What Can an Exchange Accomplish? Challenges and Opportunities for National Health Care Reform

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What Can an Exchange Accomplish? Challenges and
Opportunities for National Health Care Reform

• Amy M. Lischko
• State Coverage Initiatives, July 2009

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Agenda

• Data
• Potential Goals
• Questions
• Challenges
• Opportunities

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Data

• Lessons drawn from
• History of exchanges
• Current work with states assessing feasibility
  (WV, MN, RI) and implementation (MA, WA)
• CMWF grant to evaluate MA Connector (with Sally
  Bachman and Alyssa Vangeli)

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History of Exchanges

• Small group purchasing pools HIPCs, AHPs, other
  arrangements (Arkansas, Kansas,Texas, NY)
• Target Population Mostly small employers (size
  varies)
• Value Proposition Provides more affordable
  health insurance by pooling small employers
  together, employee choice, minimize
  administrative costs.
• Rating rules often different, adverse selection,
  participation and contribution rules for
  employers vary
• Outcome Either small in membership or closed
  due to poor risk

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Connecticut (CBIA)

• Private sector purchasing mechanism a division
  of the Connecticut Business and Industry
  Association (CBIA)
• Target Population Serves employers with 3-100
  employees, targets 3-25. In operation for 12
  years, serves over 6,000 employers and 88,000
  members
• Value Proposition Provides choice to employees
  of small businesses and full service HR shop for
  employers
• Rating rules same inside CBIA and outside
• Key Success Factors Flexible, nimble
  organization, responds to business needs, strong
  employer broker relationships

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Massachusetts Connector

• Established in 2006 as key element of system-wide
  reform. Independent, quasi-governmental entity
  separate from the state, governed by a 10-member
  board
• Began offering subsidized products in October
  2006, private products to individuals in April
  2007, private products to employers in October
  2008
• Connector designed to help eligible individuals
  and small groups purchase health insurance at
  affordable prices
• Administers premium assistance program for those
  under 300 FPL
• Makes it easier for businesses to offer pre-tax
  contributions to part-timers, contractors
• Facilitates pro-rata contributions for
  individuals working for multiple employers
• Improves transparency and choice for small
  employers (Gold/silver/bronze)
• Facilitates affordable, portable individual
  insurance coverage
• Key Challenges
• Markets exist side-by-side, carrier and broker
  resistance remain
• Most of sales have been of subsidized product
• Has not addressed health insurance cost trends

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Washington Health Insurance Partnership

• Quasi-governmental organization Established by
  law in 2007 with a 7 member board
• Narrowly targeted for start-up Small employers
  who do not currently offer coverage and have
  low-wage workers (low-wage workers get subsidy
  from state)
• Market Organizer Offers 12 plans (in four
  tiers). Employers choose plan for workers with
  no employee choice. Does not negotiate rates for
  any products.
• RequirementsEmployers required to contribute 40
  of single premium no minimum participation
  requirements. Small group rating rules apply
• No mandate and narrow target very little impact
  on uninsuredProjections of take-up are mostly
  for low-income, subsidized employees
• Initial goals unclear -- Policymakers evaluating
  options, on hold due to budgetary concerns

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Potential Goals

• Increase transparency of insurance purchase
• Distribute insurance
• Facilitate subsidies
• Increase portability
• Increase choice for employees of small employers
• Improve outreach and education
• Set standards, implement policies around health
  insurance
• Purchase health insurance (for subsidized or
  larger group)
• Reduce system costs and improve quality of health
  care

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Questions

• What infrastructure is necessary to achieve
  goals?
• How big is big enough?
• How much choice should be offered?
• How are products rated?
• Are there minimum contribution and participation
  requirements for employers?
• How is the exchange governed?
• Who can purchase?
• Who is required to purchase?

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Challenges

• Duplication and redundancy of functions
• Other state agency functions
• Commercial functions
• Resistance from brokers, carriers and providers
• Conflicts between policy and business functions
• Clarity and prioritization of roles
• Avoiding selection
• Improving quality and affordability
• Program integrity
• Coordination across multiple public programs

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Opportunities

• Bi-partisan support
• Innovate around product design
• Reduce administrative waste
• Increase portability
• Reach hard-to-reach (part-time workers with
  multiple jobs, sole proprietors, employees
  working for small firms)
• Coordinate all aspects of health reform