what are connectors and how do they work?

What are Connectors and How do they work?

April 26, 2007April 26, 2007

22

AgendaAgenda

Introduction to ConnectorsIntroduction to Connectors– The vision for the Connector in MassachusettsThe vision for the Connector in Massachusetts– What data did MA use to think through the What data did MA use to think through the

Connector’s structure and functions?Connector’s structure and functions? Connectors, Exchanges and Employee Choice Connectors, Exchanges and Employee Choice PoolsPools– Washington DC Model - Robert MoffittWashington DC Model - Robert Moffitt– Massachusetts Model – Robert CareyMassachusetts Model – Robert Carey– Connecticut Model – Phil VogelConnecticut Model – Phil Vogel

Digging Deeper: Connectors, Federal Law, and Digging Deeper: Connectors, Federal Law, and Moving Forward Moving Forward – A facilitated discussion among states and panelistsA facilitated discussion among states and panelists

33

The “Connector” in MassachusettsThe “Connector” in Massachusetts

What was and wasn’t working (background)What was and wasn’t working (background)– Understanding the insurance markets (small and Understanding the insurance markets (small and

nongroup)nongroup)– Understanding who the uninsured are and the Understanding who the uninsured are and the

reasons they are uninsured reasons they are uninsured – Understanding employer coverageUnderstanding employer coverage

Vision for functionality of the Connector (and Vision for functionality of the Connector (and how that grew)how that grew)

Connector in context of MA health care reform Connector in context of MA health care reform

44

DataData

Individual data (age, insurance status, Individual data (age, insurance status, employment, income, family status, health employment, income, family status, health status)status)

Employer data (average price of plan, % Employer data (average price of plan, % contribution, offer rate by size)contribution, offer rate by size)

Insurance market (number, price, type of plans Insurance market (number, price, type of plans in each market, benefit coverage)in each market, benefit coverage)

Medicaid and other public program cost and Medicaid and other public program cost and benefit databenefit data

Uncompensated Care Pool dataUncompensated Care Pool data

55

Questions asked about insurance Questions asked about insurance marketsmarkets

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

66

MA nongroup market vs. national

NationalNational MAMAPPOPPO 83.4%83.4% 10.0%10.0%HMO/POSHMO/POS 14.9%14.9% 90.0%90.0%IndemnityIndemnity 1.7% 1.7% 0.0% 0.0%< 19 < 19 5.6%5.6% 20.0%20.0%19-2919-29 19.8%19.8% 15.0%15.0%30-3930-39 21.1%21.1% 17.0%17.0%40-4940-49 24.8%24.8% 17.0%17.0%50-5950-59 20.2%20.2% 18.0%18.0%60-6460-64 8.5%8.5% 14.0%14.0%

77

MA nongroup market - rules

2 products are allowed to be sold 2 products are allowed to be sold – Standard - very comprehensive with minimal cost sharingStandard - very comprehensive with minimal cost sharing– Alternative – increased cost sharing and no RxAlternative – increased cost sharing and no Rx

Guaranteed issue/renewal with continuous open Guaranteed issue/renewal with continuous open enrollmentenrollment– 6 mo. waiting period or pre-ex condition exclusion period, 6 mo. waiting period or pre-ex condition exclusion period,

offset by prior continuous coverage 63 days prior to offset by prior continuous coverage 63 days prior to enrollmentenrollment

– No waiting period for “buy up”No waiting period for “buy up” Overall mlr is 91%Overall mlr is 91%– 94% for individuals and 83% for other rate basis types94% for individuals and 83% for other rate basis types– Deterioration from 83% in 2003Deterioration from 83% in 2003– 5% higher than for small group5% higher than for small group

88

MA nongroup market – enrollment and premiums

42,500 subscribers– will comprise 11% of the merged marketwill comprise 11% of the merged market

90% of the market is with BCBS

Nongroup membership decreased by 10% 2003-2005

Average premium is $650 for Standard and $450 for Alternative– Declining plan value Declining plan value

35% purchased Alternative in 2003 35% purchased Alternative in 2003

45% purchased Alternative in 200545% purchased Alternative in 2005

99

MA nongroup market – claims MA nongroup market – claims experienceexperience

Average pmpm claim cost was approximately Average pmpm claim cost was approximately 40% higher than small group in 2005 due to the 40% higher than small group in 2005 due to the following:following:– Older than average subscriber age (1.13)Older than average subscriber age (1.13)– Much lower number of children coveredMuch lower number of children covered– 77% of those that purchase buy individual-only77% of those that purchase buy individual-only

Nongroup pmpm claimsNongroup pmpm claims– Average is $375 Average is $375 – 15% have pmpm claims greater than $65015% have pmpm claims greater than $650– 15% have pmpm claims under $50 15% have pmpm claims under $50 – 50% have pmpm claims under $20050% have pmpm claims under $200

1010

MA small group marketMA small group market – enrollment – enrollment and premiumsand premiums

700,000 members in 2005 92% of 92% of which are written by 7 not-for-profit are written by 7 not-for-profit HMOsHMOsIncludes groups of 1-50 FTEsOverall small group claims pmpm is $262– 11% of groups (which are 3% of members) have 11% of groups (which are 3% of members) have

pmpm claims under $50pmpm claims under $50– 9% of groups (which are 5% of members) have pmpm 9% of groups (which are 5% of members) have pmpm

claims of more than $650claims of more than $650– 50% of groups have pmpm claims under $20050% of groups have pmpm claims under $200– 16% of groups have pmpm claims greater than $35016% of groups have pmpm claims greater than $350

2:1 rating band– Age, geography, industry, Age, geography, industry, sizesize, 4 rate basis types – , 4 rate basis types –

all inside the bandall inside the band

1111

MA small group market - productsMA small group market - products

Purchasing patternsPurchasing patterns– 87.7% are HMO/POS87.7% are HMO/POS– 11.75% are PPO11.75% are PPO– 0.54% are Indemnity0.54% are Indemnity

Plan valuePlan value– 70% of small group members have “medium” plan 70% of small group members have “medium” plan

values between 0.85 and 0.92values between 0.85 and 0.92$15-$20 office visit co-pays $15-$20 office visit co-pays $250-500 in patient and out patient co-pays$250-500 in patient and out patient co-paysDrug co-pays of $10/25/40Drug co-pays of $10/25/40

– 12% of small group membership has “low” plan 12% of small group membership has “low” plan values between 0.65 and 0.85 values between 0.65 and 0.85

– 3% of small group membership has plan values 3% of small group membership has plan values between 0.65 and 0.75 (high deductible plans)between 0.65 and 0.75 (high deductible plans)

1212

Small group enrollment by group sizeSmall group enrollment by group size

Group Group ClaimClaim Premium Premium AgeAge PlanPlanSizeSize Members Members PMPMPMPM PMPM PMPM MLRMLR FactorFactor ValueValue

11 112,000112,000 $296$296 $305 $305 97%97% 1.201.20 0.870.87 2-52-5 152,000152,000 $273$273 $323 $323 85%85% 1.031.03 0.890.89

6-106-10 117,000117,000 $250$250 $309 $309 81%81% 0.940.94 0.890.89

11-2511-25 194,000194,000 $251$251 $298 $298 84%84% 0.940.94 0.900.90 26+26+ 119,000119,000 $250$250 $287 $287 87%87% 0.930.93 0.900.90

Source: Gorman ActuarialSource: Gorman Actuarial

1313

Summary of findingsSummary of findings

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

Very small groups are older and use more services

1414


What was and wasn’t working (background)What was and wasn’t working (background)– Understanding the Insurance markets (small and Understanding the Insurance markets (small and


reasons they are uninsured reasons they are uninsured – Understanding employer coverageUnderstanding employer coverage



1515

Key questions about the uninsured? Key questions about the uninsured?

Who are the uninsured?Why don’t they have health insurance?– Are they employed, type of employment?– Are they offered insurance by employer?– If offered, do they choose not to purchase?

Demographic profile?What is their health status?How do they receive and pay for care? Who uses the uncompensated care pool?

1616

Insurance status of MA residentsInsurance status of MA residents

Total PopulationTotal Population 6,400,0006,400,000Currently insured (93%)Currently insured (93%) 5,940,0005,940,000– Employer, individual, Medicaid, MedicareEmployer, individual, Medicaid, Medicare

Currently UninsuredCurrently Uninsured (7%)(7%) 460,000 460,000

__________________________________

≤ ≤ 100% FPL 100% FPL Medicaid eligible Medicaid eligible 106,000*106,000*100-300% FPL 100-300% FPL Subsidy eligibleSubsidy eligible 150,000* 150,000*>300% FPL>300% FPL 204, 000 204, 000

* FFP eligible under waiver* FFP eligible under waiverNote: Based on August 2004 Division of Health Care Finance and Policy DataNote: Based on August 2004 Division of Health Care Finance and Policy Data

1717

Uninsured rates by age (2002-2004)Uninsured rates by age (2002-2004)

25.4%

8.0%8.8%

6.3%

20.4%

3.2% 3.2%

9.8%

0%

5%

10%

15%

20%

25%

30%

0-18 19-24 25-44 45-64

2002

2004

Younger adults have higher uninsured rates although Younger adults have higher uninsured rates although significant increases were also found in the older age significant increases were also found in the older age groups in 2004. groups in 2004.

1818

Distribution of uninsured by age (2004)Distribution of uninsured by age (2004)

11.9%

21.2%

38.4%

28.6%

0-18

19-24

25-44

45-64

The uninsured span all ages with 67% The uninsured span all ages with 67% between the ages of 25 and 64.between the ages of 25 and 64.

1919

Uninsured rates by gender and marital Uninsured rates by gender and marital status, 2002-2004 status, 2002-2004

11.1%

7.6%

12.7%

8.7%

0%

5%

10%

15%

Male Female

2002 2004

4.2%

17.2%14.9%

5.9%

20.1%

13.8%

0%5%

10%15%20%25%

Married NeverMarried

Other

2002 2004

Males have higher rates of uninsurance than females.Males have higher rates of uninsurance than females.

Never married people have higher rates of uninsurance.Never married people have higher rates of uninsurance.

Married people saw a significant increase in their rate of uninsurance from 2002 to Married people saw a significant increase in their rate of uninsurance from 2002 to 2004.2004.

2020

Uninsured rates by education and Uninsured rates by education and employment status (2002-2004)employment status (2002-2004)

28.5%

11.2%

4.6% 4.7%

13.6%

25.2%

0%

5%

10%

15%

20%

25%

30%

< HighSchool

HS/SomeCollege

CollegeGraduate

2002

2004 11.7%15.1%

25.4%

6.3%

24.4%

8.7% 6.8%

23.1%

0%

5%

10%

15%

20%

25%

30%

notworking

<20hrs 20-34hrs 35+hrs

2002

2004

Rates of uninsurance are much higher for those without a high school Rates of uninsurance are much higher for those without a high school degree and lowest for those with a college degree. degree and lowest for those with a college degree.

Rates of uninsurance are lowest for those working full-time jobs.Rates of uninsurance are lowest for those working full-time jobs.

2121

Distribution of the uninsured by education Distribution of the uninsured by education and employment status (2004)and employment status (2004)

not working32%

<20 hours5%

20-34 hours18%

35+ hours45%

< High School13%

HS/Some College

67%

College Graduate

20%

Most of the uninsured are high school graduates; almost Most of the uninsured are high school graduates; almost one fifth have college degrees. one fifth have college degrees.

A little more than two thirds of the uninsured work, and A little more than two thirds of the uninsured work, and most of those who do work hold full-time jobs. most of those who do work hold full-time jobs.

2222

Uninsured rates by size of firmUninsured rates by size of firm

18.2%

3.9%

20.8%

4.6%

0%

4%

8%

12%

16%

20%

24%

<50 50+

2002

2004

People working for small firms are more likely to be People working for small firms are more likely to be uninsured than those working for larger firms.uninsured than those working for larger firms.

Increases in uninsured rates were found for both large and Increases in uninsured rates were found for both large and small firms from 2002 to 2004.small firms from 2002 to 2004.

2323

Distribution of employed uninsured Distribution of employed uninsured by size of firm (2004)by size of firm (2004)

59.8%

40.2%< 50

50+

While the rate of uninsurance is far greater for people While the rate of uninsurance is far greater for people working in small firms, a significant percent of the working in small firms, a significant percent of the working uninsured are employed by firms with working uninsured are employed by firms with greater than 50 employees. greater than 50 employees.

2424

Distribution of uninsured and ucp Distribution of uninsured and ucp users by regionusers by region

35.5%

19.9% 20.5%

11.7% 12.4%

54.6%

13.6% 13.7%9.4% 8.8%

0%

10%

20%

30%

40%

50%

60%

Metro Boston Northeast Southeast Worcester West

Uninsured UC Pool Users

2525

Components of UCP demand Components of UCP demand

$566.6$598.9 $582.4

$118.3$102.9

$80.9

$36.9$37.5

$48.0

$4.0

$15.1$5.6

$0

$100

$200

$300

$400

$500

$600

$700

$800

2004 2005 2006

Year

($)

Mil

lio

ns

Hosp Demand Hosp ERBD CHC Payments Demo. Proj., Admin & Other

2626

Distribution of ucp claims by site of Distribution of ucp claims by site of service (2006)service (2006)

2.0%

75.0%

23.0%

HospitalInpatientHospitalOutpatientCHC

67% of pool users are between the ages of 25 67% of pool users are between the ages of 25 and 64.and 64.

2727

What we learned about the uninsuredWhat we learned about the uninsured

The uninsured are not a homogenous group; however, they are The uninsured are not a homogenous group; however, they are likely:likely:– to be employed to be employed – to have been born in the U.S. to have been born in the U.S. – to be singleto be single– to be whiteto be white– to be between 25 and 64to be between 25 and 64– to have at least a high school educationto have at least a high school education– to have moderate incomes and reportedly willing to pay for to have moderate incomes and reportedly willing to pay for

health insurance.health insurance.– more likely to use free care pool if they live close to Boston.more likely to use free care pool if they live close to Boston.

2828


What was and wasn’t working (background)What was and wasn’t working (background)– Understanding the Insurance markets (small and Understanding the Insurance markets (small and


reasons they were uninsured reasons they were uninsured – Understanding employer coverageUnderstanding employer coverage



2929

Questions to ask about employer-Questions to ask about employer-coveragecoverage

Who does and doesn’t offer?

Are they dropping or likely to drop coverage?

Reasons for not offering

What 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?

3030

Employers that offer health insurance Employers that offer health insurance

69% 68% 70%

0%

25%

50%

75%

100%

2001 2003 2005

The change in offer rate is not statistically significant.The change in offer rate is not statistically significant.

3131

Employers that offer health insurance Employers that offer health insurance by employer size by employer size

Employer SizeEmployer Size 20012001 20032003 20052005

All employee sizesAll employee sizes 69%69% 68%68% 70%70%

2 to 9 employees2 to 9 employees 59%59% 57%57% 60%60%




250 or more employees250 or more employees 97%97% 99%99% 99%99%

3232

Employers that offer health insurance Employers that offer health insurance to full-time employees onlyto full-time employees only

The change in offer rates is not statistically significant. The change in offer rates is not statistically significant.

75% 76%

0%

20%

40%

60%

80%

100%

2003 2005

3333

Hours required to qualify for health Hours required to qualify for health insuranceinsurance

20%

7%

34%39%

24%

10%

23%

44%

0%

10%

20%

30%

40%

50%

No Minimum Time Less Than HalfTime

Half Time Greater Than HalfTime

2003 2005

3434

Total monthly premium for indiv. plans Total monthly premium for indiv. plans

$254

$312

$235

$294

$350$365

$0

$100

$200

$300

$400

2001 2003 2005

2-50 Employees 51+ Employees

3535

Monthly employer contribution to Monthly employer contribution to individual planindividual plan

86%80% 80%79% 75%80%

0%

20%

40%

60%

80%

100%


2001 2003 2005

$78 $88

Employee pays

3636

Total monthly premium for family plans Total monthly premium for family plans

$650

$819

$633

$823

$950 $958

$0

$250

$500

$750

$1,000

2001 2003 2005


3737

Monthly employer contribution to Monthly employer contribution to family premium family premium

75% 74% 75%75% 73%75%

0%

25%

50%

75%

100%


2001 2003 2005

$237 $269

Employee pays

3838

Employers offering pre-tax plan for hi Employers offering pre-tax plan for hi premiums (2005)premiums (2005)

45%

80%

0%

20%

40%

60%

80%

100%


3939

Eligible employees who enroll in Eligible employees who enroll in employer’s health insuranceemployer’s health insurance

80%85%

78%

0%

25%

50%

75%

100%

2001 2003 2005

4040

Employers ask for proof of hi if employee Employers ask for proof of hi if employee turns down insurance turns down insurance

20%22% 23%

0%

10%

20%

30%

40%

2001 2003 2005

4141

Employers that offer compensation Employers that offer compensation to employees who turn down hi to employees who turn down hi

12% 11% 12%

0%

10%

20%

30%

2001 2003 2005

4242

Employers impose a waiting periodEmployers impose a waiting period

58% 61% 57%

0%

25%

50%

75%

100%

2001 2003 2005

4343

Waiting periodsWaiting periods

36%

14%

48%

1%

38%

10%

43%

9%9%

37%41%

12%

0%

20%

40%

60%

At least 1 Month At least 1 Month,Less Than 3

Months

At Least 3 Months,Less Than 6

Months

6 or More Months

2001 2003 2005

4444

Does employee contribution to health Does employee contribution to health insurance premium vary by? insurance premium vary by?

ReasonReason 20032003 20052005

SenioritySeniority 2%2% 4%4%

Part-time/ Full-time statusPart-time/ Full-time status 6%6% 9%9%

Surcharge for spouse if other insurance availableSurcharge for spouse if other insurance available - - 3%3%

Contribute higher portion of premium for dependentsContribute higher portion of premium for dependents 6%6% - -

PayPay - - 3%3%

Whether employee is executive staffWhether employee is executive staff 2%2% - -

Union/ non-union statusUnion/ non-union status 1%1% 1%1%

OtherOther 4%4% 4%4%

Employer pays 100% of premiumEmployer pays 100% of premium 17%17% 20%20%

Employee contribution does not varyEmployee contribution does not vary 65%65% 62%62%

4545

Reasons for not offering health Reasons for not offering health insurance insurance

ReasonReason 20012001 20032003 20052005

Premiums too highPremiums too high 81%81% 94%94% 85%85%

Turnover too greatTurnover too great 37%37% 41%41% 39%39%

Employees covered elsewhereEmployees covered elsewhere 79%79% 85%85% 88%88%

Administrative hassleAdministrative hassle 25%25% 39%39% 30%30%

Most employees are not full-timeMost employees are not full-time 55% 55% 58%58% 56%56%

Can attract good employees without Can attract good employees without 40%40% 44%44% 51%51%

Organization newly establishedOrganization newly established 23%23% 21%21% 16%16%

Financial status prohibits offering Financial status prohibits offering 57%57% 82%82% 72%72%

Past negative experience w/ offering Past negative experience w/ offering insuranceinsurance 12%12% 10%10% 6%6%

Employees prefer higher payEmployees prefer higher pay - - - - 40%40%

4646

Employers who do not offer hi: what Employers who do not offer hi: what would motivate? would motivate?

Ways to MotivateWays to Motivate 20012001 20032003 20052005

Lower premium ratesLower premium rates 69%69% - - - -

Lower premium rates: Lower premium rates: plan with only basic hospital plan with only basic hospital coveragecoverage

- - 54%54% - -

Lower premium rates: plan with limited Lower premium rates: plan with limited networks and high copaymentsnetworks and high copayments - - - - 50%50%

Eliminate required minimum participationEliminate required minimum participation 57%57% 60%60% 64%64%

Government subsidy for low-income Government subsidy for low-income employeesemployees 55%55% 67%67% 60%60%

Tax creditsTax credits 63%63% 82%82% 74%74%

Fee requirementFee requirement - - 28%28% 31%31%

Legal mandateLegal mandate - - - - 44%44%

4747

Employers who do not offer health Employers who do not offer health insurance: ways to constrain costs insurance: ways to constrain costs

Acceptable Ways to Limit CostsAcceptable Ways to Limit Costs 20052005

Limit benefitsLimit benefits 75%75%

Limit provider networkLimit provider network 75%75%

Impose high copaymentsImpose high copayments 62%62%

Impose higher copayments for higher-Impose higher copayments for higher-wage earnerswage earners 70%70%

Impose high deductibleImpose high deductible 49%49%

Impose higher deductibles for higher-Impose higher deductibles for higher-wage earnerswage earners 58%58%

4848

What we learned about employer hi What we learned about employer hi coveragecoverage

Employers have not been dropping coverage in MAEmployers have not been dropping coverage in MA

Many small employers who offer hi do not offer pre-tax Many small employers who offer hi do not offer pre-tax treatment of premium paymentstreatment of premium payments

Many employers have difficulty providing hi for part time Many employers have difficulty providing hi for part time workersworkers

Waiting periods have increased slightly Waiting periods have increased slightly

Most employers do not vary contribution or cost sharing by Most employers do not vary contribution or cost sharing by employee characteristicsemployee characteristics

Employers who do not offer insurance are looking for lower Employers who do not offer insurance are looking for lower cost alternativescost alternatives

Most employers do not ask for proof of coverage if Most employers do not ask for proof of coverage if employees turn down coverageemployees turn down coverage

4949

The Connector in MassachusettsThe Connector in Massachusetts

What was and wasn’t working (background)What was and wasn’t working (background)– Understanding the insurance markets (small Understanding the insurance markets (small

and nongroup)and nongroup)– Understanding who the uninsured are and the Understanding who the uninsured are and the

reasons they are uninsuredreasons they are uninsured– Understanding employer coverageUnderstanding employer coverage

Connector in context of MA health care reformConnector in context of MA health care reform


5050

Medicaid

Cost/QualityImprovements

CommonwealthCare

InsuranceReforms

SharedResponsibility

ConnectorAuthority

MassachusettsHealth Care Reform

5151

Ch. 58 of Acts of 2006Ch. 58 of Acts of 2006

Merge nongroup and small group markets Merge nongroup and small group markets – 15% decrease in nongroup rates 15% decrease in nongroup rates – 1 to 1.5% increase in small group rates (can be offset 1 to 1.5% increase in small group rates (can be offset

with purchase of $33-48 million reinsurance plan)with purchase of $33-48 million reinsurance plan)– Represents $25-$38 million subsidy from small group Represents $25-$38 million subsidy from small group

to non groupto non group

New distribution channel (Connector)New distribution channel (Connector)Individual MandateIndividual Mandate– Loss of tax deduction in 2007 Loss of tax deduction in 2007 – Assessed 50% cost of MCC in 2008+Assessed 50% cost of MCC in 2008+

Fair share employer assessment & Free Rider Fair share employer assessment & Free Rider surchargesurchargeCommonwealth Care (subsidized coverage) Commonwealth Care (subsidized coverage)

5252

Ch. 58 of Acts of 2006Ch. 58 of Acts of 2006

Section 125 Plan is required of employers with Section 125 Plan is required of employers with more than 10 FTEs more than 10 FTEs – Excused from Free Rider SurchargeExcused from Free Rider Surcharge– Allows employees to pay with pre-tax dollarsAllows employees to pay with pre-tax dollars

Expanded dependency status for health Expanded dependency status for health insurance purposes to 2 years past loss of tax insurance purposes to 2 years past loss of tax dependency status or age 26dependency status or age 26Young Adults PlanYoung Adults PlanMoratorium on mandated benefitsMoratorium on mandated benefitsHMOs can use coinsuranceHMOs can use coinsurance

5353

Key changes made to small group and Key changes made to small group and nongroup marketsnongroup markets

Small group and nongroup risk pools to mergeSmall group and nongroup risk pools to mergeConnector empowered to arrange for sale of products to Connector empowered to arrange for sale of products to individuals and small groupsindividuals and small groups– Commonwealth Care available for those at 300% FPL Commonwealth Care available for those at 300% FPL

or belowor below– ““Seal of Approval” products to small groups or Seal of Approval” products to small groups or

individuals above 300% FPLindividuals above 300% FPL– Young Adult Plan available for purchase to those 19 to Young Adult Plan available for purchase to those 19 to

2626All individuals considered groups of oneAll individuals considered groups of oneMerged pool rating based on current small group Merged pool rating based on current small group – Group size adjustment for smallest groups increased Group size adjustment for smallest groups increased

from 1.05 to 1.10from 1.05 to 1.10– Group size adjustment moved OUTSIDE the 2:1 bandGroup size adjustment moved OUTSIDE the 2:1 band

5454

Rate impact on the merged market with the new rating rules

Merger will lead to a decrease in nongroup rates of Merger will lead to a decrease in nongroup rates of approximately 15% and an increase in small group rates of approximately 15% and an increase in small group rates of approximately 1 to 1.5%approximately 1 to 1.5%Average book of business rate impact will vary Average book of business rate impact will vary substantially by carriersubstantially by carrier– -2% to -50% for nongroup-2% to -50% for nongroup– +1 to +4% for small group+1 to +4% for small group

Adding currently uninsured will lead to rate impacts of -3% Adding currently uninsured will lead to rate impacts of -3% to +6%, depending on:to +6%, depending on:– Current number of uninsuredCurrent number of uninsured– Number of uninsured purchasing coverageNumber of uninsured purchasing coverage– Morbidity of the newly insuredMorbidity of the newly insured

$30 to $45 million in reinsurance dollars required to offset $30 to $45 million in reinsurance dollars required to offset increase in small group rates due to mergerincrease in small group rates due to merger

5555

The Connector in MassachusettsThe Connector in Massachusetts

What was and wasn’t working (background)What was and wasn’t working (background)– Understanding the insurance markets (small Understanding the insurance markets (small

and nongroup)and nongroup)– Understanding who the uninsured are and the Understanding who the uninsured are and the

reasons they are uninsuredreasons they are uninsured– Understanding employer coverageUnderstanding employer coverage

Connector in context of MA health care reformConnector in context of MA health care reform


5656

Non-offeredIndividuals

SmallBusinesses

SoleProprietors

Non-workingIndividuals

Blue CrossBlue Shield

FallonHarvard Pilgrim

Insurance Connector

The Connector makes it workThe Connector makes it work

New Entrants

MMCOsTufts NHP

5757

Governor’s vision for the Connector

Nexus between buyers and sellers Nexus between buyers and sellers – Premiums paid with pre-tax dollars (125 Cafeteria Premiums paid with pre-tax dollars (125 Cafeteria

Plan)Plan)– Facilitate premium assistance for 100-300% FPL Facilitate premium assistance for 100-300% FPL

Mechanism for reaching non-traditional workersMechanism for reaching non-traditional workers– Part-timers and seasonal workersPart-timers and seasonal workers– Contractors and sole-proprietorsContractors and sole-proprietors– Spouses with two employers wanting to contribute Spouses with two employers wanting to contribute

towards family plantowards family plan– Individuals with more than one jobIndividuals with more than one job

Alternative distribution systemAlternative distribution systemPromotes shift to defined contributionPromotes shift to defined contribution

5858

Eligibility for accessing subsidized health insurance via the Connector

Uninsured resident of MA (6 mo.)Not eligible for any MassHealth program, Medicare, QSHIP, or SCHIP program.Legal citizenEmployer has not provided health insurance in the last 6 mo. for which the employee is eligible and for which the employer covers at least 20% of annual family premium or 33% of individual premium. (Board can waive in future)

5959

But, some wanted moreBut, some wanted more

Really wanted purchasing poolReally wanted purchasing pool

Final legislation did not allow as much flexibility in Final legislation did not allow as much flexibility in product design as we would have likedproduct design as we would have liked

Open meetingsOpen meetings

Ambitious timelines Ambitious timelines

Change in administration Change in administration

Tension between the “business plan” of connector Tension between the “business plan” of connector and regulatory authorityand regulatory authority– Defining affordabilityDefining affordability

– Defining minimum creditable coverageDefining minimum creditable coverage

what are connectors and how do they work?

Documents