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Texas Department of Insurance. Harris County Healthcare Alliance and Texas Department of Insurance Houston Small Employer Pilot Project February 9, 2007 Karen Love. HRSA State Planning Grants. Overall Goal: To analyze the uninsured and evaluate options for coverage
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Texas Department of Insurance Harris County Healthcare Alliance and Texas Department of Insurance Houston Small Employer Pilot Project February 9, 2007 Karen Love
HRSA State Planning Grants • Overall Goal: To analyze the uninsured and evaluate options for coverage • Texas Phase 1: $1.3M in 2001 for an in-depth phone survey of uninsured, small employer survey, health insurance fairs, and focus groups in 15 cities
HRSA State Planning Grants(cont.) • Texas Phase 2: $175K in 2003 for follow-up small employer survey and study risk pools • Texas Phase 3: $398K in 2005 to design a product for Houston small employers, develop a marketing plan, conduct focus groups with employers and employees and assist in implementation of product
Why Does Texas Have Such a High Uninsured Rate? • Lower average wages • A higher proportion of small businesses • Lower participation in public programs • A higher proportion of non-legal citizens • A large Hispanic population • Low union participation • Lower participation in employer-sponsored programs
18% 10% 72% Family member(s) working full-time Family member(s) working part-time Non-working Who Are The Uninsured by Employment Status?
25% 75% Ages 0 - 18 Ages 18 - 64 Who Are The Uninsuredby Age?
29% 71% Who Are The Uninsured by Income Level? 0 - 199% of FPL 200+% of FPL
Other 3% White 29% Hispanic 57% Black 11% Who Are The Uninsured by Race/Ethnicity?
Not a U.S. Citizen 27% Naturalized U.S. Citizen 5% Native U.S. Citizen 68% Who Are The Uninsured by Citizenship?
Working Uninsured Facts • 23% of uninsured work for firms with 500 or more employees • Nearly 50% of uninsured adults work in firms with 24 or fewer employees • Approximately 80% of uninsured live with one adult working for a small business • Fewer than 20% of the uninsured had access to employer-sponsored coverage
Average Small Employer Insurance Costs in Texas Sources: Medical Expenditure Panel Survey – AHRQ and Employer Health Benefits Annual Survey – Kaiser and HRET
Plan Objectives • Develop an affordable benefit plan that will appeal to both employers and employees • Use TDI grant data and research to guide plan design • Engage a locally based steering committee of broad representation
Plan Objectives (cont.) • Target cost: Average $150 PMPM • Simple rate chart with no “added costs” • Easy enrollment process • Benefits for typical expenses
Plan Development Process • Plan design and pricing goals discussed with Milliman actuaries • Reviewed surveys and focus groups to identify benefit preferences • Steering Committee vetting • Plan prototypes presented to employers and employees throughout Houston
Plan Features ****Modified Community Rating*** • Simplifies application and underwriting • Uses Age and Gender case characteristics • No medical underwriting or screening • No Group Size rating factor • No Industry rating factor
Benefit Plan Design • Two options: • Basic and Preventive Care • Catastrophic Care
Plan Design Assumptions • Loosely managed PPO network with very low out-of-network utilization • Aggressive provider discounts • No load for adverse selection • 85% loss ratio
Other Plan Design Features • 75% eligible employee participation requirement • 50% employer premium contribution • 12 month pre-existing condition exclusion • Assumed they are previously uninsured in the last 12 months
Other Plan Provisions • Must be issued through a cooperative to avoid small group market restrictions • Cannot restrict eligibility to uninsured groups only • Alliance to form the cooperative
Focus Group Employers • All but 3 employers (88%) said they would purchase the plan if it was available • Employers stressed importance of offering both plan options to maximize employee participation • Employers particularly supportive of simplified “community rating” and enrollment process
Focus Group Employees • Affordability is the deciding factor • Demand benefits they value • Low-cost office visits • Prescription drug coverage • Low deductibles • Having a plan they don’t expect to use is of no value to many
Next Steps • RFP to be issued in February 2007 • Alliance will work with selected carrier to create a purchasing cooperative for small employers • Targeted date for product availability – Fall 2007
Contact Information: karen_love@hctx.net (713) 368-3285