1. Connectors: What we know about them and how they work? SCI - August 2, 2007

2. 2Agenda How do you assess whether a Connector is what your state needs? –What factors contributed to the design and functionality of the Connector in MA? –What data did MA use to think through the Connector’s structure and functions? Which model is right for your state? Which model is right for your state? –Massachusetts Model –Connecticut Model –Washington DC Model Implementation issues to consider

3. 3Data Individual data (age, insurance status, employment, income, family status, health status) Employer data (average price of plan, % contribution, offer rate by size) Insurance market (number, price, type of plans in each market, benefit coverage) Medicaid and other public program cost and benefit data Uncompensated Care Pool or safety net data

4. 4 Questions to ask about insurance markets Are the nongroup and small group markets functioning well? Is anything working well? What are the barriers to entry? What is the product availability? How many carriers are in the markets? Is there adequate competition? Is there choice, portability, flexibility? What is the state’s experience with adverse selection, risk pooling, reinsurance? What reforms have been made to the markets in the past? Were they successful?

5. 5 What we learned about insurance markets Un-level playing field between employees of firms that don’t offer (nongroup purchase) and self-employed (small group purchase) Little choice of product in nongroup market No pre-tax payment for people purchasing in nongroup market Small employers have minimum participation and contribution requirements that are barriers to entry Very small groups are older and use more services

6. 6 Questions to ask about the uninsured Who are the uninsured? What does their care cost? How do they receive and pay for care? Why don’t they have health insurance? – –Are they employed? Type of employment? – –Are they offered insurance by employer? – –If offered, why do they choose not to purchase? What is their demographic profile? What is their health status?

7. 7 What we learned about the uninsured The uninsured are not a homogenous group; however, they are likely: –to have been born in the U.S. –to be single and white –to be between 25 and 64 –to have at least a high school education –to be employed and work for small firms –to have moderate incomes and reportedly willing to pay for health insurance –to turn down coverage when offered it –to have good health status.

8. 8 Questions to ask about employer coverage Who does and doesn’t offer? Are they dropping or likely to drop coverage? What are the barriers to offering? What benefits do they offer? How much do they subsidize? How many employees take up offer of coverage? Do they offer pre-tax payment of premium? How much choice do they have and how much choice do they provide to their employees? Do they discriminate among employees?

9. 9 What we learned about employer coverage Employers have not been dropping coverage in MA Many small employers who offer hi do not offer pre-tax treatment of premium payments Many employers have difficulty providing hi for part time workers Waiting periods have increased slightly Most employers do not vary contribution or cost sharing by employee characteristics Employers who do not offer insurance are looking for lower cost alternatives Most employers do not ask for proof of coverage if employees turn down coverage

10. 10 Different models Massachusetts – combine market forces with public subsidies Connecticut Washington DC

11. 11 Medicaid Cost/Quality Improvements Commonwealth Care Insurance Reforms Shared Responsibility Connector Authority Massachusetts Health Care Reform

12. 12 Non-offered Individuals Small Businesses Sole Proprietors Non-working Individuals Blue Cross Blue Shield Fallon Harvard Pilgrim Insurance Connector The Massachusetts Connector New Entrants MMCOs Tufts NHP

13. 13 Former governor’s vision for the Connector Nexus between buyers and sellers –Premiums paid with pre-tax dollars (125 Cafeteria Plan) –Facilitate premium assistance for 100-300% FPL Mechanism for reaching non-traditional workers –Part-timers and seasonal workers –Contractors and sole-proprietors –Spouses with two employers wanting to contribute towards family plan –Individuals with more than one job Alternative distribution system Promotes shift to defined contribution

14. 14 Business details Serves small businesses and individuals Offers subsidized and nonsubsidized plans Eligibility: firms up to 50, individuals without access to subsidized coverage 7 health plans types offered by 6 carriers Standard benefits with consumer choice: price (cost sharing and premiums, network, formularies

15. 15 Challenges Some really wanted purchasing pool Final legislation did not allow as much flexibility in product design as we would have liked Open meetings Ambitious timelines Change in administration Tension between the “business plan” of connector and regulatory authority –Defining affordability –Defining minimum creditable coverage

16. 16 Different models Massachusetts Connecticut – employee choice pool with full HR functionality Washington DC

17. 17 Business Partners & Customers Request Mediums CBIA Carriers Agents Employers Employees E-Mail Paper Web Phone Fax Contact Managemt Billing & Admin Health Plans Ancillary Carriers Customer Service Data Entry Agent Reps Action & Follow-up Request Coordination CBIA HC administration Workflow

18. 18 CBIA Health Connections vision Plan of choice for the owner Business loves competition Never have to “switch” Consolidated administration / bill Global budgeting for the employer Employee gets choice

19. 19 Business details Serves small businesses 6000 companies, 88,000 members Eligibility: firms of 3-100 4 health plans with up to 38 options Standard benefits with consumer choice: price, network, formularies

20. 20 Why HC works in the private sector Common benefits (standardized but not exact) Private sector approach: businesses wary of government involvement Other services (Life, STD, LTD, Dental, COBRA, Section 125, HRA’s, HSA’s) Ability to change and adapt quickly Utilization management and reporting Wellness initiatives Communications

21. 21 Challenges Rapidly changing marketplace Cost Pressures Legislative Challenges Consolidation of Health Plans Consumer Driven Options Wellness / Lifestyle

22. 22 Different models MassachusettsConnecticut Washington DC – full market reform – health insurance is an individual purchase

23. 23 Health Insurance Exchange Untested, conceptual model A Single market for health insurance. (simplified administration) Purchases by individuals and families, not employers Premiums paid with pre-tax dollars, just like employer-based insurance. (section 125 accounts) Portability of coverage

24. 24 Implementation issues Number of plans Coverage requirements Underwriting/rating rules Risk management EligibilityFunctionality Thorny issues (COBRA, HIPAA, ERISA)