Commonwealth Health Insurance Connector Authority

Massachusetts’ Health Care Reform and

the Role of the Connector

Academy Health

State Coverage Initiatives Program

April 26, 2007

Outline

In the Beginning…

Key Issues and Decisions

Year One -- Accomplishments and Challenges

How it came to pass

Federal $$ at risk ($1.2 B over three years)

Culture of health reform in Massachusetts• 1988 universal coverage ( “play or pay” plan)• 1996-97 Medicaid expansion• 2002 universal coverage ballot initiative narrowly defeated• Strong likelihood of 2006 universal coverage ballot initiative

Key stakeholders actively engaged• Advocates• Providers• Business leaders• Insurers

State and federal political leaders’ interests aligned

Key Issues and Decisions

Who’s responsible for implementation?• Existing state agency/authority

• New agency/authority

• State-sanctioned private entity

What type of governance structure?• Executive branch department

• Publicly-appointed board of directors

• CEO

Connector Governance Structure

Executive Director

10 Member Board of Directors

Secretary of Administration and Finance (Chair, ex officio)

Commissioner of Insurance (ex officio)

Director of Medicaid (ex officio)

Executive Director of Group Insurance Commission (ex officio)

Three appointed by the Governor

Actuary

Health Economist

Small Business Rep

Three appointed by the Attorney General

Health Care Consumer

Organized Labor

Employee Health Benefits Plan Specialist

Jon KingsdaleExecutive Director

Rosemarie DayDeputy Director & COO

Joan FallonChief Communications

Officer

Bob CareyPlanning &

Development

Jamie KatzGeneral Counsel

Bob NevinsCIO

Paul Wingle Dir of Outreach for

Commonwealth Choice

Melissa BoudreaultDirector of

Commonwealth Care

Ed DeAngeloAsst General

Counsel

Charlene DeLoachAsst General

Counsel

Kaitlyn KenneySenior Policy

AnalystDick PowersPublic Affairs

Niki ConteDir of Outreach for

Commonwealth Care

Kathy HoganOfficer Manager

Naomi TurnerReceptionist

Systems Staff (2)

Patricia BullDir of Commonwealth

Choice

Christine BallasManager of Operations

Shawna HolleboneMgr Comm. Choice

Health Plan

Melinda Burri Mgr. Comm.

Choice Operations

Administrative Assistants (2)

Elba MendezComm. Choice Implementation

Manager

Michael Norton

Manager of MMCO Contracts

Kevin CounihanChief Marketing Officer

(Interim)

TBD

TBD

Lawyer

Program Manager

Brent BjornsenPublic Info. Unit

Michael ChinSenior Policy

Analyst

Karla MedinaPublic Info. Unit

Kerry Connolly Connector Associate

Eric Dahlberg Connector Associate

Connector Associate

Diana McCarleyPublic Info. Unit

Director of Human Resources

Suzi BibilosCommunications

Associate

Patrick HollandCFO

Dom DiVitoDirector of Accounting

Kari MillerFinancial Analyst

Analyst

James WoolmanFinancial Analyst

Stacy LevasseurSenior Accountant

Key Issues and Decisions

Develop subsidized and non-subsidized health insurance programs

• Commonwealth Care Subsidized health insurance program for adults with income

below 300% FPL that do not have access to employer-sponsored insurance, Medicaid or Medicare

• Commonwealth Choice Non-subsidized, “affordable,” commercial health insurance for

individuals (non-group), small groups (50 or fewer employees) and employees above 300% FPL without access to ESI, such as part-timers and contract employees

Commonwealth Care

Statutory requirements:

• Subsidized health insurance program for Massachusetts residents, age 19 or older, who are uninsured and meet eligibility requirements

• Carrier choice limited to four Medicaid Managed Care Organizations (MMCOs)

Commonwealth Care – Key Issues

Establish benefits package and cost-sharing Develop sliding scale premiums for income groups up to

300% FPL• ~$30,000 for an individual

• ~$60,000 for a family of four

Coordinate enrollment and billing with MassHealth (Medicaid) and Maximus (MassHealth vendor)

Negotiate capitation rates with four MMCOs• 15% reduction from initial proposals

Initiate outreach and enrollment campaign• Engage 30+ community groups

• Target “free care” pool users

Commonwealth Choice – Key Issues

Selecting a third-party administrator (i.e., “Sub-Connector”)

“Any willing carrier” or select group of insurers

What types of plans to offer

Who’s our target market

Rating and underwriting rules/issues

The role for brokers

The Connector’s business model

Third-Party Administrator/Sub-Connector

Roles and responsibilities

• Customer service

• Enrollment

• Premium, billing, collection and reconciliation

• Surrogate for health plans’ CSR staff

• Interface with brokers, employers, individuals and carriers

Carrier and Plan Offerings

Model A -- “Any willing carrier” Model B -- Select group of carriers and limited

number of plans========================================== Issues considered

• Administrative capacity Technical and human resources

• Real variations in plan designs BCBS-MA sells 62 different plans in small group market

• Market taker or market maker Promoting new, “affordable” products

• Organizing choice Focus groups expressed preference for limits on plans and

carriers

Target Your Market

Understand your role in the marketplace Limit (unintended) disruption to existing insurance

arrangements Fill in the gaps in coverage options

========================================== The Mass. Connector’s Target Market:

• Non-group

• Small group (Sec. 125)

• Part-timers, contract employees not offered or eligible for group coverage (Sec. 125)

• Young adults (19 – 26) not offered group coverage (possible Sec. 125)

How the Mass. Insurance Market Operates

No medical underwriting

Modified community rating

Relative strict limits on rate disparity• 2:1 rate band compression

Newly merged small group (1 – 50) and non-group markets, effective July 1, 2007

Rating and Underwriting Rules/Issues

Apply the same rules in and out of the Connector

Minimize adverse risk selection

Don’t undermine existing group market

Collaborate with carriers

The Role of Brokers

Understand the influential role of brokers in the marketplace

Recognize that you may be viewed as a threat

Consider using them as a sales force

The Connector’s Business Model

$25 million in seed money

Start up costs can be significant

CommCare and CommChoice supported by 4.5% admin load

CommChoice premiums the same in and out of the Connector

Sub-Connector paid on a per-sub basis

Non-offeredEmployees

SmallBusinesses

SoleProprietors

Individuals

Blue CrossBlue Shield

Fallon

Harvard Pilgrim

The Connector

Commonwealth Choice

Health NewEngland

TuftsHealth Plan

Neighborhood

Year One Complete – Accomplishments…

Maintained and enhanced broad support Over 63,000 previously uninsured now covered by

Commonwealth Care CommChoice plans available through the Connector New products -- many with select provider networks --

now offered in small group and non-group markets Greater choice and more affordable products in non-

group market Minimum Creditable Coverage standards developed Affordability schedule established

…and Challenges

Will health care costs moderate?

Can “crowd out” be avoided?

Will the public accept the reality (and consequences) of the individual mandate?

How will employers respond to new rules (e.g., non-discrimination, Section 125)?

Will Section 125 plans serve as the magic elixir…and will the Connector establish critical mass?

Will products with deductibles, co-insurance and higher point-of-service payments be accepted in the Massachusetts market?