MINNESOTA COUNCIL of H E A L TH P L A N S

November 18, 2013

COURT INTERNATIONAL BUILDING 2550 UNIVERSITY AVENUE WEST SUITE 255 SOUTH ST. PAUL, MINNESOTA 55114 651-645-0099 FAX 651-645-0098

Commissioner Michael Rothman MN Department of Commerce 85 Seventh Place East, Suite 500 St. Paul, MN 55101-2198

RE:

November 15th ACA Announcement by President Obama

Dear Commissioner Rothman: Thank you for the opportunity to meet with your staff on Friday regarding President Obamas offer to allow a one-year delay in implementing general Affordable Care Act (ACA) requirements. As a follow up to the meeting, this letter outlines our most serious concerns and barriers with changing course this late in the process. Unlike many states, Minnesota embraced health care reform and has worked for years to move toward a marketplace that is fair and consistent for all Minnesotans. As a state we are ready for reform. We are concerned that President Obama's offer to allow the resale of non-ACA compliant policies cannot be implemented fairly for Minnesota consumers, and if allowed, would threaten out state's ability to successfully implement the ACA. While we understand that many consumers are frustrated that their health coverage is changing, the Presidents offer for a one-year delay will not erase their frustrationit will only postpone it to the fall of 2014 when those policies must be brought into compliance. In the face of significant risk to our state, we struggle to see a benefit for our state to justify allowing the President's proposal to move forward. As you make your final decision, we urge you to consider the following issues: If the Presidents offer is accepted, already approved 2014 rates will be invalid. New rates for products already on the market will need to be refiled and reapproved. If rates are not allowed to be refiled, they will be insufficient and each carrier will independently need to assess what this means going forward. Having been notified in September and October that their 2013 policies couldnt be renewed as is, many Minnesotans already shopped and compared new coverage options both inside and outside MNsure. Thousands have purchased new coverage and others are prepared to do so by the Dec. 15 federal and state deadline. Going backward on such a very tight timeline will create uncertainty, confusion and disruption when people seek care.

Blue Cross and Blue Shield/Blue Plus of Minnesota HealthPartners Medica Metropolitan Health Plan PreferredOne Sanford Health Plan of Minnesota UCare

Page 2 Commissioner Michael Rothman November 18, 2013 President Obamas announcement was, of course, at a very high level. The details that followed from Center for Medicare and Medicaid Services (CMS) present legal and regulatory barriers that are unique to Minnesota. The Presidents offer applies only to individuals and small business who received a cancellation or termination notice. Due to Minnesotas guaranteed renewability laws, products were not canceled or terminated. Health plan information technology, administrative obstacles will make implementation of a change uneven and therefore unfair for consumers. The policies as they exist today are no longer in the systems. In addition, rebuilding the systems would require the very same staff currently working to ensure a successful Jan. 1, 2014, implementation of MNsure-related policies to refocus their work on rebuilding 2013 system capability. Health plans would not be able to evenly administer a change of this magnitude creating an unfair situation and additional confusion.

Below I offer additional context and detail for each of the issues noted above. Market stability, rates, MNsure and competition Implementing two parallel individual markets with inconsistent rules creates significant differences in consumer choices, products and access to providers. The risk of disruption and destabilization of the entire market is significant. Rebuilding market assumptions, rating and filings is simply not achievable at this late date. Market rates and policies for 2014 were established based on rules set forth by not only the federal government but also by the state of Minnesota. If rules change now, the 2014 rates would not be sufficient. Refiling of forms and rates for 2014 new products and reformed-renewals will likely result in premium increases across the board. If health plans are not allowed to refile, the market will not be stable and could result in financial concerns for health plans companies as they begin the 2015 rate-setting process. This uncertainty could lead some plans to reconsider their participation in 2014 either on or off the Exchange, or both. The effects of such a policy change to the risk pools are real and cannot be ignored by the health plans. There is already significant uncertainty facing the 2015 individual market with the closing of Minnesota Comprehensive Healthcare Association at the end of 2014. We cannot support adding more complexity to the 2015 marketplace.

Page 3 Commissioner Michael Rothman November 18, 2013 Currently, members with the products that are noncompliant for 2014 are included in the risk pool with MNsure and outside-of-MNsure individual market enrollees. If the Presidents offer is accepted, these enrollees would not be in that risk pool, causing even greater premium increases for those in the pool. Healthier and/or younger enrollees who have 2014 noncompliant plans are unlikely to give up their coverage for something unknown, especially if they do not receive a tax credit to help pay the premium. This will negatively impact the prices for all policies in 2015. A change in market rules impacts more than just the 140,000 Minnesotans who were in individual market policies that had to be updated for 2014. The issue also affects the small group market. The domino effect on pricing reaches enrollees across the entire marketplace. Health plans prepared for the 2014 individual market and competitively priced their products. One company entered the individual market for the first time, based on the rules set forth for the entire marketplace. Changing the rules less than a month before the enrollment deadline is anti-competitive.

Creating unnecessary confusion Due to the fact that the timeline does not allow changes to be implemented and member ID cards and other materials to be distributed before January, there will be a disruption when people seek care. Health plans have already received calls from members who want to keep 2013 products and receive a refund from MNsure. Because the Presidents offer does not apply equally to all products, consumers will be confused. Confusion may lead some consumers to wait out the uncertainty and therefore miss the Dec. 15 enrollment deadline, leaving them uninsured in January 2014. Not all policies available in 2013 are available in 2014. For example, an individual may have a network provider under their 2013 policy who is not in the health plans network in 2014. It is not fair to offer options to some enrollees but not to others. The details around Keep what you have is very conditional. These details make it confusing for consumers and brokers or others who work with them. It also will lead to dissatisfaction next year. Some consumers may be able to keep their plan, but:

Page 4 Commissioner Michael Rothman November 18, 2013 o Only for a year. o Only if the coverage was purchased prior to Oct. 31, 2013. o Only for the individual who purchased the plan. It does not apply if someone else, such as a small employer, buys the coverage. o The premium price will change. o There are changes to state law that require plans modifications effective Jan. 1, 2014. Potential legal and regulatory barriers In the detail released by CMS following the announcement, CMS noted that the Presidents transitional policy applies only to those individuals and small business who received a cancellation or termination notice. Due to Minnesotas guaranteed renewability laws for individual products at MSA 62A.65, these products were upgraded to be compliant with the ACA; they were not canceled or terminated. It appears the transitional policy outlined by CMS only applies in Minnesota if the company is exiting the individual market. In 2013, the Minnesota Legislature adopted conforming laws and technical corrections. Would the Minnesota Legislature need to enact a change to current state law in order for the state to implement the Presidents offer? Health plans are required to give 30-day advance notice of renewal or changes. It is impossible for health plans to meet this requirement for these products. The notification from CMS does not allow 2013 rating factors to be used if the old policies are moved into 2014. There are enormous inconsistencies in the rating factors and pricing areas between 2013 and 2014 products and all of the products would need to be re-rated using the new rules. All policies must be purchased by Dec. 15 in order for coverage to begin Jan. 1. This is a state and federal deadline. There is not enough time to accept the Presidents offer, allow consumers time to compare and make a purchase by Dec. 15.

Uneven implementation across health plans, added costs are unfair to consumers Health plans will be unable to implement the proposed change evenly, leaving consumers treated differently and creating an unfair situation.

Page 5 Commissioner Michael Rothman November 18, 2013 The 2013 products as designed today no longer exist within the health plan information technology systems. In order to rebuild these systems, staff would have to be redirected away from MNsure-related work. These employees are already working seven days a week on MNsure-related activities due to MNsures schedule for transferring enrollment and payment data to the health plans. There is no time available to rebuild systems. We believe resources are best spent focused on MNsure, not rebuilding systems that would be in place for a year.

While I commend President Obama and Governor Dayton for wanting to offer Minnesotans as many health care coverage choices as possible, the increased premium costs for the entire market, added confusion, and the significant legal, regulatory, operational and administrative unfairness are too complex to overcome on such a short timeline. In conclusion, President Obamas announcement comes too late to allow health plans to complete filings, rate approvals, communication and re-enrollment in time to prevent major disruptions for Minnesotans who purchase coverage on their own. It is also important, I believe, that we remember the delay offered by President Obama does not eliminate the need for individuals to move to products they may not want. The offer simply delays the move until fall 2014 unless changes are made at the federal level. I strongly urge you to keep Minnesota moving forward on its carefully planned, strategic implementation of health care reform. The stability of Minnesota health care marketplace is too great of price to pay for the narrow one-year delay offered by President Obama. Very truly,

Julie Brunner Executive Director cc: Commissioner Ed Ehlinger Commissioner Lucinda Jesson Commissioner Jim Schowalter Deputy Commissioner Tim Vande Hey Tina Smith