1. How Massachusetts Answered Tim Jost’s Eight Questions
Nancy Turnbull
Harvard School of Public Health
Board Member of Massachusetts Health Insurance Connector
September 24, 2010

2. Massachusetts Connector
Individual-
Unsubsidized
Subsidized
CommCare
Small Employers-
Unsubsidized
Section 125 plans
Making the market work better:
Set standards
Increase transparency
Simplify consumer experience
Create more affordable options
Standardize benefit plans

3. #1: Structure and Governance?
Independent public authority
Governed by 10-person board
4 government officials
Chaired by secretary of administration and finance
Medicaid director
Commissioner of insurance
Head of agency responsible for state worker and retiree benefits
3 gubernatorial appointees: economist, small employer, actuary
3 Attorney General appointees: consumer, union, health and welfare trust funds
Three-year terms for appointees
Broker will be added to board as of July 1, 2011 3 3

4. #2: Protecting against adverse selection?
Before the exchange:
Long history of insurance market reform
Guaranteed issue/renewal
No rating on health status, medical claims, gender
Modified community rating
2:1 rating bands
All products available to everyone
Major carriers must sell individual products
All products at each carrier in one rating pool

5. #2: Protecting against adverse selection?
Since reform
Same insurance rules inside and outside the exchange
Same rating pool inside and outside Connector
Merged small employer and individual markets
Insurer must sell “Seal of Approval” products inside and outside the Connector
Individual mandate
Standardized products in the Connector
LACKING
Insurers can sell non-standardized products outside the Connector
No risk adjustment across insurers (except in subsidized Commonwealth Care)

6. #3: Preventing Selection Against Exchange by Self-Insured/Large Employers?

7. #4: Making exchange attractive to small employers?
~6000 members in small employer plans
Biggest value: Easy to compare what’s available from many carriers
But many challenges
Opposition by BCBSMA (60% market share)
Concern about adverse selection if BCBS sits out
Opposition by most brokers (lower commissions)
Whining about standardized products
New 5% state premium subsidy for participation in Connector plan with wellness program
How much will federal tax credits help?

8. #5: How to pick health carriers and products?
Subsidized program
Medicaid Managed Care plans initially
Robust competitive procurement
Unsubsidized program
Standardized products: Gold, Silver, Bronze, YAP
Carriers with 5,000+ lives in small employer market must bid
Must bid for all lines of business and all products
“Seal of Approval” to plans that provide “good value” and “high quality”

9. #6: Information for Consumers?
Massachusetts 1.0: “Actuarial Value” 9
Premiums for 50-year-old resident of Boston for effective date of June 2009 9

10. Mass 2.0: Standardized Products10 10

11. #7: Eligibility across programs?
Single application for all health programs
Electronic application, sort of
“Passive enrollment” – use information from other state agencies to verify eligibility
Auto enrollment for subsidized plan– enroll into cheapest plan
Outreach grants to community organizations across state: big pay-off

12. #8: Reducing Administrative Costs and Finding Funding?
$25 million start-up funding
Collects administrative fees
3.5% of premium
Cut of premium not an add-on: reduces revenue paid to health insurers
Self-sufficient since 2008
Broker commissions
$10 per subscriber per month: groups 1-6 lives
2.5% premium: groups with 6+ lives
90% of Connector small group sales are not through brokers
Scale/size is critical to lowering administrative costs
Tensions about disrupting existing business practices: Duplicative? More expensive? Adding value?

13. #9: Implementation is an on-going campaign
Needs adequate funding
Coordinated framing and messaging
Public-private partnerships for aggressive public education and outreach/enrollment/re-enrollment
Implementing on time and celebrating every success, big and small
Establish credible measurement of results
Aggressive, coordinated and rapid response to lies and misinformation 13 13

14. Eyes on the Prize
2.7%
2009
Source: Massachusetts Division of Health Care Finance and Policy, 2009 Household Insurance survey 14 14