May 8, 2008 Waiving Commonwealth Care Prohibition on Enrolling Adults with Access to ESI

2 Agenda  Background  Scenario  Estimates of Potential Pool  Variables Affecting Cost Estimates  FY09 – FY12 Cost Estimates  Other Issues to Consider

3 Key Take-Aways 1.Difficult to estimate and target population 2.Potentially expensive for the Commonwealth 3.Federal financial participation (FFP) is unknown 4.Potential for disruption to market (risk selection) 5.Administration/operations bandwidth is limited in FY 2009

4 Background Statutory eligibility criteria: 1.Household income does not exceed 300% of FPL 2.Resident of MA 3.Not eligible for MassHealth, SCHIP or Medicare 4.Employer or family member’s employer hasn’t provided ESI in the last six months, with employer contributing at least 20% (family) or 33% (individual) 5.Employer has not provided financial incentive to employee to decline ESI

5 Background However, Board may waive ESI prohibition if: 1.Individual’s employer complies with non- discrimination provisions of health reform law, and 2.Employer’s contribution for ESI is sent to the Connector to offset the Commonwealth’s cost, with any residual amount offsetting the enrollee’s cost.

6 Background  Legislation enacted in November 2007 directs the Connector to report to Legislature on estimates of enrollees and projected premium contributions from employers if Board were to waive ESI prohibition.

7 Scenario  Employer contributes 50% for ESI.  Employee’s share is $200 (individual) or $600 (family).  Employee with spouse and child (annual income of $30,000) declines ESI.  Employee is uninsured, exempt from the individual mandate, and eligible for Health Safety Net coverage.

8 Estimates of Potential Pool  Majority of working adults at or below 300% FPL covered by ESI.  Estimate -- based on adjusted 2007 Current Population Survey -- that approximately 485,000 adults and 225,000 children at or below 300% of FPL are covered by ESI.

9 Variables Affecting Cost Estimates 1.Using survey data to estimate (1) family income in 50% increments and (2) source of coverage. 2.Demographic profile of potential enrollees (e.g., age/sex/income). 3.Contribution from employer and pace of enrollment.

10 Variables Affecting Cost Estimates 4.Annual change in cost of ESI and percentage contribution by employers. 5.Annual change in capitation rates paid to MMCOs. 6.Employees that shift from ESI to CommCare would have their children enrolled in MassHealth.

11 FY09-FY12 Cost Estimates $ in millionsFY09FY10FY11FY12 % Adults Shifting to CC 10% (48,500) 20% (96,800) 30% (145,150) 40% (193,500) CommCare Cost $20 - $50$48 - $148$59 - $218$63 - $283 MassHealth Cost $40$125$197$275 Total Cost$60 - $90$173 - $273$256 - $415$338 - $558

12 Other Issues to Consider  Updated insurance estimates will soon be available:  MA Dept. of Revenue data on insurance status of tax filers  Update to CPS estimates due in August  Newly revised survey methodology being used by DHCFP for state’s household survey

13 Other Issues to Consider  Administration/Operations:  Connector in the process of selecting new vendor for premium billing and customer service  Transition from current vendor to new vendor will occur in Fall 2008  Requires marketing campaign to reach target population

14 Other Issues to Consider  Risk selection:  Potential to attract adverse risk from employer groups  Potential to disrupt group coverage

15 Other Issues to Consider  Affect on MassHealth/CMS Waiver:  Administrative challenge for MassHealth  Uncertain about CMS’s response  Would costs be eligible for FFP?  If not, full cost borne by the Commonwealth