FEASIBILITY OF INSURANCE PRODUCT OPTIONS FOR THE LOW INCOME ADULT UNINSURED IN SAN MATEO COUNTY Prepared for the HEALTH PLAN OF SAN MATEO By the PACIFIC HEALTH CONSULTING GROUP October 31, 2007

INTRODUCTION San Mateo Health Commission formed the Health Plan of San Mateo in 1987. HPSM is a state licensed, managed care health plan, and serves 59,000 individuals through five programs There is a countywide effort to expand health insurance coverage led by the BOS and Blue Ribbon Task Force During the course of Task Force meetings, HPSM committed its interest and willingness to explore insurance product options for the adult uninsured in San Mateo County, products that could be offered by the Health Plan to help reduce the number of uninsured adults living in the County. This report discusses the first phase of that exploration.

SCOPE and PURPOSE OF THE FEASIBILITY STUDY This feasibility study explores possible employer group and individual health insurance products, identifies their respective advantages and disadvantages, models financial outcomes, and recommends the selection of best options.

STUDY FINDINGS The number of uninsured adults in San Mateo County is a moving target. A number of sources could be used to develop estimates. UCLA California Health Interview Survey (CHIS) is one of the most widely used sources in the State· While the data has limitations because it is a survey and is subject to statistically limitations, the depth of the breakdowns makes it a valuable tool for planning purposes. The number of uninsured that have sufficient income to be able to purchase insurance or contribute to an employer offered health plan is relatively low. (At the 300% plus FPL level the number was 19,000 in 2005) The number that are employed 20 hours or more a week is even lower (3,000 in 2005).

STUDY FINDINGS HPSM can offer a group product like HealthWorx (51+ employees). This would require an amendment to its existing license from the California Department of Managed Health Care (DMHC) Two additional products can be considered: an individual and a small employer group. These would also require licensure by DMHC. Individual products required medical underwriting to be financially feasible. Employer group products cannot be denied based on medical risk. Any employer group option is a potentially high-risk venture. Administrative costs need to be minimized. Yet, new competencies have to be developed, unless expensive outsourcing is chosen. Marketing challenge: finding employers and employees to bear ongoing financial obligations and employers capable of performing recordkeeping  

FEASIBILITY RECOMMENDATIONS A HealthWorx-like product should be available to offer large employer groups. An individual health insurance product should not be pursued because it would require medical underwriting and the potential rejection of applicants. A small employer group health insurance product should be developed and implemented in a limited, phased approach. The development of employer group health insurance products for both small and larger employers will provide flexibility in responding to employer and employee needs.