Georgetown University Health Policy Institute The Future of Children’s Health Coverage Children SUMMARY This paper addresses changes needed to improve the in the ability of Marketplace coverage to meet children’s needs.1 As the paper notes, relatively few children (approximately one million) receive their coverage through the Marketplace; Marketplace most in public coverage are served through Medicaid and the Children’s Health Insurance Program. As a new source of coverage, and one that may grow over time, it by Kelly Whitener, JoAnn Volk, is important for policymakers to consider ways to improve Sean Miskell, and Joan Alker Marketplace coverage for children. INTRODUCTION Addressing Benefits and Costs as First in a series of reports on the More Gain Coverage future of children’s health Prior to the Affordable Care Act (ACA), children who were care coverage insured had coverage either through publicly financed programs such as Medicaid and the Children’s Health Insurance Program (CHIP), through private employer- sponsored plans, or through the individual insurance market. As employer-sponsored coverage for children has either declined or flat-lined over many years,2 Medicaid and CHIP have filled the gap for low- to moderate-income children. These two programs are largely responsible for the decline in the overall rate of uninsured children from 9.3 percent in 2008 to 6 percent in 2014 and together covered 38 percent of children.3 With the goal of expanding coverage to uninsured working adults and their families, the ACA created health insurance Marketplaces. Individuals who are not eligible for Medicaid or CHIP, or who do not have access to affordable employer- sponsored insurance (ESI) that meets minimum coverage standards, can use the Marketplaces to shop for private insurance plans and apply for subsidies. Children do not currently make up a significant share of Marketplace enrollees. Overall, children make up 9 percent of enrollees in the federally facilitated Marketplace (FFM) June 2016 and 6 percent of enrollees in the state-based Marketplaces 2 CCF.GEORGETOWN.EDU CHILDREN IN THE MARKETPLACE (SBM), for a total of slightly more than one million Adequacy of Coverage children below the age of 18 covered under insurance from the Marketplace.4 The percentage Prior to the ACA, Medicaid set the standard for of children enrolled in Marketplace coverage varies pediatric coverage through its comprehensive Early considerably at the state level and may change in and Periodic Screening, Diagnosis and Treatment the future. Not surprisingly, states with lower CHIP (EPSDT) benefit, which has also been adopted income eligibility levels have higher child enrollment by CHIP plans in 14 states.7 Pediatric benefits in the Marketplace. For example, in North Dakota, in the remaining CHIP programs are based on a CHIP income eligibility is limited to children with benchmark chosen by the state from the following: incomes below 175 percent of the federal poverty either the standard Blue Cross/Blue Shield preferred level (FPL) and 23 percent of their Marketplace provider option offered to federal employees, the enrollees are under the age of 18. By contrast, in state employees’ coverage plan, or the health New York, where the upper limit for CHIP income maintenance organization (HMO) with the largest eligibility is 405 percent of FPL, only 4 percent of commercial enrollment within the state (or Marketplace enrollees are under the age of 18.5 comparable coverage approved by the Secretary of the Department of Health and Human Services). This paper summarizes the available literature on children’s coverage under Marketplace plans, The ACA established a different minimum standard with a focus on how well those plans are serving for benefits to be covered by private plans sold to children along three primary dimensions: adequacy individuals and small employers, including those of coverage, affordability of coverage, and access sold in Marketplaces. The ACA’s Essential Health to providers. It includes recommendations on how Benefits (EHB) package includes 10 categories to ensure that Marketplace plans meet the unique of services,8 one of which is “pediatric services, needs of children. including oral and vision care.” The definition of pediatric services was intended to be broad, but it Until significant policy changes are implemented has been implemented only with respect to oral and to improve children’s coverage under Marketplace vision care. plans, funding for CHIP should continue so that no child loses benefits that are essential to his or her Ten Categories of Essential health and development. Health Benefits 1. Ambulatory patient services 2. Emergency services 3. Hospitalization As numerous studies, including a 4. Maternity and newborn care congressionally-mandated analysis 5. Mental health and substance use disorder services, including behavioral health comparing CHIP and Marketplace treatment coverage, have shown, CHIP 6. Prescription drugs coverage is better at meeting 7. Rehabilitative and habilitative services and devices children’s needs across the country.6 8. Laboratory services 9. Preventive and wellness services and chronic disease management 10. Pediatric services, including oral and vision care 3 CCF.GEORGETOWN.EDU CHILDREN IN THE MARKETPLACE States must select a benchmark plan to serve as audiology exams (based on EHB benchmark the EHB standard. There are 10 EHB benchmark selections) and almost half (46 percent) of states’ options in each state: three small employer plans, Marketplace plans do not cover hearing aids. When three federal employee plans, three state employee hearing aids are covered, there is greater cost- plans, and the non-Medicaid HMO in the state with sharing and/or limits on utilization (for example, aids the greatest enrollment. Nearly all states selected are covered just once every two to five years) as a benchmark from one of the three small employer compared to CHIP.11 plans with the greatest enrollment. If the benchmark plan does not adequately meet pediatric standards for oral and vision care, states may use the vision and Children’s Unique Needs: Audiology dental benefits required in their CHIP plan or those Treating a child with hearing loss is different available under the federal employee benefit program than treating an adult with the same condition because as children grow, they are developing (known as FEDVIP). In addition, habilitative services critical language skills. Regular audiology must now meet the uniform federal definition. If the exams are required to identify whether a child selected benchmark plan does not appropriately has hearing loss and if so, to determine the cover habilitative services, the benefit must be appropriate treatment. Children with hearing supplemented. While EHB plans cannot have dollar loss will typically need two hearing aids every limits, federal rules do permit treatment limits. three to five years (or sooner if the prescription changes); new ear molds (as often as every A 2014 review of EHB benchmark plans in 35 month) to ensure proper fit, and speech states found that the coverage available in the therapy (often multiple times weekly) to Marketplace was similar to CHIP on typical promote language development. All of these major medical benefits but was more limited on services must be provided in a timely way benefits that are critical to children’s health and and with frequent monitoring to help the child development. The study found that benefits such as develop age-appropriate language skills. physician services, inpatient services, prescription drugs, lab services, and mental health services were relatively comparable between the Marketplace and While both CHIP and Marketplace plans cover CHIP, but that dental, vision, and audiology, as well physical therapy, occupational therapy, and speech as habilitative, physical, occupational, and speech and language services, 80 percent of states’ EHB therapies in the Marketplace fell short of CHIP requirements impose limits on these services.12 coverage. In Marketplace plans, those benefits were Marketplace coverage was intended to look like the more likely to be absent or provided with treatment typical employer-sponsored coverage, and though limits. Only 30 percent of Marketplace plans cover employer-sponsored coverage varies widely, the services without limits and nearly half exclude Marketplace and employer-sponsored coverage do the services completely.9 Additionally, Marketplace have more similarities with respect to dental and plans were more likely to impose limits on the audiology services and physical, occupational, and coverage of durable medical equipment.10 speech therapies than either has with Medicaid or The benefit limitations in Marketplace plans have CHIP.13 Medicaid covers all of these benefits as part the most profound effects for children with special of its EPSDT benefit, as do the CHIP programs that health care needs. For example, only 37 percent provide EPSDT benefits. of states require that Marketplace plans cover 4 CCF.GEORGETOWN.EDU CHILDREN IN THE MARKETPLACE Dental Coverage may be paid for under the program.16 Child health In addition, some Marketplace enrollees must assistance under CHIP includes benefits already purchase dental coverage under a separate policy. covered under EHB, such as inpatient and outpatient Although pediatric dental benefits are required hospital services, prescription drugs, and prenatal under the EHB standard, federal rules and most care. However, child health assistance also includes Marketplaces allow carriers to omit pediatric dental important services—such as inpatient and residential benefits if stand-alone dental plans (SADP) are mental health and substance use disorder services; available. SADPs are dental plans that are not durable medical equipment such as eyeglasses included as part of a health plan. As a result, it and hearing aids: and physical therapy—that are is possible for a family to purchase Marketplace not specifically required under EHB; and physical coverage without having coverage for pediatric dental therapy—that are not currently provided under EHB. services. Moreover, when families purchase dental Defining pediatric services under EHB as those coverage separately, the premium cost, as well as available under CHIP adds specificity to EHB and will any cost-sharing, are not included in the families’ help ensure coverage adequacy. Doing so will also expected premium contribution and annual cost- provide an incentive for states to cover more services sharing limit. Thus, families are paying extra for these under EHB. States would be required to examine services when they should be included within their their benchmark selections for all pediatric services overall cost-sharing requirements (see more details and supplement the benchmark to meet the federal below).14 definition. This would include instances where the benefit is covered but inadequate and those where Finally, one review of EHBs found many plans the benefit is absent. The federal premium and excluded services for children with special needs and cost-sharing subsidies would then account for the disabilities. For example, the review found exclusions full range of services, avoiding a cost-shift to states of services for learning disabilities and for speech or families, and children would have access to a therapy for developmental delays, stuttering, or both.15 pediatric benefit package that meets their needs. Policy Options to Improve Adequacy Define medical necessity to include of Coverage services necessary for healthy development. Define pediatric services. When defining pediatric services, it is critical The ACA statute specifically lists pediatric services to consider the needs of all children, including as one of the 10 essential health benefits (EHBs) children with special health care needs, as well as and mentions vision and dental as examples of such the unique needs that are associated with healthy services. However, under current regulations, only development. Children require many of the same pediatric vision and dental services are required to types of services as adults, but because they are be supplemented if the coverage in the selected continuing to develop and grow, they may need benchmark plan is absent. Even if a state chose certain services more frequently or intensely. For to supplement its benchmark further, for example, example, children may need durable medical to add missing services like hearing aids, the state equipment like wheelchairs to be replaced more might be required to pay 100 percent of the cost if frequently to accommodate their growth or they this were considered to be a new state mandate. may need therapeutic services like speech therapy Define EHB pediatric benefits using the more intensely as they acquire and develop definition of CHIP “child health assistance language skills for the first time. services.” Acknowledging the challenge of defining medical A better way to define pediatric services under necessity in a way that adequately captures the EHB would be to require that these services include needs of all children, the National Health Law those spelled out in CHIP regulation as “child Program has articulated criteria that should guide health assistance”—a list of those services that 5 CCF.GEORGETOWN.EDU CHILDREN IN THE MARKETPLACE any attempt to define medical necessity (beyond ACA prohibits insurers that receive federal funding a doctor prescribing a particular treatment).17 (e.g., Marketplace plans and Medicaid managed care These criteria specify that any definition of medical organizations) from discrimination based on age or necessity should: disability, among other factors. These provisions are critical to prevent plans from having benefit designs 1. Incorporate appropriate outcomes that discriminate against children generally and within a framework that promotes children with special health care needs in particular. physical, intellectual, and psychological State and federal regulators should carefully review development, including preventing or benchmark plans to ensure that they meet these ameliorating the effects of a condition, federal standards and should thoroughly investigate assisting in maintaining or facilitating complaints where there is evidence that plans are functional capacity. offering discriminatory benefits. 2. Address the information that will be needed in the decision-making process, with an Ensure plans are available that embed emphasis on treatment strategies tailored dental coverage. toward an individual’s needs. In states using the federal Marketplace platform, 3. Identify who will participate in the decision- only 8 percent of enrollees under the age of 18 making process. purchased a stand-alone dental plan (SADP).18 There are no data on the take-up rates for plans 4. Start by drawing on specific standards, with dental coverage embedded by age, but only including scientific evidence, practice about one-third of plans in the federally facilitated guidelines, and consensus statements from Marketplace (FFM) embedded dental, so it is likely experts where available. that many children do not even have the option to 5. Support flexibility in the sites of service enroll in a plan with dental included.19 The low take- delivery. up rate of SADPs and the fact that embedded dental Defining medical necessity through federal coverage is not prevalent suggest that children rulemaking in a way that is faithful to these criteria enrolled in the Marketplace are not able to obtain would prevent children from being subjected to dental benefits as intended by the ACA. Ensuring harmful treatment limitations. that all children have access to a health plan with dental coverage included would help make sure Strictly enforce the ACA’s that children get the full range of benefits to which antidiscrimination rules. they are entitled. However, in order to make sure The ACA prohibits discrimination based on age and the dental benefit is valuable to enrolled children, health condition, among other factors, through a embedded plans should also standardize the number of mechanisms. Rules implementing the benefit design to either eliminate or greatly reduce EHB requirement prohibit plans that must offer the deductible for pediatric dental coverage.20 If EHB from using discriminatory benefit design. the deductible for dental coverage is too high, the This prohibition includes cost-sharing that would benefit will be rendered meaningless given typical discriminate against individuals based on age or dental utilization patterns. The low take-up rate health conditions. For example, plans cannot limit could also be linked to the additional costs of SADP benefits based on age if there is no evidence-based coverage, which would require additional policy reason to do so, nor can they put all the drugs used to changes (see more details below). treat a particular condition on the highest cost-sharing tier of a formulary. In addition, Section 1557 of the 6 CCF.GEORGETOWN.EDU CHILDREN IN THE MARKETPLACE Affordability of Coverage for where CHIP and the second lowest cost silver plan pay an equivalent portion of a family’s cost. Though Children and Families differences in actuarial value depend on each state’s Affordability of coverage includes both the cost CHIP program and available Marketplace plans, CHIP of obtaining coverage (premiums) and the cost of provided coverage that was, on average, 25.7 percent using health services once enrolled in a plan (cost- greater in actuarial value than the second lowest cost sharing, including copayments and deductibles). silver plan available through the Marketplace in states The ACA provides tax credits to reduce premiums that operate their own CHIP program.23 for Marketplace plan enrollees who meet income The second measure presented in the CMS guidelines and do not have access to coverage “comparability study” is out-of-pocket costs from that meets minimum standards. Individuals that cost-sharing charges, including copayments, are eligible for Medicaid or CHIP, or for affordable coinsurance, and deductibles. CMS found that and adequate employer coverage, cannot obtain families spend more on a per-child basis in premium tax credits. The ACA also provides the second lowest cost silver plan through the cost-sharing subsidies to reduce the amount that Marketplace compared with CHIP. While out- families with incomes up to 250 percent of FPL are of-pocket charges vary by state in both the expected to pay out-of-pocket to obtain services. Marketplace and in CHIP, families could expect While the ACA’s Marketplaces and financial to pay an average of $969 more per child in the assistance have led to significant coverage gains, Marketplace compared with state CHIP programs.24 many families nonetheless face considerable These findings provide an important cautionary note costs. A recent congressionally mandated analysis about the nature of the coverage that children and conducted by the federal Centers for Medicare & families receive through the Marketplace. Beneath Medicaid Services (CMS) provides a useful guide the remarkable gains in the number of children and to illustrate the cost that families face for pediatric families with access to coverage as a result of the coverage in Qualified Health Plans (QHPs) through ACA, this coverage may still entail costs that are the Marketplace relative to CHIP. For this analysis, out of reach for many families, especially compared CMS compared the second lowest cost silver plan with the coverage available to children through available through the Marketplace in the largest Medicaid and CHIP. Policymakers must consider rating area in each state with that state’s CHIP how to reduce these costs for coverage through the coverage. This analysis found that families can Marketplace, which enrolled over a million children expect to pay higher costs for QHPs compared with in 2016, and may potentially enroll many more as CHIP in all 36 states that operate a separate CHIP Marketplace enrollment increases. program.21 In states that provide health insurance to CHIP-eligible children through Medicaid, this A March 2016 report from the Medicaid and CHIP coverage is assumed to be better than Marketplace Payment and Access Commission (MACPAC) coverage, given Medicaid’s robust EPSDT benefit concluded that, due to their higher out-of-pocket package and very low cost-sharing. costs, Marketplace plans are not ready to serve as an adequate alternative for children enrolled in The analysis looks at two measures. First, the report CHIP.25 The report found that the average actuarial looks at actuarial value (AV), which measures the value of CHIP coverage in the 36 states with percentage of expected medical costs that a health separate CHIP is 98 percent per child compared plan will cover and offers a way to compare plans with 82 percent for benchmark plans available in based on overall cost-sharing.22 The remaining the Marketplace. MACPAC also reports that families charges are not covered by the plan and would faced an average of $158 in out-of-pocket spending be paid by families out-of-pocket. With regard to across separate CHIP programs compared with actuarial value, CHIP pays a higher portion of a $1,073 for Marketplace coverage. child’s health care costs in all states except Utah, 7 CCF.GEORGETOWN.EDU CHILDREN IN THE MARKETPLACE Premiums credits face costs in excess of what the ACA itself defines as affordable. While families between 250 A key concern for families regarding the and 400 percent of FPL receive financial assistance implementation of the ACA is that the test for under the ACA, their expected contribution ranges affordable employer coverage prevents half from 8.18 to 9.66 percent of income for silver level a million children from obtaining premium tax plans—even though the ACA exempts those with credits.26 Under the ACA, employer coverage is health costs above 8 percent of income from the considered “affordable,” and thus ineligible for individual mandate.29 premium tax credits, if the cost to the employee for self-only coverage is less than 9.66 percent of Table 1: Expected Family Contribution Under the family income. Dependent coverage is generally far ACA’s Premium Tax Credit Caps, 2016 30 more expensive than coverage for the employee only. The result—known as the “family glitch”—is For Family of 3 Percent of that children and parents who have “access” to Federal Expected Expected employer-sponsored dependent coverage can Poverty Total premium premium Level earnings contribution contribution in be excluded from premium tax credit eligibility percentage, 2016 dollars, 2016 even if the dependent coverage is unaffordable. 100% $20,160 2.03% $409 The Government Accountability Office (GAO) 133% $27,813 3.05% $848 estimated that 6.6 percent of uninsured children 150% $30,240 4.07% $1,231 (approximately 460,000 children) would be ineligible 200% $40,320 6.41% $2,585 for Medicaid and CHIP based on household income 250% $50,400 8.18% $4,123 that was too high and also would be ineligible for 300% $60,480 9.66% $5,842 the premium tax credit because one parent had access to employer-sponsored insurance (ESI) that 350% $70,560 9.66% $6,816 had an estimated premium deemed “affordable.”27 400% $80,640 9.66% $7,790 Even for families who qualify for premium tax Subsidized Marketplace premiums are generally credits, the expected family contribution can be so lower than those typically faced by families enrolled high that coverage remains out of reach. A recent in employer coverage, particularly at lower income report from the Kaiser Family Foundation found levels. However, premiums for Marketplace that 33 percent of those with Marketplace coverage coverage are higher than in CHIP, where premiums had reported difficulty paying their premiums, are nominal in most states. At 151 percent of compared with 17 percent of those with ESI. Of FPL, more than half of states’ CHIP programs those reporting difficulty paying their premiums, 49 do not charge a premium to enroll, and at 201 percent had dependent children in the home.28 percent of FPL, half of states with a separate CHIP Sliding scale tax credits cap the amount a family program charge premiums of less than $10 per is expected to contribute based on household child.31 Additionally, some states charge per-family income. For the 2016 plan year, families are premiums rather than per-child premiums, or limit expected to pay from 2.03 percent of household the per-child premiums to two or three children per income for those at the poverty line to 9.66 percent family.32 By comparison, the required contribution of household income for those at four times the for Marketplace premiums for those in the CHIP poverty level (See Table 1). Thus, families at the income range is between 3.05 and 9.66 percent of higher end of the sliding scale for premium tax family income. 8 CCF.GEORGETOWN.EDU CHILDREN IN THE MARKETPLACE Cost-Sharing Using health services in a Marketplace plan is Figure 1. Actuarial Value, CHIP vs. another area where children may face high costs. Second Lowest Cost Silver Plan Families with incomes up to 250 percent of FPL 99% 97% 99% 99% qualify for additional cost-sharing reduction (CSR) 100% 92% subsidies. Families enrolled in Marketplace plans 84% 80% 75% with the lowest incomes (those with income 68% between 100 and 150 percent of FPL) qualify for 60% plans with an actuarial value of 94 percent, meaning enrollees pay, on average, 6 percent of health 40% care costs out-of-pocket. This level of enrollee cost-sharing is more than that required of families 20% with CHIP coverage and, by definition, higher 0 than for families with children in Medicaid—where 133%-150% 151%-200% 201%-250%251%-400% copayments are prohibited for children. Further, the Income as Percent of FPL difference for families with slightly higher incomes is Separate CHIP Second Lowest Cost Silver Plan more pronounced. Source: MACPAC Despite those protections, a 2016 MACPAC study illustrates how out-of-pocket costs for Marketplace coverage are higher than those in separate state CHIP programs. For example, CHIP and the second Figure 2. Total Out-of-Pocket Costs, CHIP vs. lowest cost silver plan offer actuarial value levels for Second Lowest Cost Silver Plan families between 133 and 150 percent of FPL at 99 $2,500 percent and 92 percent, respectively. The difference between an actuarial value of 99 percent and 92 $2,000 $2,014 percent is not negligible, especially for families $1,550 at this income level. These values progressively $1,500 diverge as family income goes up, such that for families between 251 and 400 percent of FPL, CHIP $1,000 $915 still provides coverage with a 99 percent actuarial $500 $511 $472 value while the effective actuarial value for coverage $238 through the second lowest cost silver plan is 68 $31 $113 0 percent (figure 1). In comparison, the majority of 133%-150% 151%-200% 201%-250%251%-400% employer-sponsored plans have an actuarial value Separate CHIP Second Lowest Cost Silver Plan of 88 percent.33 Note: Total costs include cost-sharing and premiums. Figures 1 and 2 illustrate how out-of-pocket Source: MACPAC costs increase with enrollee income in CHIP and Marketplace coverage. Costs for coverage available in the Marketplace become greater as premium tax credits and cost-sharing reductions phase out as income rises. 9 CCF.GEORGETOWN.EDU CHILDREN IN THE MARKETPLACE CHIP regulations limit total cost-sharing for families Premium tax credits (PTCs) do not apply to to 5 percent, but most states are not near this cap. premiums for stand-alone dental plans unless According to MACPAC, only 1 percent of children enrollees have unspent tax credits after applying in separate CHIP programs have out-of-pocket them toward a QHP.39 In addition, cost-sharing costs in excess of 2 percent of their income.34 By for SADPs does not count toward the maximum contrast, 48 percent of children enrolled in the out-of-pocket limit that applies to QHPs ($5,200 second lowest cost silver plan face out-of-pocket for an individual, $10,400 for a family at 250 costs in excess of 2 percent of income. percent of FPL in 2015).40 Therefore, the costs of SADP premiums, dental deductibles and other While 2 percent of income may seem small, cost-sharing are not included in the family’s families in this range face a variety of cost-of-living overall expected contribution, effectively requiring expenses that constitute a significant share of their families to pay more than the stated out-of-pocket incomes. A Kaiser Family Foundation recently found maximum in order to obtain dental coverage. that those who had difficulty paying their health costs were more likely to face financial challenges Policy Options Related to Affordability in other aspects of their lives.35 of Coverage Families of children with health problems also Improve federal financial assistance. face higher out-of-pocket costs. MACPAC found The financial assistance available through PTCs that children being treated for chronic conditions and CSR subsidies has had a significant impact on (including mental health treatment, asthma, or insurance affordability in the individual and small trauma) as well as those that needed unexpected group markets. However, in some cases, coverage hospital care faced the highest out-of-pocket is still out of reach for children and families. spending in Marketplace coverage.36 Increasing the value of the PTCs would help more families afford the premium payments. An analysis As a result, total out-of-pocket costs in Marketplace by the Urban Institute highlighted several ways plans—from both higher cost-sharing and coverage to make coverage more affordable, including gaps created by service limits—are higher than the the following: decreasing the expected premium costs found in CHIP coverage. These differences contribution amounts and eliminating the indexing, pose the greatest challenges for children with extending CSR assistance to those with higher the most health care needs. Using three real-life incomes, and changing the reference premium to scenarios of children and their actual use of health gold rather than silver.41 Alternatively, the value of care services, a Georgetown study of Arizona the CSR for families with incomes between 200 and Marketplace coverage found typical children would 250 percent of FPL could be increased to reflect face cost-sharing that is between 2.2 and 8.3 times actuarial values in the employer market, as was higher, and children with special health care needs done for those with incomes between 100 and 200 would face cost-sharing that is between 35 and 38 percent of FPL. times higher, than would be required under CHIP.37 Incentivize state-based supplemental Marketplace plan coverage of pediatric dental financial assistance. services raises additional cost concerns for families. In the absence of federal action to improve financial Families that purchase dental coverage separately assistance, two states, Massachusetts and Vermont, from their Marketplace plan must pay an additional provide additional cost-sharing assistance for families premium, and they are subject to separate with incomes too high to qualify for federal cost- deductibles. Average SADP premiums in 2014 were sharing reduction payments (i.e., 250 percent of FPL), $238 per child per year.38 The cost-sharing limit for but below 300 percent of FPL. Two other states, SADPs is $350 for one child, $700 for two or more Minnesota and New York, adopted the Basic Health children. 10 CCF.GEORGETOWN.EDU CHILDREN IN THE MARKETPLACE Program and are providing additional financial Offer standardized benefit designs that protection to enrollees up to 200 percent of FPL. promote pediatric benefits. These and other approaches may also serve low- to States may standardize the benefit and cost-sharing moderate-income families well by helping make structures across all participating Marketplace Marketplace coverage more affordable. plans so that the deductibles, copayments and coinsurance promote utilization of pediatric benefits. Fix the family glitch. Many pediatric services are low cost relative to adult Incorporating the cost of dependent coverage services, making high-deductible plans of little value into the affordability test when determining PTC to children because all of the child’s services may eligibility would help some children who are currently still not reach the deductible. High-deductible plans uninsured gain coverage. Further, many legal and could be prohibited for children, or states could policy experts believe legislation is not required to require that some pediatric benefits, such as dental, address this problem. The Internal Revenue Service have zero or low deductibles. already uses the required contribution for coverage of family members when considering exemptions States such as California offer standardized plan from the individual mandate.42 designs that allow consumers to easily compare plans, as consumers know that each plan has Even so, as modeled by MACPAC and the Urban the same cost-sharing levels and benefits.44 Institute, fixing the family glitch would not solve While a plan option with standardized in-network the affordability problem completely. According to deductibles, cost-sharing limits, and copayments their analyses, approximately one million children and coinsurance amounts will be available through previously in a separate CHIP program would remain the federal platform for the 2017 plan year,45 uninsured even if the affordability test accounted for children would benefit if these standardized options family premiums.43 specifically promote pediatric services. Eliminate premium stacking. Apply affordability rules to dental Families relying on multiple sources of coverage, coverage. like QHPs for the parents and CHIP for the children, Dental is one of the pediatric benefits that is or families enrolling in multiple plans, such as expressly identified in the ACA, and yet, many medical and dental, face multiple premiums. children enrolling in the Marketplace are not getting However, only the premium for the Marketplace dental coverage. The affordability provisions of medical plan is considered when determining the the ACA have limited or no application to dental expected premium contribution amounts. Expected benefits, making them unaffordable for many premium contributions for QHPs should be reduced families. Requiring application of the PTC to dental to reflect other premium obligations that families coverage would increase take-up of SADPs, and face. Families seeking an exemption from the counting dental expenditures toward maximum out- individual responsibility payment are able to include of-pocket limits would promote access to dental multiple premiums to show the available coverage is services, as guaranteed by the ACA. unaffordable, and the same principle should apply to expected premium contributions for those seeking coverage. 11 CCF.GEORGETOWN.EDU CHILDREN IN THE MARKETPLACE Access to Providers network providers. However, even networks that work relatively well for most enrollees do not necessarily The ACA requires Marketplace plans to “maintain work well for those with special health care needs, a network that is sufficient in number and types especially children. Families that must get care out- of providers, including providers that specialize in of-network are subject to higher cost-sharing and mental health and substance abuse services, to their out-of-pocket costs do not count toward the assure that all services will be accessible without ACA out-of-pocket cap. Plans will consider requests unreasonable delay.”46 Insurers selling plans in the to obtain care from an out-of-network provider at in- FFM in for the 2017 plan year must also include network rates if an enrollee can demonstrate that the 30 percent of available “essential community network does not provide access to needed services, providers” (ECPs), such as community health but the burden falls on the enrollee to seek and obtain centers, that serve predominantly low-income, plan approval, and the enrollee may still receive a bill medically underserved individuals. Insurers must from the provider for costs not covered by the plan also offer contracts “in good faith” to all Indian (known as balance billing). For example, families may health providers, and to at least one ECP in each of face surprise medical bills for out-of-network services six categories of ECPs (family planning providers, when they seek care during emergencies (and thus federally qualified health centers, hospitals, Indian are not able to choose where they receive care) or health care providers, Ryan White providers, and receive care at an in-network facility that incorporates “other” ECPs) in their service area.47 States can out-of-network providers for some services (such impose more stringent standards on networks, as anesthesia).52 Medicaid managed care plans, in including quantitative standards that require contrast, are required to cover contracted services providers to be accessible within defined timeframes out-of-network if they are unable to cover them and/or distances. In 2015, 30 states required at in-network and must coordinate with the provider least some Marketplace plans to meet one or more to ensure the cost to the enrollee is no greater than quantitative standards for network adequacy.48 it would have been in-network.53 The final rule on Medicaid and CHIP managed care subjects CHIP To date, there has been relatively little data on how managed care plans to this same requirement.54 Marketplace plans are meeting network adequacy standards and what it means for children’s access Policy Options Regarding Access to needed providers.49 However, there is some to Care evidence that plans are excluding some providers that charge higher prices from their network or Develop and enforce pediatric network adequacy requirements. are using tiered networks that require enrollees to pay higher out-of-pocket costs to obtain care The combination of narrow networks and the from a less-preferred provider.50 And in one highly inapplicability of affordability provisions such as publicized case, the Washington state insurance maximum out-of-pocket limits for out-of-network commissioner’s interpretation of “reasonable care create an environment in which children may access” was in conflict with that of the state’s be unable to get the care they need. To ensure that Marketplace. The commissioner rejected some families across all states have sufficient access to plans for participation in the Marketplace because providers, there should be a federal default standard their networks lacked access to a children’s for network adequacy that contains quantitative hospital that provides critical tertiary care, but the measures of distance standards, minimum ratios of state’s Marketplace and an administrative law judge patients to providers, and wait-time limits. These overruled his recommendation.51 default standards should apply to plans sold through the Marketplace in states that have not In the absence of comprehensive data on adopted their own federally approved set of network Marketplace plans, it is difficult to know if adequacy standards. Further, these standards should consumers are able to obtain care through in- specifically apply to services relevant to children, 12 CCF.GEORGETOWN.EDU CHILDREN IN THE MARKETPLACE such as pediatric mental health care, pediatric regarding problems obtaining care or regarding urgent care, and pediatric dental care. If pediatric inaccurate provider directories. In addition to network adequacy standards were developed and providing this data to consumers via public forums enforced, children would be more likely to find in- such as Marketplace and state Department of network care that is affordable. Insurance websites, health plans themselves should also make this information available to Limit out-of-network charges. families. In order to limit the costs that families face when they need to receive out-of-network care More generally, section 1311(e) of the ACA and reduce surprise medical bills when families requires QHPs to submit and make public data inadvertently do so, insurers selling in the regarding claims payment policies and practices, Marketplace should be required to cover any out- financial disclosures, enrollment, disenrollment, of-network services unavailable through in-network denied claims, rating practices, cost-sharing and providers at network rates, especially for children payment for out-of-network coverage, enrollee with special health care needs. Further, the costs rights, and other information as determined that families incur through services received from appropriate by the Secretary of Health and Human out-of-network providers should count towards Services. Collecting and making public these data their maximum out-of-pocket costs. would help regulators target enforcement and oversight and inform evidence-based policymaking Strengthen requirements for including on non-discrimination, network adequacy, overall Essential Community Providers in plan adequacy of the benefit package, and many other networks. critical issues. Additionally, stakeholders could use Currently, plans are only required to offer a the data to identify trends and offer solutions for contract in good faith to one essential community ongoing coverage improvement efforts. To date, provider in each class in order to fulfill the federal regulators have required only limited data contracting thresholds for these providers.55 from QHPs to begin in 2017. Federal rule-makers should strengthen this requirement so that QHPs must actually cover Summary of an essential community provider, rather than just attempt to do so. Further, pediatric providers Recommendations should be added to the classes of essential The ACA has achieved some major milestones, community providers that insurers must include in including helping to bring the rate of uninsured their networks. children to the lowest point in history at just 6 percent.56 However, Marketplace coverage should Collect and report coverage and be modified to improve access for children enrolled utilization data for use by consumers and in QHPs today and in the future. Budgetary and regulators. political constraints may make it difficult to make Adopting standardized reporting requirements for many of the suggested policy changes, but they insurers would assist policymakers and regulators must be considered in combination to ensure that in monitoring how children and families are faring children’s coverage in the Marketplace meets their in the various network arrangements available in needs. For example, fixing the family glitch would Marketplace plans. For example, standardized make more children eligible for a premium tax credit, reporting requirements would better document but such a change would have limited benefit if the frequency with which families receive out- Marketplace coverage were not strengthened for of-network services, as well as the cost of these children. Moreover, as policymakers consider CHIP’s services, and could help identify areas where future, the inadequacies of Marketplace coverage for families need additional protections. Plans should children raise serious concerns about proposals that also collect and report complaints from consumers would move children into the Marketplace. 13 CCF.GEORGETOWN.EDU CHILDREN IN THE MARKETPLACE Policy Options to Strengthen Marketplace Coverage for Children Adequacy of Coverage zz Define pediatric services to include the full range of services children need—not just vision and dental services, but particularly services that are essential to development and frequently absent from EHB benchmark plans, such as audiology exams and hearing aids. One way to accomplish this would be to require that pediatric services include the services spelled out in CHIP regulation as being “child health assistance” services that may be paid for under the program. zz Ensure that medical necessity definitions include services necessary for healthy development. zz Strictly enforce the antidiscrimination rules to prevent discrimination based on age and diagnosis. zz Ensure that every child has access to a plan with dental coverage embedded. Affordability of Coverage zz Improve the federal financial assistance to reduce premiums and make services more affordable. Ways to accomplish this include decreasing the expected premium contribution amounts, extending CSR assistance to those with higher incomes, and changing the reference premium to gold rather than silver. zz Fix the family glitch by accounting for the cost of family rather than individual coverage. zz Address premium stacking by including premiums for other coverage family members have in calculations of the expected premium contributions for QHPs. zz Incentivize state-based supplemental financial assistance. zz Standardize benefit designs to promote utilization of pediatric services. zz Apply affordability rules to SADP. Access to Providers zz Develop and enforce pediatric network adequacy requirements. Establish a federal default standard for network adequacy that contains quantitative measures of distance standards, minimum ratios of patients to providers, and wait-time limits. zz Limit out-of-network charges by requiring insurers selling in the Marketplace to provide any out-of-network services unavailable through in-network providers at network rates and by counting these costs towards families’ Maximum Out-of-Pocket costs. zz Strengthen requirements for including Essential Community Providers in plan networks. zz Collect and report coverage data to support oversight and inform future policymaking and family choices. Adopting these recommendations would set a standard for pediatric coverage; the recommendations could be applied flexibly to allow states and issuers to take different approaches. The ACA made a commitment to protecting patients by providing them with meaningful access to affordable coverage. In order to live up to that promise, some modifications need to be made, particularly for children. As children grow and develop, they must meet critical milestones to put them on the path to realize their full potential. 14 CCF.GEORGETOWN.EDU CHILDREN IN THE MARKETPLACE Endnotes 13 Medicaid and CHIP Payment and Access Commission (MACPAC), “Comparing CHIP Benefits to Medicaid, 1 Other planned papers in the series will examine topics Exchange Plans, and Employer-Sponsored Insurance,” such as ensuring that all children receive health coverage Report to Congress on Medicaid and CHIP, March 2015, and rethinking pediatric dental coverage. available at https://www.macpac.gov/publication/march- 2 M. Long et al., “Trends in Employer-Sponsored Insurance 2015-report-to-congress-on-medicaid-and-chip/. Offer and Coverage Rates, 1999-2014,” Kaiser Family 14 A forthcoming paper in this series will focus on pediatric Foundation, March 21, 2016, available at http://kff. dental coverage. org/private-insurance/issue-brief/trends-in-employer- sponsored-insurance-offer-and-coverage-rates-1999-2014/. 15 A. Grace et al., “The ACA’s Pediatric Essential Health Benefit Has Resulted in a State-by-State Patchwork 3 State Health Access Data Assistance Center analysis of Coverage with Exclusions,” Health Affairs 33, no. of the American Community Survey (ACS) Public Use 12, 2014, available at http://content.healthaffairs.org/ Microdata Sample (PUMS) data, available at http:// content/33/12/2136.abstract. datacenter.shadac.org/rank/6/coverage-type-by- age#1/12,9/80/11/false/location. 16 42 C.F.R.§ 457.402. 4 Department of Health and Human Services, Office of the 17 J. Perkins and M. Youdelman, “Q & A: Defining Medical Assistant Secretary for Planning and Evaluation (ASPE), Necessity,” National Health Law Program, June 24, 2004, “Health Insurance Marketplaces 2016 Open Enrollment available at http://www.healthlaw.org/about/staff/mara- Period: Final Enrollment Report,” March 11, 2016, available youdelman/all-publications/qa-defining-medical-necessity#. at https://aspe.hhs.gov/sites/default/files/pdf/187866/ VwQPGRMrL_9. Finalenrollment2016.pdf. 18 Department of Health and Human Services, 2016. 5 T. Brooks et al. “Medicaid and CHIP Eligibility, Enrollment, 19 C. Reusch, “Greater transparency needed on dental Renewal, and Cost-SharingPolicies as of January 2016: coverage provided by health plans,” Children’s Dental Findings from a 50-State Survey,” The Kaiser Commission Health Project, May 10, 2014, available at https://www. on Medicaid and the Uninsured, January 21, 2016, available cdhp.org/blog/261-greater-transparency-needed-on-dental- at http://kff.org/medicaid/report/medicaid-and-chip- coverage-provided-by-health-plans. eligibility-enrollment-renewal-and-cost-sharing-policies-as- of-january-2016-findings-from-a-50-state-survey/. See examples in California, Connecticut, District of 20 Columbia, and Maryland. 6 Centers for Medicare and Medicaid Services (CMS), “Certification of Comparability of Pediatric Coverage 21 CMS, 2015. Offered by Qualified Health Plans,” November 25, 2015, available at https://www.medicaid.gov/chip/downloads/ 22 For example, someone enrolled in a plan with an 80 certification-of-comparability-of-pediatric-coverage-offered- percent AV can expect to pay 20 percent of the cost of their by-qualified-health-plans.pdf. medical expenses in the form of copayments, coinsurance, and deductibles. For more information on actuarial value 7 As of 2014. See Appendix 1 in A. Cardwell et al., “Benefits and how it is calculated, see L. Quincy, “Actuarial Value: and Cost-Sharing in Separate CHIP Programs,” National Why It Matters and How It Will Work,” Health Affairs Blog, Academy for State Health Policy and Georgetown University February 28, 2012, available at http://healthaffairs.org/ Center for Children and Families (CCF), May 2014, available blog/2012/02/28/actuarial-value-why-it-matters-and-how- at http://ccf.georgetown.edu/wp-content/uploads/2014/05/ it-will-work/. Benefits-and-Cost-Sharing-in-Separate-CHIP-Programs. pdf. 23 Georgetown University Center for Children and Families analysis of the data presented in CMS, 2015. 8 45 C.F.R. § 156.110. 24 Ibid. 9 A. Bly, J. Lerche, and K. Rustagi, “Comparison of Benefits and Cost-Sharing in Children’s Health Insurance Programs 25 Medicaid and CHIP Payment and Access Commission, to Qualified Health Plans,” Wakely Consulting Group, July “Design Considerations for the Future of Children’s 2014, available at http://www.wakely.com/wp-content/ Coverage: Focus on Affordability,” Report to Congress on uploads/2014/07/FINAL-CHIP-vs-QHP-Cost-Sharing-and- Medicaid and CHIP, March 2016, available at https://www. Benefits-Comparison-First-Focus-July-2014-.pdf. macpac.gov/publication/march-2016-report-to-congress- on-medicaid-and-chip/. 10 Ibid. 26 Government Accountability Office (GAO), “Children’s 11 Ibid. Health Insurance: Opportunities Exist for Improved Access to Affordable Insurance,” June 2012, available at http:// 12 Ibid. www.gao.gov/assets/600/591798.pdf. 27 Ibid. 15 CCF.GEORGETOWN.EDU CHILDREN IN THE MARKETPLACE 28 J. Tolbert and K. Young, “Paying for Health Coverage: 43 Medicaid and CHIP Payment and Access Commission, The Challenge of Affording Health Insurance Among “Estimates of Children’s Coverage under Different Policy Marketplace Enrollees,” Kaiser Family Foundation, April Approaches,” September 2015, available at https://www. 2016, available at http://kff.org/health-reform/issue-brief/ macpac.gov/publication/estimates-of-childrens-coverage- paying-for-health-coverage-the-challenge-of-affording- under-different-policy-approaches/. health-insurance-among-marketplace-enrollees/. 44 For a discussion of California’s approach to plan 29 L. Blumberg and J. Holahan, “After King v. Burwell: Next standardization, see Covered California’s comment on the Steps for the Affordable Care Act,” Urban Institute, August HHS Notice of Benefit and Payment Parameters for 2017, 2015, available at http://www.urban.org/sites/default/files/ December 21, 2015, available at http://board.coveredca. alfresco/publication-pdfs/2000328-After-King-v.-Burwell- com/meetings/2016/1-21/CoveredCA_comments_9937-P_ Next-Steps-for-the-Affordable-Care-Act.pdf. Standard_Benefit12-21-15.pdf. 30 26 C.F.R. 601.105.“Examination of returns and claims for 45 Health and Human Services Department,“Patient refund, credit, or abatement; determination of correct tax Protection and Affordable Care Act; HHS Notice of Benefit liability,” available at https://www.irs.gov/pub/irs-drop/rp- and Payment Parameters for 2017,” Federal Register, 14-62.pdf. March 8, 2016, available at https://www.federalregister.gov/ articles/2016/03/08/2016-04439/patient-protection-and- 31 Medicaid and CHIP Payment and Access Commission, affordable-care-act-hhs-notice-of-benefit-and-payment- “Affordability of Exchange Coverage for Children Now parameters-for-2017. Covered by CHIP,” Report to Congress on Medicaid and CHIP, March 2015, available at https://www.macpac.gov/ 46 45 C.F.R. 156.230. publication/march-2015-report-to-congress-on-medicaid- 47 See Center for Consumer Information and Insurance and-chip/. Oversight (CCIIO), 2017 Letter to Issuers in the Federally 32 Ibid. Facilitated Marketplaces, February 29, 2016, available at https://www.cms.gov/CCIIO/Resources/Regulations-and- 33 Medicaid and CHIP Payment and Access Commission, Guidance/Downloads/Final-2017-Letter-to-Issuers-2-29-16. “Affordability of Exchange Coverage for Children Now pdf. Covered by CHIP,” Report to Congress on Medicaid and CHIP, March 2015, available at https://www.macpac.gov/ 48 See J. Giovanelli, K. Lucia and S. Corlette, “Implementing publication/march-2015-report-to-congress-on-medicaid- the Affordable Care Act: State Regulation of Marketplace and-chip/. Plan Provider Networks,” Commonwealth Fund, May 2015, available at http://www.commonwealthfund.org/ 34 MACPAC, March 2016. publications/issue-briefs/2015/may/state-regulation-of- 35 Tolbert and Young, 2016. marketplace-plan-provider-networks. Updated data for 2015 were provided by the authors and include the addition 36 MACPAC, op cit. of quantitative standards in Arkansas, California, and 37 T. Brooks, M. Heberlein, and J. Fu, “Dismantling CHIP Washington. in Arizona: How Losing KidsCare Impacts a Child’s Health S. Corlette et al., “Narrow Provider Networks in New 49 Care Costs,” Georgetown University Center for Children and Health Plans: Balancing Affordability with Access to Quality Families and Children’s Action Alliance, May 2014, available Care,” Robert Wood Johnson Foundation, May 2014. at http://ccf.georgetown.edu/wp-content/uploads/2014/05/ Dismantling-CHIP-in-Arizona.pdf. 50 Ibid. 38 Medicaid and CHIP Payment and Access Commission, 51 Ibid. “Affordability of Exchange Coverage for Children Now 52 K. Pollitz, “Surprise Medical Bills,” Kaiser Family Covered by CHIP,” Report to Congress on Medicaid and Foundation, March 17, 2016, available at http://kff.org/ CHIP, March 2015, available at https://www.macpac.gov/ private-insurance/issue-brief/surprise-medical-bills/. publication/march-2015-report-to-congress-on-medicaid- and-chip/. 53 42 C.F.R. 438.206(b)(4) and (5). 39 See 26 U.S. Code § 36B(3)(E). 54 Medicaid and CHIP Programs; Medicaid Managed Care, CHIP Delivered in Managed Care, and Revisions Related to 40 This amount is indexed to grow annually. In 2017, Third Party Liability, Final Rule (April 25, 2016) (amending 42 the maximum out-of-pocket limits will be $7,150 for an CFR 457.1230(a)). individual and $14,300 for a family plan. 55 CCIIO Letter to Issuers, 2016. 41 Blumberg and Holohan, 2015. 56 J. Alker and A. Chester, “Children’s Health Insurance 42 For more on this issue, see T. Brooks, “The Family Glitch,” Rates in 2014: ACA Results in Significant Improvements,” Health Affairs Health Policy Brief, November 10, 2014, Georgetown University Center for Children and Families, available at http://www.healthaffairs.org/healthpolicybriefs/ October 2015, available at http://ccf.georgetown.edu/wp- brief.php?brief_id=129. content/uploads/2015/10/ACS-report-2015.pdf. 16 CCF.GEORGETOWN.EDU CHILDREN IN THE MARKETPLACE The authors would like to thank Tricia Center for Children and Families Brooks, Sonya Schwartz, Cathy Hope, Health Policy Institute and Peggy Denker for their contributions. Georgetown University Design and layout provided by Nancy Box 571444 Magill. 3300 Whitehaven Street, NW, Suite 5000 Washington, DC 20057-1485 The Georgetown University Center Phone (202) 687-0880 for Children and Families (CCF) is an Email childhealth@georgetown.edu independent, nonpartisan policy and research center founded in 2005 with a mission to expand and improve high ccf.georgetown.edu/blog/ quality, affordable health coverage for America’s children and families. CCF is facebook.com/georgetownccf part of the Health Policy Institute at the McCourt School of Public Policy. twitter.com/georgetownccf