its enabling regulations. 

Iowa estimates funding for this to be approximately [amount to be determined] of the total [amount to be determined between $350 - $500 million] in APTC funding and [amount to be determined] of CSR funding, although results may vary based on the actual enrollment count and experience of the population enrolled.  With the guarantee of reimbursement at these levels, premium rate increases will be substantially lower than without this guaranteed reimbursement.  

The Iowa Stopgap Measure will provide coverage for all of the essential health benefits as defined in 45 C.F.R. § 156.110.  It will also provide coverage for all of the state mandated benefits found in Iowa Code §514C.  Further, the standard plan under the Iowa Stopgap Measure is designed to meet the current silver tier requirement of between sixty-eight (68) percent to seventy-two (72) percent actuarial value. 

As the standard benefit provides coverage for all of the essential health benefits required by 42 U.S.C.A. § 18022(b), it meets the requirement of Section 1332(b)(1)(A) of providing coverage at least as comprehensive as that currently offered on the Exchange. 

Section 1332(b)(1)(B) requires that the proposed plan provide “coverage and cost sharing protections against excessive out-of-pocket spending that are at least as affordable as the protections of this title would provide.” Under the Iowa Stopgap Measure, the consumer would receive a flat, monthly premium credit based on their age and income.  These premium credits will be paid directly to the insurance carrier to lower the monthly premium costs that an Iowa consumer is required to pay.  The reinsurance program is designed to not only offer support for high cost claimants, but lower the overall premium costs to all consumers.  

While the Iowa Stopgap Measure does reflect a rate increase over the 2017 lowest cost silver plan, this is due in large part to Aetna’s having the second lowest-cost silver plan for 2017 and their withdrawal for the Marketplace for 2018.   

As noted above, there is one carrier who filed an intent to offer ACA-compliant plans in 2018.   Medica’s filed premium rates reflect an increase of an additional forty-three (43) percent.  Given this increase and the increase attributable to Aetna’s departure, premium rates may double for many consumers who wish to purchase individual health insurance on the Marketplace for 2018. 

[Iowa is currently conducting an economic analysis to explore the affordability of the market for 2018 under Medica’s filed rates compared to the 2018 individual health insurance market with the Iowa Stopgap Measure.   Iowa anticipates that the economic analysis will also discuss the impact of the current 2018 ACA market on larger market stability concerns for 2019 as compared to the Iowa Stopgap Measure 2018 market.]

Critically, thousands of Iowans purchased ACA-compliant off-Exchange plans and do not receive federal subsidies.  These individuals, along with other unsubsidized consumers purchasing on-Exchange plans, will be dramatically impacted by this increase, and will likely be driven from the market with a disproportionate departure of additional healthy and young individuals.   Some of these individuals may try to become eligible for subsidies by managing their income down, leaving their current employment, or using a structured divorce.  All of these options will not only have a direct impact on these individual’s financial condition and autonomy, but would impact Iowa’s economy. 

It is also likely that unsubsidized Iowans currently in the individual health insurance market will not purchase coverage in 2018 but instead seek care through emergency rooms.  Although Iowa does not have estimates on the costs of uncompensated care, the impact will negatively impact the healthcare sector and a general reduction in the economic conditions for consumers, through increased premiums, and for business, through less consumer spending.

[Iowa expects that the economic analysis will demonstrate that the Iowa Stopgap Measure 2018 market will be more affordable for the majority of impacted Iowa consumers than the current 2018 ACA market.   Iowa will provide the results of the economic analysis when completed.]

The Iowa Stopgap Measure would be available to any eligible Iowa consumer in 2018.   The eligibility criteria used for the Iowa Stopgap Measure are modeled after those currently utilized by CMS for the ACA, and thus would not exclude additional individuals.

[As part of the economic analysis that is in progress, Iowa is studying the number of the individuals that may be enrolled in the ACA individual health insurance market in 2018 through Medica as compared to the number of individuals that would enroll in the individual health insurance market in 2018 under the Iowa Stopgap Measure.  Iowa is working to understand the impact of the individual health insurance market in 2018 under the proposed rates filed by Medica for 2018, including the impact on participation on the approximately 30,000 Iowans who do not currently receive any federal subsidies. The coverage for this same population will also be considered under the Iowa Stopgap Measure 2018 market.   

The Iowa Stopgap Measure will not increase the federal deficit, as it reallocates the funds payable to Iowa consumers under the ACA via the existing APTC and CSR funding mechanisms.  No new, additional funding is requested from the federal government to support the Iowa Stopgap Measure.

Individual Health Insurance Market

Approval of the Iowa Stopgap Measure, at its most fundamental level, will restore the individual health insurance market.  Without the implementation of this program, the substantial risk of no individual health insurance coverage for 72,000 Iowans remains. 

Small and Large Employers

The Iowa Stopgap Measure does not affect health insurance available to Iowa residents through their small and large employers. 

Medicare and Medicaid

The Iowa Stopgap Measure does not affect health insurance available under Medicare or Medicaid.   However, individuals who are currently eligible for Medicaid but have chosen to purchase ACA-compliant plans off-Exchange will not be eligible for the standard plan.

Number of Employers Offering Coverage Pre/Post Waiver

The Iowa Stopgap Measure will not affect the number of employers offering health insurance coverage in Iowa.

Impact on Individuals Needing Health Care Services Out-of-State

The Iowa Stopgap Measure is intended to increase the number of carriers participating in the individual commercial health insurance market, which will allow consumers access to different networks based on the carrier they select for coverage.  Carriers will provide consumers with details about cost-sharing requirements for in- and out-of-network providers. The Iowa Stopgap Measure itself contains no provisions or restrictions regarding out-of-state services.

Under the Iowa Stopgap Measure, Iowa anticipates that the participating health insurance companies will see a slight increase in their respective administrative burdens.  Initially, there will be administrative requirements to set up the standard health benefits plan, including the development of an application as it will not be sold via the Exchange.  The Iowa Insurance Division will work with the carriers to develop a standard application for all consumers, which will be modeled after the single streamlined application used by the Iowa Department of Human Services and previously approved by CMS.  The participating insurance carriers will be required to work with the Iowa Department of Revenue and the Iowa Department of Human Services to verify the consumer’s stated income and ensure they meet other non-financial eligibility requirements.  

The Iowa Insurance Division will engage a third-party vendor to facilitate eligibility determinations, coordinate the premium credit payments, and reinsurance program. 

The Iowa Stopgap Measure should not increase the administrative burden for CMS and the federal government once the Iowa Stopgap Measure has been approved and implemented.  

The Iowa Insurance Division will ensure that all parties, including insurance carriers and the third-party vendor follow all reporting and other requirements.  

As discussed above, income and other eligibility criteria will be verified by the Iowa Department of Revenue and Iowa Department of Human Services to ensure that the consumers enrolled in the Iowa Stopgap Measure meet the eligibility requirements and that the appropriate premium credit is apportioned for each consumer.  

The Iowa Stopgap Measure, as described above, would be an appropriation of funds already allocated to Iowans under the ACA, and thus would be federally budget neutral. 

The Iowa Insurance Division was tasked by Governor Kim Reynolds to develop a solution to address the collapse of Iowa’s individual health insurance market.  The Iowa Insurance Division, in conjunction with several insurance carriers, developed the Iowa Stopgap Measure.  Iowa is seeking implementation of the Iowa Stopgap Measure as soon as CMS is able to give approval such that the Iowa Stopgap Measure can be implemented so that Iowa consumers will have coverage available starting January 1, 2018. 

Included below is a timeline of the development and implementation of the Iowa Stopgap Measure.

During the period between August and October, it is anticipated that the Iowa Insurance Division will be working with interested carriers to finalize the standard application and enrollment processes.  The Iowa Insurance Division will coordinate enrollment verification processes with the participating carriers and enrollment verification systems in use at other state agencies. 

The Iowa Insurance Division will provide education on the Iowa Stopgap Measure and the coverage available under the standard plan. The participating carriers will provide their agents and brokers with education on the plan, its benefits, and the eligibility requirements.   

As required under 45 CFR 155.1308(f)(4), the Iowa Insurance Division, with support from the third party vendor, will submit quarterly, annual, and cumulative targets for the scope of coverage requirement, the affordability requirement, the comprehensive requirement, and the federal deficit requirement. 

While the long-term goal is, and should continue to be, a permanent solution to ensure market stability, in the short term there needs to be a true market for Iowans to purchase affordable individual health insurance for 2018.  To that end, Iowa developed the Iowa Stopgap Measure to temporarily stabilize the individual health insurance market for 2018.

To ensure that participating insurers are able to properly implement the Iowa Stopgap Measure, Iowa respectfully requests that CMS consider this proposal in a timely fashion.  Iowa is prepared to engage with CMS on this proposal in any way necessary to ensure its prompt review and acceptance.

Iowa has a history of a strong health insurance market, and when left to its own devices, we are confident that we can do this again.  The anticipated premium rates for 2018 will price out all individuals currently on the individual health insurance market except for those who are fully federally subsidized or those who must incur these steep costs to ensure coverage for their serious illnesses or medical condition.   This is not a commercial insurance market.  This is not sustainable.  This is unacceptable.  Iowa needs flexibility and support from DHHS, Treasury, and CMS to implement the Iowa Stopgap Measure.   

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