Connectors: What we know about them and how they work?

Connectors: What we know about them and how they work? SCI - August 2, 2007

Agenda • How do you assess whether a Connector is what your state needs? • What factors contributed to the design and functionality of the Connector in MA? • What data did MA use to think through the Connector’s structure and functions? • Which model is right for your state? • Massachusetts Model • Connecticut Model • Washington DC Model • Implementation issues to consider

Data • Individual data (age, insurance status, employment, income, family status, health status) • Employer data (average price of plan, % contribution, offer rate by size) • Insurance market (number, price, type of plans in each market, benefit coverage) • Medicaid and other public program cost and benefit data • Uncompensated Care Pool or safety net data

Questions to ask about insurance markets • Are the nongroup and small group markets functioning well? • Is anything working well? • What are the barriers to entry? • What is the product availability? • How many carriers are in the markets? Is there adequate competition? • Is there choice, portability, flexibility? • What is the state’s experience with adverse selection, risk pooling, reinsurance? • What reforms have been made to the markets in the past? Were they successful?

What we learned about insurance markets • Un-level playing field between employees of firms that don’t offer (nongroup purchase) and self-employed (small group purchase) • Little choice of product in nongroup market • No pre-tax payment for people purchasing in nongroup market • Small employers have minimum participation and contribution requirements that are barriers to entry • Very small groups are older and use more services

Questions to ask about the uninsured • Who are the uninsured? • What does their care cost? How do they receive and pay for care? • Why don’t they have health insurance? • Are they employed? Type of employment? • Are they offered insurance by employer? • If offered, why do they choose not to purchase? • What is their demographic profile? • What is their health status?

What we learned about the uninsured • The uninsured are not a homogenous group; however, they are likely: • to have been born in the U.S. • to be single and white • to be between 25 and 64 • to have at least a high school education • to be employed and work for small firms • to have moderate incomes and reportedly willing to pay for health insurance • to turn down coverage when offered it • to have good health status.

Questions to ask about employer coverage • Who does and doesn’t offer? • Are they dropping or likely to drop coverage? • What are the barriers to offering? • What benefits do they offer? • How much do they subsidize? • How many employees take up offer of coverage? • Do they offer pre-tax payment of premium? • How much choice do they have and how much choice do they provide to their employees? • Do they discriminate among employees?

What we learned about employer coverage • Employers have not been dropping coverage in MA • Many small employers who offer hi do not offer pre-tax treatment of premium payments • Many employers have difficulty providing hi for part time workers • Waiting periods have increased slightly • Most employers do not vary contribution or cost sharing by employee characteristics • Employers who do not offer insurance are looking for lower cost alternatives • Most employers do not ask for proof of coverage if employees turn down coverage

Different models • Massachusetts – combine market forces with public subsidies • Connecticut • Washington DC

Medicaid Cost/Quality Improvements Insurance Reforms Massachusetts Health Care Reform Shared Responsibility Connector Authority Commonwealth Care

Non-offeredIndividuals Non-workingIndividuals SmallBusinesses SoleProprietors The Massachusetts Connector Insurance Connector MMCOs Blue CrossBlue Shield Tufts NHP Harvard Pilgrim New Entrants Fallon

Former governor’s vision for the Connector • Nexus between buyers and sellers • Premiums paid with pre-tax dollars (125 Cafeteria Plan) • Facilitate premium assistance for 100-300% FPL • Mechanism for reaching non-traditional workers • Part-timers and seasonal workers • Contractors and sole-proprietors • Spouses with two employers wanting to contribute towards family plan • Individuals with more than one job • Alternative distribution system • Promotes shift to defined contribution

Business details • Serves small businesses and individuals • Offers subsidized and nonsubsidized plans • Eligibility: firms up to 50, individuals without access to subsidized coverage • 7 health plans types offered by 6 carriers • Standard benefits with consumer choice: price (cost sharing and premiums, network, formularies

Challenges • Some really wanted purchasing pool • Final legislation did not allow as much flexibility in product design as we would have liked • Open meetings • Ambitious timelines • Change in administration • Tension between the “business plan” of connector and regulatory authority • Defining affordability • Defining minimum creditable coverage

Different models • Massachusetts • Connecticut – employee choice pool with full HR functionality • Washington DC

CBIA HC administration CBIA BusinessPartners &Customers Request Coordination RequestMediums Carriers Billing &Admin ContactManagemt Web Agents Health Plans E-Mail Workflow Employers Phone AncillaryCarriers Fax Employees CustomerService AgentReps DataEntry Paper Action & Follow-up

CBIA Health Connections vision • Plan of choice for the owner • Business loves competition • Never have to “switch” • Consolidated administration / bill • Global budgeting for the employer • Employee gets choice

Business details • Serves small businesses • 6000 companies, 88,000 members • Eligibility: firms of 3-100 • 4 health plans with up to 38 options • Standard benefits with consumer choice: price, network, formularies

Why HC works in the private sector • Common benefits (standardized but not exact) • Private sector approach: businesses wary of government involvement • Other services (Life, STD, LTD, Dental, COBRA, Section 125, HRA’s, HSA’s) • Ability to change and adapt quickly • Utilization management and reporting • Wellness initiatives • Communications

Challenges • Rapidly changing marketplace • Cost Pressures • Legislative Challenges • Consolidation of Health Plans • Consumer Driven Options • Wellness / Lifestyle

Different models • Massachusetts • Connecticut • Washington DC – full market reform – health insurance is an individual purchase

Health Insurance Exchange • Untested, conceptual model • A Single market for health insurance. (simplified administration) • Purchases by individuals and families, not employers • Premiums paid with pre-tax dollars, just like employer-based insurance. (section 125 accounts) • Portability of coverage

Implementation issues • Number of plans • Coverage requirements • Underwriting/rating rules • Risk management • Eligibility • Functionality • Thorny issues (COBRA, HIPAA, ERISA)

Connectors: What we know about them and how they work?