FISCAL NOTE
Date Requested: February 27, 2023
Time Requested: 03:19 PM |
| Agency: |
Insurance Commission |
|---|
| CBD Number: |
Version: |
Bill Number: |
Resolution Number: |
| 2704 |
Comm. Sub. |
HB3274 |
|
|---|
| CBD Subject: |
Actions, Suits and Liens |
|---|
|
FUND(S):
7152 Insurance Commission Fund
Sources of Revenue:
Special Fund
Legislation creates:
Creates New Expense
Fiscal Note Summary
Effect this measure will have on costs and revenues of state government.
If enacted, the Committee Substitute for House Bill 3274 would direct the Bureau of Medical Services (DHHR) to apply to the federal government (CMS) for a Basic Health Plan (BHP) option under Section 1331 and / or a State Innovation Waiver under Section 1332 of the Patient Protection and Affordable Care Act (PPACA) and requires that DHHR maximize all available federal dollars.
If enacted, the Committee Substitute for HB 3274 will have no fiscal impact on the Offices of the Insurance Commissioner (OIC). However, the OIC anticipates that the legislation may have an impact on the private health insurance market (Marketplace) exchange which is administered by the OIC. Please see the memorandum section of this fiscal note for additional information.
Fiscal Note Detail
| Effect of Proposal |
Fiscal Year |
2023
Increase/Decrease
(use"-") |
2024
Increase/Decrease
(use"-") |
Fiscal Year
(Upon Full
Implementation) |
| 1. Estmated Total Cost |
0 |
0 |
0 |
| Personal Services |
0 |
0 |
0 |
| Current Expenses |
0 |
0 |
0 |
| Repairs and Alterations |
0 |
0 |
0 |
| Assets |
0 |
0 |
0 |
| Other |
0 |
0 |
0 |
| 2. Estimated Total Revenues |
0 |
0 |
0 |
Explanation of above estimates (including long-range effect):
Please explain increases and decreases in personal services, current expenses, repairs and alterations, assets, other costs and revenues, including assumptions and data sources and delineation between start-up and ongoing costs. Please also include a long-range schedule of costs and revenues if fiscal impact is expected to vary in future years.
Memorandum
If enacted, the Committee Substitute for House Bill 3274 would direct the Bureau of Medical Services (DHHR) to apply to the federal government (CMS) for a Basic Health Plan (BHP) Option under Section 1331 and / or a State Innovation Waiver under Section 1332 of the Patient Protection and Affordable Care Act (PPACA) and requires that DHHR maximize all available federal dollars.
If enacted, the Committee Substitute for HB 3274 will have no fiscal impact on the Offices of the Insurance Commissioner (OIC). However, the OIC anticipates that the legislation will likely have an impact on the private health insurance market (Marketplace) exchange which is administered by the OIC.
The cost of establishing a Basic Health Plan (BHP) option for low-income West Virginians will have a fiscal impact on the Department of Health and Human Resources, Bureau for Medical Services (BMS) and they should be consulted regarding this legislation, as the State (BMS) would bear the administrative costs of such a program. The state may also bear additional costs if the federal subsidies received were not enough to fully fund a BHP.
Section 1331 of the Affordable Care Act (ACA) gives states the option of creating a BHP for low-income individuals who are not eligible for Medicaid or other affordable employer coverage. A state that operates a BHP would create a public health plan option for individuals between 133% and 200% of federal poverty level (FPL) and receive some federal funding to pay for the BHP, which is generally equal to 95% of the amount that otherwise would have been paid by the federal government on behalf of these eligible individuals if they had purchased a private health plan through the Marketplace. Federal funds provided to operate a BHP can only be used to pay for benefits or to reduce out-of-pocket costs for enrollees and cannot be used to pay administrative expenses of the BHP. As such, administrative costs of the BHP would, presumably, be borne by BMS. Further, the OIC is unsure if federal funding equaling 95% of the subsidies the BHP enrollees would have received if purchasing a private insurance through the Marketplace would be sufficient to fund claims costs for BHP enrollees. This would likely be dependent upon the claims experience of the BHP enrollees, the BHP’s benefit and cost-sharing structure and reimbursement rate paid to providers.
Further, in 2022, approximately 40% of the enrollees on the private Marketplace were 200% of FPL and below. If those enrollees left the private Marketplace for a BHP option, it potentially could influence the premiums of those who remained in the private Marketplace. However, there has not yet been a comprehensive actuarial study on this issue. It appears that only two states, New York and Minnesota, have established BHPs and neither of those states have a Marketplace similar to West Virginia’s.
House Bill 3274, as amended, also gives BMS the alternative option of applying for a 1332 Innovation waiver to fund the establishment of a BHP. To the best of OIC’s knowledge, CMS has not approved a 1332 waiver to fund a BHP in any state. As such, the OIC is unsure whether state funds would be necessary to supplement a BHP that is established under a 1332 waiver. However, CMS has advised that states are responsible for ensuring that any approved state plan created with a 1332 waiver is fully funded. The state could be at-risk if enrollment in a BHP were higher than expected under the 1332 waiver proposal, if enrollees in a BHP were a higher-cost pool than expected under the plan, or if the approved amount of federal “pass-through” funding is less than necessary to fully fund a BHP. As such, any application should be carefully researched and include detailed actuarial analyses and certifications of the cost to fund such a plan.
Person submitting Fiscal Note: Melinda Kiss
Email Address: Melinda.A.Kiss@wv.gov