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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.
(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.
(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
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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.
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;
(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
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(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.".