Maine Health Exchange for Small Businesses
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Transcript of Maine Health Exchange for Small Businesses
Maine Health Exchange forSmall Businesses
Presentation by Terry GardinerSmall Business Majority
forMaine Joint Select Committee on Health Care Reform“Health Insurance Exchanges: Key Policy Issues and
Questions”September 21, 2010
• Small Business Majority is a nonprofit, nonpartisan small business advocacy organization founded and run by small business owners and focused on solving the biggest problem facing small businesses today: the skyrocketing cost of health coverage.
• We speak for the nearly 28 million Americans who are self-employed or own businesses of up to 100 employees. Our organization sponsors scientific research that guides us to understand and advocate on behalf of the interests of small businesses across the country.
About Small Business Majority
Still an Employer-Based System • CBO healthcare reform coverage projections -- 2018
(Millions of non-elderly people) Change
o Employers 159M (-3) 56%o Medicaid 51 (+16) 18%o Nongroup 25 (-5) 9%o Exchanges 24 (+24) 9%o Uninsured 22 (-31) 8%
• Healthcare reform success depends on the success of employer health coverageo Affordability – Cost containment and delivery system reformo Exchanges that work for employers
Exchanges Can Expand Employer Coverage• Rand simulation of healthcare reform found
employer coverage would expand from 115M today to 129M
• Largest increases were small employers with fewer
than 50 employees – 10.4M new workers
• Reasons:o Individual requirement increases employee
demand for coverageo Exchange benefits to employers facilitates
employer coverage
• Rand simulation: http://healthpolicyandreform.nejm.org/?p=12339&query=home
• 22 million self-employed entrepreneurs nationallyo 28% of self-employed entrepreneurs are uninsured
• Nationally, 5.9M employers with fewer than 100 employees employ 43Mo 80% (4.8M) have fewer than 10 employeeso 54% (2.6M) of employers with fewer than 10 employees
do not offer health coverage
• Most small businesses are very small and lack sophisticated HR departmentso Average employer in Connecticut exchange has 8
employees
National Small Business Landscape
Maine Small Business Landscape
• Self-employed: 115,581
• Small Businesses: 33,435 <50 employeeso 45% of firms < 50 offer coverageo 98% of firms >50 offer coverage
• Employer coverage: 687,310o 219,564 employees work at firms <100 employees
• Individual coverage: 63,175
# Employees # of Firms %
> 10 27,875 78%
10 to 24 4,175 11%
25 to 99 2,046 6%
100 + 1,771 5%
Maine Small Business Distribution
Maine exchange will have large numbers of small employers to service.
Small Employer Health Coverage Choices in 2014
• Purchase health coverage through the exchange
• Purchase health coverage in the outside market
• Maintain a “grandfathered” health plan
• Do not offer health coverage o Employers with 50 employees or fewer (94% of Maine
employers) are exempt from any shared responsibility requirements
• Small business owners are skeptical for many reasonso Recession has created a pessimistic atmosphere and the
focus is on survival – “near death experience”o Multiple versions of reform and two years of debate have
left most confused on the final outcomeo Controversy over health reform has created lack of
understanding and confusiono Our surveys find a lack of faith in any government solution
• It is vital that thousands of Maine small business owners learn about their exchange and their choices
Convincing Small Business the Exchange will Work
• Provide affordable health planso Attract insurers to the exchange and create incentives for
price/value competition among insurers
o OPM is required to provide at least two “multi-state plans”
o Create incentives for participants to select lower-cost plans
• Examples: Federal Employees Health Benefits plan, CalPERS for CA state employees and Wisconsin State Employees Health Plan have created consumer incentives
• Keep annual premiums stable
Small Business Needs - Exchange
• Offer choice of competitive plans to employees
• Single point of entry for small employero All necessary information for employer and employees
to make decisions on coverageo One applicationo One premium payment o One source for enrollment changeso Qualification and calculation of the small business tax
credito Provide additional “HR” services such as Cobra
administration, Section 125 service, HAS/FSA/HRA
Small Business Needs - Exchange
Effective Outreach & Education
• Direct contact – only half of employers belong to any business groupo IRS postcard succeeded in helping make small businesses
aware of the tax credito Direct survey and focus groups of employers
• Trusted voices of peers – historical sourceso Brokers, business groups, business media
• Navigators in ACA can work for employerso Case Study: Massachusetts Fishing Partnership Health
Plan• Uninsured rate dropped from 43% to 13%
Governance• Independent agency
• Flexibility and agility to “market health insurance”
• Subject to state laws on transparency, accountability and public participation
• Governing board should represent cooperating state agencies, interested parties and relevant expertise, and prohibit conflicts of interest
• Annual independent audit
State or National Exchange?
• State management will be closer to local market conditions and needs of individuals and small businesseso Monitoring and adapting to market conditions is ongoing
as outside market will continue to exist and evolve• States regulate insurers and coordination with the
exchange will be vital to prevent adverse selection and enforcement
• National exchange will require:o System for local stakeholder input & market knowledgeo Coordinating mechanism with state insurance regulatoro Coordinated risk adjustment (inside/outside exchange
pools)
Regional Exchange Advantages
• Larger exchange has many scale of economy advantages
o Lower administrative costso Reduce risk of adverse selectiono Create more stable risk poolso Attract more insurerso Be a driver in the overall health system for improved
value
Regional Exchange Complexities
• Need to align structure and rules of individual and small group markets in all states
• Need for enforcement consistency of insurance regulators
• Will a regional exchange actually result in more insurers marketing in another state?o Do insurers have networks in more than one state?
• Transitions likely needed to prevent rate shock to different individuals and groups in each state
• Risk adjustment system will be more complex• Plan pricing may need to vary based on
geographic cost differences of medical costs
Regional Cost Differences
States have different starting points for individual and small group market plans, rates and costs
State Individual Small GroupMaine $4,061 $4,320New Hampshire $3,427 $5,040Massachusetts $5,143 $5,496Rhode Island $4,779 $5,184Connecticut $3,503 $4,656Vermont $3,986 $4,260
Average Annual Premium - AHIP
Regional Exchange Option
• States may resist merging risk pools
• Regional exchange could “administer” a regional pool achieving scale of economy advantages but state risk pools could remain separate
Separate or Combined Exchanges
• Evaluation of market regulatory differences between small group and individual marketo Guaranteed issue, rating, benefits
• Evaluation of market differences between individual and small group market o Size of markets (Massachusetts had a small individual
market)o Profile of risk pools
Adverse Selection - Factors
• Adverse selection between exchange and outside marketo Exchange plan standards may differ from plans outside
exchangeo “Grandfathered plans”o Self-insured health plans have expanded to smaller
employers
• Between plans inside the exchangeo Different plan offerings by insurers may be more popular
with different individuals
Adverse Selection• Strong and clear direction to exchange governing
boards and managers to create an active and ongoing process to guard against adverse selection
• Regulate the individual and small group market identically inside and outside of the exchange.
• Sophisticated but practical risk adjustment system: adjusts risk among insurers inside and outside the exchange to discourage adverse selection against and within the exchange.o Utah has implemented a “prospective” risk adjustment
system that encourages insurers to participate• A larger exchange generally will reduce the risk of
adverse selection
Role of Brokers
• No brokers could lower costs• Different roles of brokers for individuals and small
employerso Communication with employeeso Brokers provide other products and services to
employers• Historical experience of exchanges and pools has
found brokers necessary• Middle ground – defining the new roles and costs
of brokers under the exchangeo Differentiate between individuals and employers
Cost Containment
Helen Darling, president of the National Business Group on Health, also said during the HHS panel discussion that the exchanges could serve as a "force for transformation in the health care system," one that could lead to a primary care-based system.
"If we take overuse, waste and inappropriate nonevidence-based medicine out of the health care system, we will have a lot more money to pay for all of the things we have already committed to pay for," said Darling. "We shouldn't waste this moment."
Cost Containment
• Large exchange -- 20% of market • Active purchaser
o “Clearinghouse” model unlikely to drive lower costso Selective plan offering can drive change
• Plan rating system that works for employers and employees
• Employer indexing to base health plan• Exchange should set “high standards” for insurers,
including use of innovative provider payment systems to improve quality and reduce costs
• Develop prevention & wellness programs that fit small employers
Other Options & Issues
• Healthcare co-opso Interest by employers as well as consumers
• OPM and national plans – special role in small states and non-competitive markets
• Large employerso Self-insured plans have adverse selection riskso “Free choice” voucher may prove successfulo All employers have stake in exchange potential to drive
delivery system reform
General Resources - Exchanges
• National Association of Insurance Commissioners (NAIC) has special committees implementing healthcare reform-exchanges:o http://www.naic.org/committees_b_exchanges.htm
• Prof. Tim Jost and Commonwealth Fund reports:o http://www.commonwealthfund.org/Content/Publications/Fund-Reports/2010
/Jul/Health-Insurance-Exchanges-and-the-Affordable-Care-Act.aspx• Recent: California enabling legislation for their state exchange:
o http://www.itup.org/Reports/Health%20Reform/ExchangebillsSummaries08242010FINAL.pdf
• HHS office of healthcare reform (OCIIO) exchange conference: o http://www.hhs.gov/ociio/initiative/index.html
• Jon Kingsdale former director of the Massachusetts Connector has produced a 2010-2014 exchange timeline for states:o http://www.rwjf.org/files/research/66489.pdf
Exchange Models in Action
• Massachusetts Connector – largest individual exchange and growing small employer exchange:o https://www.mahealthconnector.org/portal/site/connector/
• Connecticut (CBIA) – largest and oldest small employer exchange:o http://www.cbia.com/ieb/er/AboutHC.php
• Utah exchange – newest small employer exchange has just expanded operations:o http://www.exchange.utah.gov/
• 8 million federal employees, retirees and family members choose plans from FEHBP exchange:o http://www.opm.gov/insure/health/planinfo/index.asp
Info for Small Businesses
• Frequently asked questions:o http://smallbusinessmajority.org/hc-reform-faq/index.php
• Small business healthcare reform summary:o http://smallbusinessmajority.org/_docs/resources/
SBM_whats_in_it_for_small_biz.pdf
• For more information:o (866) 597-7431 or [email protected]