How Health Insurance Exchanges Will Affect Employers and Health Plans Shawn Nowicki, MPH Director, Health Policy

1. How Health Insurance Exchanges Will Affect Employers and Health Plans Shawn Nowicki, MPH Director, Health Policy HealthPass | New York Business Group on Health A Presentation for the National Congress on Health Insurance Reform Pre-Conference on Health Insurance Exchanges Ritz-Carlton Hotel, Washington, DC January 19, 2011

2. Today’s Agenda • About HealthPass • How Exchanges Affect Employers • How Exchanges Affect Health Plans • Questions

3. About HealthPass New York

4. A Commercial Health Insurance Exchange for NY Small Businesses • Commercial health insurance exchange started in 1999 • Joint collaboration between: • Northeast Business Group on Health • Mayor’s Office of the City of New York • Health insurance industry • Missions: • Grant small businesses greater access to healthcare • Help stem the tide of the working uninsured

5. An Employee-Choice Model • Employee-choice, defined contribution model for small businesses in a pure community-rated environment • Menu of carriers and benefits • Serve 5 boroughs of NYC, Long Island, Mid-Hudson Valley

6. How Exchanges Affect • Employers

7. SHOP Exchanges Must Be Attractive to Employers • Must be a simple, streamlined purchasing experience • In Utah Exchange pilot, 20% of eligible groups didn’t enroll because employees couldn’t complete application • Defined contribution model encouraged • Broad, but not overly complicated, range of choices needed • Simplified administration & a suite of solutions • One-page group election and employee enrollment forms • Robust member services/call center • Ancillary services • Employee choice (at the point of enrollment) • Relieves employer from choosing coverage plan that may or may not fit employees’ needs and budget

8. Exchange Must Streamline Health Benefits Services Size of small business correlated with HR capability

9. Choice at What Level? DESIRABILITY Defined fixed-dollar employer contribution recommended across all options

10. A True One-Stop SHOP Carrier A CarrierB Carrier C Carrier D Carrier E E P E P P P E E E P Carrier Reconciliation Broker/ Navigator Facilitate Compensation Exchange P E I: One consolidated “list” bill (P) – Group Premium Payment (I) – Premium Invoice (E) – Plan Selection, Enrollment Tax Credit Mechanism IRS Employer Adopted from: Terry McCorvie, Workable Solutions, Inc.

11. Employers & Health Plans May End Up Financing Exchanges Anticipate Exchange needing 2.5% - 4.0% of premium rate for self-sustainability

12. Brokers & Agents Are Vital Broker/agent assists, educates, & services Considerations: - Equality between brokers and navigators? - What about other feeder groups?

13. Exchange Implementation Timeline

14. Employer Benefits No need to pick one plan for different employees Curbs wasted healthcare spending Helps to attract and retain key employees Empowers employees to participate in making informed healthcare decisions Defined contribution sets a benefits budget Simplified administration Robust client support Home billing of COBRA and COBRA administration No need to shop for insurance every year Employee Benefits A voice in a personal decision – healthcare Choice of plan types (e.g., HMO, EPO, POS, PPO, HSA) Choice of insurer Annual choice to meet individual healthcare and budget requirements Pre-Tax contributions (thru Section 125) minimize out of pocket costs Robust member and advocacy services Employer & Employee Benefits

15. How Exchanges Affect • Health Plans

16. Product Mix Dependent on Governing Model, Regionalization, & Market Rules • Active purchaser? • Selective contractor? • Passive clearinghouse? • Regional exchanges? • Regional sub-exchange(s) within a state? • One statewide exchange? PRODUCT & STRATEGY • Rules mirrored inside and outside exchange? • State rules stricter than PPACA requirements? • Benefit mandates? • Benefit plan standardization?

17. Exchanges Will Attract Varying Populations Likely to be regional and geographic differences in enrollment levels across Exchanges 1Cunningham, PJ. (2010). Who Are the Uninsured Eligible for Premium Subsidies in the Health Insurance Exchanges? (No. 18).Center for Studying Health System Change.

18. Other Considerations • Exchange enrollment projections • CBO: 24-30 million enrollees by 20191 • Urban Institute/RWJF: 44 million enrollees by 20172 • 23 million in AHBE; 21 million in SHOP • Brand & marketing/outreach will matter, especially with standardized options • Competition based on value, quality, & member services • Efficient administration • Demonstrate ongoing value • National & regional start-up carriers will consider entering markets • Medical loss ratio (MLR) considerations 1Congressional Budget Office. (2010) Estimate of the direct spending and revenue effects of an amendment in the nature of a substitute to H.R. 4872, the Reconciliation Act of 2010. Washington, DC: U.S. Government Printing Office. 2Buettgens M, Bowen G and Holahan J. (2010). America Under the Affordable Care Act. Washington, DC: Urban Institute.

19. Policy Recommendations 1 2 3 4 5

20. Questions Q & A

21. Contact Information Shawn Nowicki, MPH Director, Health Policy 61 Broadway Suite 2705 (212) 252-8010 x227 snowicki@healthpass.com www.HealthPass.com