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| Public Act 102-0900 | ||||
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AN ACT concerning regulation.
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Be it enacted by the People of the State of Illinois,
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represented in the General Assembly:
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Section 1. Short title. This Act may be cited as the Health | ||||
Insurance Coverage Premium Misalignment Study Act. | ||||
Section 5. Purpose. This Act is intended to enable the | ||||
State to study possible misalignment in the Illinois health | ||||
insurance marketplace that would produce increased premium or | ||||
cost sharing for some consumers and drive some consumers into | ||||
lower value qualified health plans or out of the marketplace | ||||
altogether. | ||||
Section 10. Findings. The General Assembly finds that: | ||||
(1) Section 1402 of the Patient Protection and Affordable | ||||
Care Act requires health insurance issuers to provide | ||||
cost-sharing reductions to low-income marketplace consumers | ||||
below the 250% federal poverty level who choose a silver level | ||||
plan; it also requires the United States Department of Health | ||||
and Human Services to reimburse issuers for cost-sharing | ||||
reductions. Cost-sharing reductions are important because they | ||||
help low-income marketplace consumers afford out-of-pocket | ||||
costs, including deductibles and copayments, and therefore | ||||
keep them in the marketplace.
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(2) On October 12, 2017, the federal government, through | ||
executive action, announced that it would be discontinuing | ||
cost-sharing reduction payments to issuers in the Patient | ||
Protection and Affordable Care Act marketplace. Illinois, like | ||
the majority of other states, took action to mitigate the | ||
losses that Illinois issuers would endure without the federal | ||
cost-sharing reduction payments by adopting a practice called | ||
"silver loading" or "cost-sharing reduction uncertainty cost" | ||
beginning in the 2018 plan year. Silver loading allows issuers | ||
to increase their silver plan baseline premiums to make up the | ||
costs lost from the missing federal cost-sharing reduction | ||
payments. Most of these premium increases are offset by higher | ||
advanced premium tax credits from the federal government.
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(3) However, due to silver loading and resulting pricing | ||
of silver plans in the Illinois marketplace, it appears that | ||
the current metal-level premiums in the Illinois marketplace | ||
are misaligned and do not reflect coverage generosity of the | ||
plans. The fact that silver plans are now overpriced for | ||
enrollees ineligible for generous cost-sharing reductions has | ||
driven some of those enrollees into non-silver (mostly bronze) | ||
plans with levels of cost sharing that are a worse match for | ||
their needs. In other words, Illinois marketplace consumers | ||
could be currently paying more than they should for low value | ||
plans and less than they should for high value plans.
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Section 15. Premium misalignment study. | ||
(a) The Department of Insurance shall oversee a study to | ||
explore rate setting approaches that may yield a misalignment | ||
of premiums across different tiers of coverage in Illinois' | ||
individual health insurance market. The study shall examine | ||
these approaches with a view to attempts to make coverage more | ||
affordable for low-income and middle-income residents. The | ||
study shall follow the best practices of other states targeted | ||
at addressing metal-level premium misalignment and include an | ||
Illinois-specific analysis of: | ||
(1) the number of consumers who are eligible for a | ||
premium subsidy under the Patient Protection and | ||
Affordable Care Act (Pub. L. 111-148) and the relative | ||
affordability of the plans;
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(2) if the plan is in the silver level, as described by | ||
42 U.S.C. 18022(d), the relation of the premium amount | ||
compared to premiums charged for qualified health plans | ||
offering different levels of coverage, taking into account | ||
any funding or lack of funding for cost-sharing reductions | ||
and the covered benefits for each level of coverage; and | ||
(3) whether the plan issuer utilized the induced | ||
demand factors developed by the Centers for Medicare and | ||
Medicaid Services for the risk adjustment program | ||
established under 42 U.S.C. 18063 for the level of | ||
coverage offered by the plan or any State-specific induced | ||
demand factors established by Department rules. | ||
(b) The study shall produce cost estimates for Illinois | ||
residents addressing metal-level premium misalignment policy | ||
as studied in subsection (a) along with the impact of the | ||
policy on health insurance affordability and access and the | ||
uninsured rates for low-income and middle-income residents, | ||
with break-out data by geography, race, ethnicity, and income | ||
level. The study shall evaluate how premium realignment, if | ||
implemented, would affect costs and outcomes for Illinoisans. | ||
(c) The Department of Insurance shall develop and submit, | ||
no later than January 1, 2024, a report to the General Assembly | ||
and the Governor concerning the design, costs, benefits, and | ||
implementation of premium realignment to increase | ||
affordability and access to health care coverage that | ||
leverages existing State infrastructure.
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