In a recent email from Aetna, Aetna has come forward with a new change for those people that have Aetna or plan on getting it, whether individual or group.  Good news!  Your children who still live with you can also stay on your insurance until they finally marry the neighbor’s kids and get off of your back! We know many families are worried about their dependents losing medical coverage when they graduate from high school or college or otherwise age out of coverage. Health care reform will address this issue nationwide later this year, when new regulations will go into effect. In keeping with the spirit of health care reform, Aetna will work with our customers to extend coverage to their medical plans’ current dependents ahead of schedule. This means current dependents under the age of 26 would not have to leave their plans when they would otherwise age out or are no longer full-time students (including those who would have lost eligibility effective May 31, 2010). Note: that this would not include reinstatement of dependents who previously aged out of their plan. It also does not affect dental, vision, standalone pharmacy or other benefits..

For individual medical plans Aetna will continue coverage effective June 1, 2010 for dependents under age 26 currently covered on a parent’s medical plan. Aetna will not change the plan’s premium until renewal. Regardless of whether a plan makes this change ahead of schedule, health care reform is bringing changes to all plans soon. On the next renewal date on or after September 23, 2010, all medical plans must cover all dependents up to age 26 (and older for plans in states that mandate coverage above age 26). This may include dependents who are not currently enrolled in the plan, in accordance with regulations. We will be able to tell you more when the federal government issues regulations telling insurers and employers how this must be administered. We are pleased to offer our plan members the ability to keep their dependents insured. This is one step toward the goal of health care coverage for all Americans. If you have questions about how this will affect individual members who are interested in making this change ahead of the health care reform law, please contact your Aetna representative as soon as possible.

Individual Health Insurance Quotes

Rate Increase Products

• Individual U65 BlueChoice®,
• BlueSelect®
• Florida Farm Bureau
• BlueOptions® Products
• Large Group
• Small Group
• Individual Under 65
• Medicare
• Group Medicare

If you are a Blue Cross of Florida policy holder, now is  a good time to fill out the quote form above and start shopping health insurance plans!

Here is the agency email received by agents to give us a heads up of the coming news so we can break it to you our trustful clients.

The purpose of this bulletin is to provide you with information on the upcoming rate increase for all Individual Under 65 BlueChoice®, BlueSelect®, Florida Farm Bureau and most BlueOptions® products. (This excludes BlueOptions Temporary
Plans 562-563, all Hospital-Surgical products and GoBlue.) This year’s implementation continues to include the alternate offer process and the transition to the restructured rate environment for impacted members. Carefully review the following
information.

And here are some relative estimations,

Rate Increase Percentage, Effective Date & Implementation: The Office of Insurance Regulation (OIR) approved an 11.2% rate increase for BlueChoice (Underwritten & Guaranteed Issue), BlueOptions (Underwritten and Guaranteed Issue),
BlueSelect and Florida Farm Bureau products. The new rates are effective June 1, 2010 and will be implemented based on the subscriber’s first paid-to date that falls on or after June 1. Approximately 197,000 contracts representing 319,000
members will be impacted by this rate action. The last rate increase experienced by these members occurred June 1, 2009.

How you will find out

Customer Mailings: The first round of rate increase notification packages will be mailed April 13-16, 2010. These notification packages will be mailed using a staggered approach with daily mailings scheduled to continue through the third
quarter of 2010.

Your Choices

Remember, these letters were addressed to us, so these instructions are to agents not to policy holders.

Alternate Product Offer Including Rate Quote

In conjunction with this rate increase we are continuing the Alternate Offer program. This process has been very successful and has enabled us to retain over 95% of customers who contact us. With Alternate Offer, we suggest a
specific lower cost alternate insurance plan to the subscriber and we include the monthly premium that will apply to that subscriber’s coverage if they choose to transfer to the alternate product. This immediately displays to them the
monthly premium savings available.

Monthly Premium Criteria (Underwritten Customers Only)

If the monthly premium for the alternate product is equal to or less than the subscriber’s monthly rate today (pre-rate increase), then the customer will receive a specific Alternate Offer (presuming other criteria are satisfied).

If the monthly premium for the alternate product is more than the subscriber’s monthly rate today (pre-rate increase), the customer will not receive a specific alternate offer. Their letter will contain general verbiage around other lower
cost products that are available and will encourage them to contact us.

The Alternate Offer process was designed and built to support all Individual Under 65 products. There is a variety of different scenarios requiring different letters. All letters have been assigned unique letter codes that appear at the
bottom of each letter.

Depending on which rate increase letter you get, the alternative products are listed below.

A

. BlueChoice with optional maternity if the Alternate Offer is BlueChoice. The suggestion will be to increase their deductible in BlueChoice.
. BlueChoice without optional maternity when the Alternate Offer is BlueOptions.
. Most BlueOptions & BlueSelect Plans (with or without optional maternity).
. Most BlueOptions HSA-compatible plans.
. Florida Farm Bureau (FFB).

D

BlueChoice with optional maternity when the Alternate Offer would be BlueOptions. This letter does not include a specific Alternate Offer because the structure of the optional
maternity benefit available with BlueOptions is entirely different than what is available with BlueChoice. Further, there are two different BlueOptions optional maternity benefits
available with different and separate deductible amounts. Customers are encouraged to contact us for more information.

H

Guaranteed Issue (Choice & Options). There are no alternate products for this population.

The above categories represent the majority of subscribers involved in this rate action.

B

Criteria for alternate offer not met (i.e., the rate for the alternate offer product is higher than their pre-rate increase premium, they changed products within the last 180 days, they were a new sale within the last 180 days, etc.)

C

Current product is a non-HSA plan and the Alternate Offer would be an HSA-compatible plan.

F

. The current product is a non-HSA compatible plan with optional maternity and the alternate offer would be an HSA-compatible plan. This letter does not include a specific Alternate Offer. While enrollees are eligible to transfer into an HSA-compatible plan, optional maternity is not available with the HSA-compatible plans.
. BlueOptions Plans 81 and 98 (with or without optional maternity).
. Highest deductible HSA-compatible Plans with BlueRx Discounts Program

G

BlueOptions MyBasic Plans 82 & 582.

Sample letters are attached for your reference. Where an Alternate Offer is made, the applicable Benefit Authorization
Form and a Business Reply Envelope will be included in the package.

Restructured Rates

Impacted BlueChoice and BlueOptions customers will continue to be transitioned into the restructured rate environment. This transition plan was negotiated with and approved by the OIR. As a reminder, rate restructuring is a required routine
industry practice that insures continued financial integrity and regulatory compliance of our rates. It is revenue neutral to BCBSF. To ensure our rates remain correct, appropriate and consistent, we analyzed the rate relationships between
different benefit plans, different deductibles, different geographic areas, etc., along with structural factors for age, gender, county, etc. This detailed review resulted in the development of restructured rates that brought the entire state into
alignment so that everyone pays a fair and equitable premium for the coverage they maintain. Virtually every rate at every age in every county changed. On Oct. 1, 2006, restructured rates were implemented for all new sales into Individual
BlueOptions and BlueChoice products that occurred on or after that date. All new IU65 products introduced since that date have been developed at the Restructured Rate level.

Members enrolled prior to 10/01/06 are in the non-restructured rate environment. These are the customers who will be impacted by the transition and they will receive the following additional reminder message printed on the reverse of their
rate adjustment notification letter.

NOTICE OF RATE RESTRUCTURE

To ensure you’re receiving health insurance rates that are appropriate, accurate, and fair, our BlueChoice and BlueOptions Individual Under 65 products have undergone a rate restructure. This is a standard industry practice. It ensures your
premiums best reflect the appropriate rates for your age, gender, and county where you live. Rate restructuring is different from rate changes, which are typically rate increases due to rising medical costs, trends, and age. The Office of Insurance
Regulation has approved this rate restructure. The restructured rates will continue to be implemented gradually over the next several years.

Inquiry Support

Product specific toll-free numbers are provided in the rate notification letters. These lines will be staffed by Intermedia, an external vendor that has supported rate increase activities for the Individual Under 65 products for several years and is very familiar with our products, retention practices and all aspects of this initiative.

Rates
Rates will be available on accessBlue by close of business on Wednesday, April 14, 2010.

He is also a doctor.   This is the transcription of a speech he gave right after health reform was passed.  See if you can find any point that you can debate.  I couldn’t.

Following months of heated public debate and aggressive closed-door negotiations, Congress finally cast a historic vote on healthcare late Sunday evening. It was truly a sad weekend on the House floor as we witnessed further dismantling of the Constitution, disregard of the will of the people, explosive expansion of the reach of government, unprecedented corporate favoritism, and the impending end of quality healthcare as we know it.

Those in favor of this bill touted their good intentions of ensuring quality healthcare for all Americans, as if those of us against the bill are against good medical care. They cite fanciful statistics of deficit reduction, while simultaneously planning to expand the already struggling medical welfare programs we currently have. They somehow think that healthcare in this country will be improved by swelling our welfare rolls and cutting reimbursement payments to doctors who are already losing money. It is estimated that thousands of doctors will be economically forced out of the profession should this government fuzzy math actually try to become healthcare reality. No one has thought to ask what good mandatory health insurance will be if people can’t find a doctor.

Legislative hopes and dreams don’t always stand up well against economic realities.

Frustratingly, this legislation does not deal at all with the real reasons access to healthcare is a struggle for so many – the astronomical costs. If tort reform was seriously discussed, if the massive regulatory burden on healthcare was reduced and reformed, if the free market was allowed to function and apply downward pressure on healthcare costs as it does with everything else, perhaps people wouldn’t be so beholden to insurance companies in the first place. If costs were lowered, more people could simply pay for what they need out of pocket, as they were able to do before government got so involved. Instead, in the name of going after greedy insurance companies, the federal government is going to make people even more beholden to them by mandating that everyone buy their product! Hefty fines are due from anyone found to have committed the heinous crime of not being a customer of a health insurance company. We will need to hire some 16,500 new IRS agents to police compliance with all these new mandates and administer various fines. So in government terms, this is also a jobs bill. Never mind that this program is also likely to cost the private sector some 5 million jobs.

Of course, the most troubling aspect of this bill is that it is so blatantly unconstitutional and contrary to the ideals of liberty. Nowhere in the constitution is there anything approaching authority for the Federal government to do any of this. The founders would have been horrified at the idea of government forcing citizens to become consumers of a particular product from certain government approved companies. 38 states are said to already be preparing legal and constitutional challenges to this legislation, and if the courts stand by their oaths, they will win. Protecting the right to life, liberty and pursuit of happiness, should be the court’s responsibility. Citizens have a responsibility over their own life, but they also have the liberty to choose how they will live and protect their lives. Healthcare choices are a part of liberty, another part that is being stripped away. Government interference in healthcare has already infringed on choices available to people, but rather than getting out of the way, it is entrenching itself, and its corporatist cronies, even more deeply.

Most physicians are now losing money every time a patient walks through the door after counting salaries and office expenses including outrageous malpractice premiums.  The solution?  Most doctors will end up dropping all of these patients and most are already not accepting any new patients.  And guess what?  They are getting ready to cut Medicaid and Medicare payments again right now!

In an appeal to Congress right after a health reform meeting, Obama admitted that reimbursements rates will need to be adjusted in order to extend Medicaid to over 15 million Americans which is part of the current, ambitious health reform bill.

As of 2008, nearly 3/4 of rates paid by Medicare were less then private health insurance companies.   Right now, most doctors are only taking existing Medicaid patients not new ones.  So how on earth is the health reform bill not only going to give Medicaid to 15 million more Americans, but how are they also going to increase payouts to doctors, so that Medicaid members will not have to wait months to see a doctor?

Right now, Medicaid has 47 million members and will soon be over 60 if health reform passes.  Waits for Medicaid members for an appointment at some of our poorer city’s federally subsidized health clinic,  have lengthened to four months from six weeks in 2008 in light of the recession.

So where are all of these patients going instead of the doctor?  If you guessed the emergency room, then you should buy yourself a cane to match your hat, and by the way you are excellent at this game.   And guess who pays for these er visits?  If you guessed the people that have health insurance, then you should finish off your outfit as you got all three correct.

In any case the text of the reconciliation act for the health care bill was posted today on the House Rules Committee Web site, and again on my site.  But this document is basically legal nonsense, and so I posted the explanation below.

For the record I am quite unsure about passing this bill, if it will be a good thing or a bad thing.  Though I am certain that doing nothing is no worse then passing this.  As the old saying goes, “if you don’t have you health, then what do you have?”  Well right now, close to 50 million have no access to health care or health insurance.  And that is disgusting.  This bill will for a fact cover at least 30 million of that 50 million.  And even if it causes the deficit to rise and our dollar to continue its long descent into the toilet of history, this can’t be bad.  Iraq and all of our Middle East meddling?  That is bad, and worse?  A waste of money and lives.  No one argues that anymore.  I used to be a Republican, no longer.  Being a Republican right now means allowing your friends, neighbors, and family to have no health coverage.  Everyone deserves access to health care.  And while this bill might not go far enough in fixing our health care system it is 100% a step forward.  The Republican plan (if it even exists) is to do nothing, and that is unconscionable.

H.R. 4872, THE HEALTH CARE & EDUCATION AFFORDABILITY RECONCILIATION ACT of 2010 SECTION-BY-SECTION ANALYSIS

I am asking you to donate money if you support health reform to this great organization.  Perhaps you need to read how much money the health care industry has dumped into defeating the bill.

Support the Public Option

After Senator Durbin announced that Senate Leadership would get the votes needed to pass any reconciliation bill sent to the Senate from the House — even if it included a public option — Speaker Nancy Pelosi and other House Democrats spent all weekend still claiming that the Senate doesn’t have the votes.

The Senate has 51 votes for a public option and we can prove it.

Today, we’re releasing this new ad pressuring Speaker Pelosi and others in Congress to put a public option in the new House bill. They need to see this ad right away so they don’t kill the public option by mistake.

PLEASE CONTRIBUTE $20 RIGHT NOW TO KEEP THIS AD ON THE AIR

The House may vote this week on health care — so we need to act fast.

If Speaker Pelosi puts a public option in the bill, the over two million members of Democracy for America, Progressive Change Campaign Committee, and CREDO Action will help lock down the 216 votes needed to pass healthcare reform in the House.

That’s why we’re running this ad at least 100 times in D.C. before Wednesday. The more we raise to air it, the more members of Congress will see it on MSNBC and CNN before it’s too late.

CLICK HERE TO VIEW THE AD

This is the end game. We can win this if Democrats in Washington have the will to lead.

Working together, we’re helping deliver the votes they need to pass real reform. Thank you for everything you do.

-Jim

Jim Dean, Chair
Democracy for America

So this article is to awaken you America, to this growing health care crises, so that you will spring into action, like an angry superhero.  Here is the sad truth….

The number of uninsured Americans could grow by 10 million people in just five years, and spending on government health care programs for the poor could more than double by 2020, if there are not significant reforms to the current health care system, according to a new analysis just released from the Robert Wood Johnson Foundation (RWJF).
Urban Institute researchers used their Health Insurance Policy Simulation Model to assess the changes in coverage patterns and health care costs that will occur nationally from 2010 to 2020 if major reforms are not enacted. The authors provide a range of scenarios to assess the effects. In the worst case:
• By 2015, there could be 59.7 million people uninsured. The number could swell to 67.6 million by 2020. An estimated 49.4 million individuals were uninsured in 2010.
• Middle-class households would suffer most without reform, with the percentage of these families without health coverage rising from 19 percent today to 28 percent at decade’s end.
• As premiums nearly double, employees in small firms would see offers of health insurance almost cut in half, dropping from 41 percent of firms offering insurance in 2010 to 23 percent in 2020.
• For employers who continued to offer health insurance, more of the costs would likely be passed on to workers. At the same time, individuals and families would face higher out-of-pocket costs for premiums and health care services. Their spending will jump 34 percent by 2015 and 79 percent by 2020.

The study from the Urban Institute also examined three alternative scenarios:

1. Worst case – continuing high levels of unemployment; slow growth in incomes; high growth rates for health care costs;

2. Intermediate case – somewhat faster growth in incomes, but a lower growth rate for health care costs; and

3. Best case – full employment; faster income growth; even slower growth in health care costs.

Under all three economic scenarios, the analysis finds that middle-class families will be hardest hit, as by 2020, they will compose over half of the uninsured population in America. Specifically, the researchers explored the following question on the effects that failure to reform the health care system would have on the composition of uninsured:

What will the composition of the uninsured look like in ten years compared to now if health reform fails in terms of income, age and health status?

• Middle-income families will be hardest hit. In the worst case, the uninsured rate for those in families with incomes from 200 to 399 percent of the federal poverty level (FPL) would rise by 9 percentage points, from 19 percent to 28 percent in 2020. The number of uninsured people in this income group would increase by 7.3 million people. In the best case, the uninsured rate would rise to 23 percent. The rate of uninsurance for families with incomes 400 percent of the FPL or more would also increase. The number of uninsured families in this income level would increase from 7 percent in 2010 to 13 percent in the worst case, and 9 percent in the best case in 2020.

• A larger share of the uninsured would come from middle- and higher-income families. In the worst case, more than half of the uninsured will have incomes of more than 200 percent of the FPL in 2020, whereas such families currently comprise an estimated 44 percent of the uninsured. Even in the best case, the uninsured will increasingly consist of middle- and higher-income Americans. Being mostly ineligible for Medicaid or the Children’s Health Insurance Program (CHIP), middle- and higher-income families who lose private coverage would become uninsured, whereas many eligible lower-income individuals would obtain coverage through Medicaid or CHIP.

• The rate of uninsurance among lower-income families will remain at high levels. In the best and worst cases, those in families with incomes less than 200 percent of the FPL will continue to have high uninsurance rates of 33 to 34 percent. Uninsurance rates would remain stable as eligible individuals increasingly shift to public coverage. This assumes that states maintain Medicaid eligibility at current levels.

• The uninsured rate would increase significantly for older adults. For adults ages 45 to 54, the rate would increase from 17 percent in 2010 to 24 percent in 2020 in the worst case. For adults ages 55 to 64, the uninsured rate would increase from 15 percent in 2010 to 18 percent in the best case, and 22 percent in the worst case in 2020. While the value of health insurance increases as people get older, many over age 45 would lose access to coverage through their employers while nongroup premiums would become increasingly unaffordable. For children ages 18 and below, Medicaid and CHIP would limit the rise in uninsurance rates to a 3 percentage point increase in ten years in the worst case.

The Changing Ranks of the Uninsured

• The uninsured population will shift somewhat toward older age groups. Young adults ages 19 to 24 would have the highest rate of uninsurance in each year and scenario. They will, however, become a smaller share of the uninsured population in 2020 in both the best and worst cases. The share of uninsured ages 35 to 64 will be higher in 2020 in the worst case, with only minor changes in the best case.

• Uninsured rates will rise for those in better health. Among people in excellent, very good or good health, the uninsured rate would rise from 18 percent in 2010 to 20 percent in the best case, and 24 percent in the worst case. Currently, those in fair or poor health are more likely to be uninsured than those in better health. Among people in fair or poor health, the uninsured rate would remain fairly stable over time at 22 percent. This is because those with higher health care needs who currently have coverage would be more likely to continue their coverage as premiums increase. As a result, those who continue to have private health insurance will be an increasingly less healthy population in 2020.

Impact On Medicaid and CHIP (Childrens Health Insurance Program)

1. Worst case – continuing high levels of unemployment; slow growth in incomes; high growth rates for health care costs;

2. Intermediate case – somewhat faster growth in incomes, but a lower growth rate for health care costs; and

3. Best case – full employment; faster income growth; even slower growth in health care costs.

Under all three economic scenarios, the analysis finds that an increasing burden would be placed upon existing public insurance programs like Medicaid and CHIP. Specifically, the researchers explored the following questions on the effects that failure to reform the health care system would have on Medicaid and other public insurance programs:

How many people will obtain coverage under Medicaid given changes in incomes, health care costs and declines in employer coverage?

• Medicaid and CHIP coverage would increase substantially. Enrollment in the programs would increase from 45.4 million in 2010 to 58.2 million in 2020 in the worst case scenario, an increase of 12.8 million nonelderly Americans covered under public programs. Even in the best case, enrollment would increase by 7.2 million persons.

How much will spending on public insurance (e.g. Medicaid and CHIP) increase?

• Medicaid and CHIP expenditures on acute care services for the nonelderly would grow considerably. The increase would happen both because of increased enrollment and because of higher health care costs. In the worst case scenario Medicaid and CHIP spending for the nonelderly would increase from $278 billion in 2010 to $576 billion in 2020, an increase of 108 percent. In the best case, spending would increase by 59 percent to $442 billion. This assumes states maintain current eligibility levels. If they do not, Medicaid enrollment and spending will be lower but uncompensated care costs will be higher.

Introduction

While the health reform debate continues in Washington, both the House and the Senate proposals include the establishment of health insurance exchanges to help facilitate the purchase of insurance for individuals and small employers. Although the bills differ in terms of the structure and number of exchanges— particularly whether to establish a single, national exchange or to support the creation of state and regional exchanges, as well as the larger policy issue regarding the creation of a public health insurance option to compete against commercial insurers—both proposals feature an insurance exchange as a central element of health reform.

Supporters of the exchange model view it as a way to organize the market, provide individuals and small employers with a central source of information, enable the comparability of benefit designs, administer public subsidies, facilitate the purchase of insurance through standardized enrollment processes, and improve competition among carriers. At its very core, an insurance exchange seeks to alter competition in the health insurance market from one based on avoiding risk to one based on price and quality.1

The success of Massachusetts’s health reform law in covering upwards of 95 percent of all residents has convinced many people that an exchange, or in the parlance of Massachusetts, a “connector,” is critical to expanding health coverage. However, whether—and how—an exchange can be instituted will vary from place to place, and its value will depend on the structure and role of the proposed exchange.

State-based exchanges, as opposed to a single national exchange, are the focus of this brief.  Proponents of a national exchange argue that it would be better able to exercise bargaining power to reduce premiums and lower administrative costs.  However, the establishment of a national exchange would likely require standardization of insurance rules across the states, which would bring with it a host of additional policy decisions, as well as various implementation and operational issues.

This Issue Brief provides readers with an overview of the potential role of a health insurance exchange, state-specific issues that should be considered before establishing an exchange, and the different ways in which an exchange might be structured and operated.  Regardless of the outcome of national health reform, a number of states are contemplating creating a health insurance exchange as a way to improve the individual and small group markets.

In addition, this brief makes no assumptions regarding potential changes to individual and small group health insurance rules and regulations (e.g., guaranteed issue requirement, elimination of medical underwriting, no pre-existing condition exclusions or waiting periods, restrictions on allowable rating factors, limitations on rate bands, etc.).  Nor does it assume either an individual mandate to purchase health insurance or an employer play-or-pay requirement regarding the offering of employer-sponsored insurance, both of which are major elements of the national health reform proposals.

Certainly, changes to the insurance rules could have a material effect on the availability and affordability of health insurance. An individual mandate and/ or an employer play-or-pay requirement would alter the health insurance markets across all of the commercial segments (i.e., individual, small group and large group).  However, these changes would impact states in different ways depending on each state’s current insurance rules and regulations, the level of health coverage and rate of uninsured, and the extent to which employers are offering employer-sponsored insurance.

Nevertheless, the issues associated with establishing a health insurance exchange, and the groundwork that states can take in preparation for the possible development of an exchange, can be undertaken without regard to these or other changes that may occur as a result of federal health reform.

Developing a Baseline

The first step state policymakers should take in deciding whether to create an exchange is developing a thorough understanding of the existing sources of coverage, documenting the ways in which health insurance is obtained—for publicly-subsidized programs as well as commercial health insurance—and clearly delineating the problems or issues that an exchange is intended to address.  By assembling a strong foundation of knowledge, policymakers can then decide whether, and how best, to structure an exchange that meets the needs of state residents and extends health coverage to the uninsured in the most efficient manner.

A comprehensive understanding of the state’s current health insurance markets should include not only a thorough examination of the uninsured, but also an examination of the currently insured, recognizing that people move in and out of health coverage—as well as across different types of coverage (i.e., public and private)—throughout the year.
The analysis of the uninsured should include:

• Estimates of the total number of people who lack health coverage;
• Demographic information (i.e., age, gender, marital status, race/ethnicity), as well as any geographic/regional variations in the distribution of the uninsured;
• Family income;
• Employment, including a breakdown of the uninsured who are employed based on the size of their employer (i.e., number of employees), and whether they are offered employer-sponsored insurance; and
• Eligibility for publicly-subsidized health coverage programs.

This information is important and useful for a number of reasons, not least of which is the value in helping to quantify the number of people who do not have access to health coverage, determining how effectively current public programs are reaching the intended target populations, and developing projections of the potential cost of expanding publicly-subsidized coverage.  Detailed information on the uninsured can be used to target outreach and enrollment efforts for existing health coverage programs, to design new health insurance products and programs, and to better understand the population that could be served by an exchange.

In Massachusetts, detailed information on the uninsured was used to develop the health reform law, to establish the specific provisions of the various health insurance programs, and throughout implementation to target outreach efforts to particular groups of residents.  The data used by Massachusetts policymakers included publicly available data (e.g., US Census Bureau’s Current Population Survey, Massachusetts Department of Health Care Finance and Policy), as well as data prepared by researchers funded through the Blue Cross Blue Shield of Massachusetts Foundation’s “Roadmap to Coverage” initiative.

The Massachusetts data showed that a disproportionate percentage of young adults lacked health insurance and these data were subsequently used to persuade lawmakers to enact a legislative change that allowed commercial carriers to develop lower-cost “Young Adult Plans.”  These plans were allowed to offer slightly slimmer benefits than standard commercial insurance and were made available to individuals ages 18 to 26 who did not have access to subsidized coverage, either through an employer or through public programs.

The data were also used by the Connector to inform its marketing strategy, in particular the Connector’s decision to partner with the Boston Red Sox as a way to reach men and young adults, two groups with higher than average rates of uninsurance.  In addition, the data were used to estimate enrollment for the various publicly-subsidized health insurance programs, including programs that were in effect prior to health reform as well as the newly-established health insurance programs.

A second phase of the analysis should include a thorough review of the existing publicly-subsidized health insurance programs, including the penetration (i.e., take-up rates) of the different programs, the distribution methods (i.e., outreach and enrollment) for each program, and a review of how existing programs may complement an exchange model.  In particular, states should carefully review public programs that provide premium subsidies for lower-income individuals who work for small employers; programs that are designed to assist people who are recently unemployed (e.g., COBRA premium subsidy programs); and other programs geared toward helping working adults obtain coverage.

A number of states have established premium subsidy programs for lower-income individuals who work for small employers (e.g., Maryland’s Health Insurance Partnership, Insure Oklahoma, and Massachusetts’ Insurance Partnership).  These programs subsidize the employee’s share, and some programs also help subsidize the employer’s share, of the premium for employer-sponsored insurance.  It is important to understand how these programs might be impacted by the establishment of an exchange, particularly if the exchange provides premium subsidies to help lower-income individuals purchase insurance.

Not only will it be important to understand the eligibility rules for the various public programs, but it will also be critical to recognize how premium subsidies for similarly-situated individuals might compare across these programs. For example, programs that subsidize employer-sponsored insurance offered by small employers will need to be matched against an exchange-based program that provides subsidies for the purchase of individual insurance, as these programs would likely be targeted toward many of the same people.  States will need to understand how the programs interact and structure the programs so that they are complementary.  There may also be opportunities to consolidate or eliminate programs, as well as opportunities to streamline program administration.

The final step of the baseline analysis should include a thorough review of the commercially insured, in much the same way that the detailed examination of the uninsured was undertaken.  For many states, detailed information on the insured population may not be as readily available as information on the uninsured.  For some of the metrics noted below, it may be necessary to piece together information from a variety of sources (e.g., state insurance agencies, commercial health plans, private researchers), or states may need to sponsor new research to obtain this information.

The review of the insured population should include the following:

• Demographic profile of the insured across each of the major market segments (i.e., individual, small group, large group);
• Geographic/regional variations in the coverage rate of the commercially insured;
• Number of carriers operating in the market;
• Breakdown by size of employers that offer insurance;
• Types of insurance provided by employers (i.e., benefit design, cost-sharing arrangements);
• Premiums and the percentage paid by employees and employers;
• Employees’ take-up rate of employer-sponsored insurance by size of employer; and
• Manner by which individuals obtain coverage (e.g., directly from carriers, through a broker, using an intermediary, etc.).

Particular attention should be paid to the individual and small group markets. Policymakers will need to consider a number of issues in these market segments, including the rating rules and regulations; the extent to which these markets are functioning, what is working well, and what is not; the existence, operation and membership of high-risk pools; the number of carriers and types of health plans available; the manner by which commercial insurance is distributed (e.g., the role of insurance brokers, intermediaries, carriers, third-party administrators, etc.); and the sources and types of information available to individual and small group purchasers.

This information will be crucial in determining whether, how, and to what extent, an exchange might improve access to health insurance.  For example, in many parts of the country there is little competition among health carriers.  In these markets, what would be the role of an exchange?  Are there barriers to entry that could be lowered or eliminated by the establishment of an exchange?  Is it necessary to establish an exchange or can the market be improved through other means to encourage more competition among insurers?

In other states, commercial exchange-like entities may already be operating.  In these markets, private-sector intermediaries may provide small groups and, in some instances, individual consumers with a central point of access to compare health benefits and select a health plan from among a number of insurers.

For example, the Connecticut Business and Industry Association operates the Health Connections program, which enables small employers (i.e., firms with 3 to 100 employees) to offer their employees a number of health plans and health insurers from which to choose.  In Maryland, several third party administrators provide individuals and small employers with a central point of access to select from numerous health plans offered by a range of health carriers.

Policymakers also need to determine what is currently available in the market.  In states with already functioning private sector exchange-like entities, policymakers will want to consider whether there are opportunities to leverage the infrastructure and capabilities of existing intermediaries to improve the functioning of the individual and small group markets.

Finally, a recognition and understanding of the role of health insurance brokers is essential.  In most states, brokers play a central role in the purchase of health insurance, and their influence in the market should not be underestimated. However, brokers’ involvement may vary from state to state, and their role may differ between the individual and small group markets.

For example, prior to health reform in Massachusetts, brokers played no role in the purchase of health insurance by individuals, but they were heavily involved in the purchase of health insurance by small employers. Understanding the role played by health insurance brokers—and how they may support an evolving individual and small group market—could prove crucial to the success of an exchange.

Key Issues for an Exchange

Having established a strong baseline of information and an understanding of how the state’s health insurance market operates, policymakers will need to weigh various policy options in determining how an exchange might be structured to achieve the objective of extending health coverage to more residents; and how an exchange can help transform the individual and small group markets from competition based on avoiding risk into competition based on price and quality.

Defining the exchange’s roles and responsibilities is essential to determining what type of administrative structure is most appropriate. While an exchange can take many different forms, there are three basic models to consider:

1. market organizer and distribution channel;
2. selective contracting agent; and
3. active purchaser.

Market organizer and distribution channel: under this model, the exchange acts as an impartial source of information on health plans that are available in the market; provides structure to the market to enable consumers to compare health plans and purchase coverage; and serves as a broker of health insurance by handling premium billing and collection, as well as other administrative responsibilities on behalf of consumers and health carriers. Although not yet fully developed, the Intermediaries — also known as third party administrators or general agents  — provide administrative services, including processing enrollment, premium billing and collection, mid-year changes in enrollment or rate basis type, COBRA administration, and other administrative services. Unlike health insurance brokers, intermediaries do not sell insurance, although many intermediaries also have a brokerage business that does.

In the individual and small group markets, intermediaries handle a number of admin­istrative functions that for large employers are usually handled by the health carrier or the employer’s human resources staff.  Intermediaries are typically paid by the health carrier through retention of a portion of the premium.

Utah Exchange (www.exchange.utah.gov) provides an example of this type of model.
Selective contracting agent: this model includes many of the same functions noted above, but also attempts to influence the market and enhance competition by contracting with a select group of carriers and offering a limited number of health plans.  The exchange solicits health plans based on plan design parameters established by the administrators of the exchange.  However, the exchange does not necessarily negotiate premiums with the health carriers, but provides an endorsement of the health plans that it chooses to offer.  The Massachusetts Connector (www.mahealthconnector.org) uses a selective contracting approach for its commercial offerings (i.e., Commonwealth Choice).

Active purchaser: an exchange might also play a more active role in the market by establishing plan designs and purchasing health insurance much like a large employer procures health benefits on behalf of its employees.  This model is predicated on the exchange covering a large group of members, comprised of a relatively healthy risk pool that enables insurers to offer competitively-priced plans.  Many of the health purchasing cooperatives that were established in the 1990s, such as California’s PacAdvantage (originally called the Health Insurance Plan of California) and the Texas Insurance Purchasing Alliance (TIPA), are examples of active purchaser models.

The approach taken—market organizer and distribution channel, selective contracting agent, or active purchaser— will dictate the administrative structure necessary to support the exchange. In particular, the more the exchange is actively involved in the market, the more likely the need to establish an entity with adequate staff to operate the exchange or to designate an existing agency to serve as the exchange administrator.

In addition to its impact on staffing levels, the exchange’s roles and responsibilities will influence its governance structure. An exchange that supports the existing market, has no regulatory responsibilities, and does not actively participate in the selection of health plans likely will not require a significant governing authority to oversee its activities.  However, if regulatory responsibilities are handed to the exchange, and if the exchange acts more like a purchaser of health plans, there may be greater demand for a more public governing body.

For example, the Massachusetts Connector Authority was given a number of regulatory responsibilities—e.g., establishing minimum creditable coverage standards for the individual mandate, approving the benefits and income-based premium schedules for subsidized health coverage, adopting an affordability schedule, and setting the penalties for not having health insurance.  This led the state legislature to establish a public governing board for the Connector Authority, comprised of ex-officio public officials and individuals appointed by the governor and attorney general.  In contrast, the Utah Exchange has no comparable regulatory authority, serves primarily as a market organizer and distribution channel, and is housed within the Governor’s Office of Economic Development.

Funding and Operating an Exchange

Even if the exchange is set up as a “simple” market organizer and distribution channel—as opposed to an active purchaser of health insurance—the services provided by the exchange may require an initial investment of resources as well as an ongoing stream of revenue to fund operations.  The level of upfront investment will depend, in part, on the types of services currently being provided in the market and the extent to which existing services may be leveraged and utilized by the exchange.
An exchange that is responsible for structuring the market, providing consumers with an ability to compare health plans, generating premium quotes, and enrolling individuals and/ or groups in coverage will require information technology infrastructure and customer service staff. Whether the infrastructure and personnel are built or bought—i.e., established and operated by the administrator of the exchange or outsourced to a third party—there will be significant back-office infrastructure needed to operate the exchange.

In addition to assisting consumers with initial health plan selection and enrollment responsibilities, a fully-functioning exchange will need to provide ongoing account management and maintenance (e.g., monthly premium billing and collection, processing changes in coverage status, delinquent payment notification, renewals, etc.).  The exchange administrator will need to establish—or work with an entity that has already established—electronic data interchanges with the health carriers in order to generate quotes, process enrollments, and handle myriad administrative responsibilities.

If the exchange is also responsible for administering public subsidies to help lower-income individuals purchase insurance, the exchange will need to establish an eligibility determination process or utilize an existing means of screening applicants for subsidized health coverage (e.g., the state’s Medicaid agency). The costs associated with determining eligibility for subsidized coverage—as well as handling eligibility redetermination processes and administering program integrity measures—may also need to be factored into the cost of operating the exchange.

The amount of capital needed to set up an exchange will depend on the availability and capabilities of existing commercial intermediaries, as well as the ability of public agencies to process eligibility applications for premium subsidies—and the extent to which these resources are leveraged.  Regardless, funding ongoing operations will require either an annual appropriation, retaining a portion of the premium for coverage obtained through the exchange, or possibly a combination of the two.

The Massachusetts Connector received an upfront appropriation of $25 million, with ongoing operations funded through retention of a portion of the premiums for subsidized and unsubsidized health coverage purchased through the Connector. In the private sector, intermediaries and health insurance brokers are typically paid through retention of a portion of the premiums paid by enrollees.  The fees retained by these administrative entities typically range from 3 to 5 percent of premiums.

Building or Renting Administrative Functions

In a number of states, private sector intermediaries provide administrative services on behalf of health insurers and consumers.  These entities typically operate in the individual and small group markets.  Often working in concert with health insurance brokers, the intermediaries generate premium quotes, process enrollments, bill, collect and remit premiums, and provide a range of post-enrollment administrative functions.  In essence, these intermediaries take over account management functions that are otherwise handled by a health carrier and/ or the benefits management office of mid-sized and large employers.

In those states with private intermediaries, public exchange administrators will need to decide whether, and how best, to leverage the capabilities of these businesses. There will likely be significant advantages to contracting with one or more existing intermediaries, not least of which are the infrastructure and the data interchanges that these companies have established with the health carriers.  This will be particularly relevant for exchanges that intend to offer a variety of health plans from a number of carriers.  It is worth noting that despite different approaches to the exchange model, the Massachusetts Connector and the Utah Exchange use private sector intermediaries to administer their commercial insurance offerings.

The exchange administrator may need to decide whether to contract with one intermediary or utilize the services of multiple intermediaries.  This decision will depend, in part, on the role of the exchange and the capabilities of the private intermediaries.  Massachusetts contracts with one intermediary for its commercial insurance offering and a separate intermediary for its subsidized insurance program; Utah offers a number of intermediaries from which small employers may purchase commercial insurance.

The decision of whether and how best to utilize the services of existing private sector intermediaries will be affected by the roles and responsibilities of the public exchange, as well as the capabilities of these businesses.  Exchange administrators will need to determine which services can be handled internally, which should be outsourced, and which intermediaries are best equipped to provide the administrative services required.

Premium Subsidies and the Role of the Exchange

The health reform proposals being considered by Congress empower the exchange with administering a premium subsidy program to help lower-income individuals purchase insurance.  How the subsidized insurance program is designed will affect the structure and operation of the exchange.  There are two basic options with regard to a premium subsidy program: establish a separate Medicaid-like health plan with enrollment limited to individuals eligible for subsidized coverage; or provide premium subsidies to help individuals purchase health coverage in the commercial market.

Massachusetts adopted the former model. The Connector’s subsidized health plan, Commonwealth Care, is available to adult residents of Massachusetts with incomes at or below 300 percent of the Federal Poverty Level (FPL) who do not have access to other types of subsidized health coverage (e.g., Medicaid, Medicare, employer-sponsored insurance, etc.).3  This program is separate and distinct from commercial insurance offered through the Connector.

The Connector establishes the benefits schedules (i.e., services covered, point ­of-service cost sharing) and negotiates rates with the health carriers that choose to participate in the subsidized insurance plan.  Individuals eligible for subsidized coverage are then able to choose coverage from the participating carriers.  The services covered and the point-of-service cost sharing are the same for each plan type,4 although the monthly premium paid by the enrollee may vary depending on the rate negotiated between the health carrier and the Connector.  In addition to potential differences in monthly premiums, the major difference across the carriers is the provider network (i.e., which physicians and hospitals are included in the network).

The latter approach is the one that is most commonly discussed as part of national health reform.  Under this model, public funds would be made available to subsidize the premiums for lower-income individuals wishing to purchase health insurance in the commercial market.

One advantage of using public funds to subsidize premiums in the commercial market is that an individual would be able to maintain his or health plan when their income grows and they are no longer eligible for a subsidy.  In contrast, under the Massachusetts Connector’s Commonwealth Care program, once someone becomes ineligible for publicly-subsidized coverage they lose their health insurance and must purchase a new policy in the commercial market.

Nonetheless, an exchange that provides subsidies for commercial insurance will have a number of decisions to make in determining how best to structure the program.  For example, will the subsidy be available only for a select group of plans or for all commercial plans sold through the exchange? Will the subsidy be set as a fixed dollar amount based on the lowest cost plan available or will the subsidy be set as a percentage of the premium?  Will there be a pre-determined open enrollment period or will enrollment occur on a rolling basis? Policymakers will need to grapple with these and many other policy and administrative issues.

Outreach and Enrollment

Instituting an aggressive and pro-active outreach and enrollment campaign will be critical to generating sufficient enrollment in the health plans offered through the exchange, which in turn will largely determine the sustainability and success of the exchange.  This will be true for publicly-subsidized health coverage, as well as unsubsidized health insurance.

The fact that millions of Americans are eligible—but not enrolled—in (free) Medicaid coverage is an indication of the challenge that states will face in signing up people for coverage through the exchange, particularly for people who will be charged a monthly premium. While an individual mandate will certainly affect the take-up rate, policymakers must recognize that people will need information on the health insurance options available and their responsibility to obtain and maintain health coverage.
The Massachusetts experience is helpful in this regard. After health reform was enacted, the state undertook a multi-pronged outreach, education, and enrollment effort, utilizing state employees, community-based advocacy organizations, hospitals, community health centers, paid media, and public-service announcements, as well as pro bono private sector advertisements. As noted previously, a major part of the Connector’s marketing strategy included promotional activities and paid advertisements during Boston Red Sox games, in an effort to reach young adults and men, two groups that were disproportionately uninsured.  In addition, to jump-start enrollment in Commonwealth Care, tens of thousands of individuals who had been receiving care through the state’s free care pool were automatically enrolled in this new publicly-subsidized health coverage program.

However, even with a multi-million dollar outreach effort, Commonwealth Care enrollees who are charged a premium for health insurance are more likely to be older than enrollees who are provided free health insurance. As of November 2009—three years since the program’s inception—over 43 percent of Commonwealth Care enrollees in the highest income category (i.e., 200 percent to 300 percent FPL) are age 50 or older, compared to 26 percent of enrollees in the lowest income category (i.e., 150 percent FPL or less).  Conversely, only 11 percent of enrollees in the highest income category are 19–26 years old, while this age group comprised over one-third of enrollees in the lowest income category.

The importance of attracting a large and diverse risk pool, comprised of a broad mix of individuals with varying health care needs, will largely determine whether an exchange can effectively function and be sustainable.  The history—and the ultimate demise—of the insurance cooperatives and health purchasing alliances that sprang up in the early and mid-1990s provides ample evidence of the dangers of not attracting and retaining a large and diverse risk pool.5

While outreach and enrollment will be crucial for the success of the subsidized insurance program, the exchange will also need to attract a significant share of the unsubsidized individual and small group market.  In order for a commercial, non-subsidized health insurance exchange to survive, it will need to attract enough volume to create administrative efficiencies and be “risk neutral” in terms of the overall health status of the individuals and small groups purchasing coverage through the exchange.

The exchange, or an entity aligned with the exchange, will need to undertake both a broad public information campaign and a targeted marketing strategy to create awareness and generate customers.  This will require a significant, sustained, and multi-pronged approach.

The Risk of Adverse Selection

A well-organized and multi-faceted outreach and enrollment initiative will be necessary to inform individuals and to enroll a large and broad mix of people in the exchange.  The success of this effort will have ramifications for the sustainability of the program due to the impact that the health status of the population covered may have on the premiums of policies purchased through the exchange.

Publicly-subsidized insurance often faces little “competition,” in that most people eligible for public health insurance programs do not usually have alternative sources of coverage. And while people in good health may not sign up for publicly-subsidized coverage until they think they “need it,” even if it is free, commercial insurers face an even greater challenge attracting enough healthy people to offset and spread the cost of members with significant health care needs.  This is particularly true in the individual market.

Pro-active outreach and enrollment— along with an individual mandate—should help attract a large number of people to the subsidized insurance program available through the exchange.  However, the commercial (non-subsidized) health insurance made available through the exchange may be competing for customers against other established distribution channels (e.g., carriers, health insurance brokers, Web-based brokers, intermediaries).

If the exchange becomes the sole source of coverage for individual and small group purchasers—as some have suggested—and there are no alternative distribution channels, adverse selection becomes less of a concern.  However, if people can obtain health insurance from other distribution channels, the exchange will need to establish policies and procedures that minimize adverse selection.

One way to mitigate the risk of adverse selection would be to require health insurers to combine all of their individual and small group members into a single risk pool for the purpose of establishing premiums.  This is the approach taken in Massachusetts. An individual who purchases a health plan through the Connector is quoted a premium that is based on each health carrier’s individual and small group book of business, including individual and small group members who purchase coverage outside of the Connector.  The carriers do not establish separate risk pools for each distribution channel.

An alternative—or complementary— approach would be for states to establish a risk adjustment mechanism that would help protect health plans that cover a disproportionate share of high-cost people by shifting funds from health plans that cover a greater percentage of low-cost people. While not easily accomplished, risk adjustment can help minimize the carriers’ inclination to control costs by avoiding older and/or sicker individuals; and can help minimize carriers’ financial exposure, particularly for smaller carriers who might not have a book of business large enough to offset a large share of high-cost enrollees.

As noted in the preceding section, many of the 1990’s versions of health purchasing cooperatives failed because they attracted relatively poor risk and competed against insurers and other distribution channels that were able to offer consumers lower priced health plans.  That experience— although not identical to the exchange models being considered today—offers a few cautionary lessons with regard to mitigating adverse selection: (1) rating rules should be applied consistently inside and outside the exchange; (2) carriers’ underwriting rules should not vary significantly across distribution channels; and (3) brokers play a key role in the marketplace and can influence both the volume and the types of people who purchase coverage through the exchange.

The Role of Health Insurance Brokers

Although health insurance brokers’ level of involvement in the individual and small group markets may vary from state to state, they generally play an influential and critical role in the distribution of health insurance across the country. Brokers serve as the de facto benefits office for many small businesses, providing firms with a range of services, including assistance with health insurance, disability coverage, life insurance, and other ancillary lines of coverage.

Business owners rely on brokers to sort through their health insurance options, provide health plan recommendations at the time of renewal, and serve as their agents throughout the year in dealings with insurers. As noted above, small group brokers in many markets often use intermediaries to provide back-office support before, during, and after enrollment. The intermediaries perform administrative functions that are typically handled by large employers’ human resources office and/or by the health carriers.

How to utilize brokers and how they fit into the outreach and enrollment program for the exchange will be one of the more important decisions made by exchange administrators.  California’s experience in this regard is illuminating. The Health Insurance Plan of California (HIPC) attempted to minimize the role of brokers by setting its broker commissions below the prevailing small group rates and allowing employers to avoid paying commissions altogether by purchasing coverage directly from the HIPC.

As a result, brokers reacted by not promoting the HIPC as an option for small employers—which severely impacted enrollment—and plan administrators discovered that servicing the small groups without brokers was more costly than they expected.  The HIPC reversed course, adjusted their broker fees so that they were comparable to those paid in the small group market, and eliminated the financial incentive offered to small employers who purchased coverage directly from the HIPC.6

The key lesson from California’s experience, as well as the experience of other purchasing cooperatives across the country, is to recognize that brokers play a prominent and important role among small employers.  They often have long-standing and trusting relationships with their clients, and they provide information at the ground level about health insurance options.  Determining how best to leverage the expertise of health insurance brokers —and to make an effort to include them in the outreach and enrollment program —will prove invaluable to exchange administrators.

The Exchange in the Context of the Current Market

As suggested in the first few sections of this Issue Brief, understanding the current health insurance market will be critical to designing an effective exchange that addresses gaps in coverage and improves the health insurance market.  These gaps may be similar across many parts of the country, but market conditions will vary and may be quite different in each state.  Much like the “first do no harm” maxim that medical students are taught, policymakers must be mindful of how the exchange will fit into the current market and how it can operate most efficiently and effectively.

With regard to the exchange’s subsidized health insurance program: how will the premium subsidies and eligibility rules be structured so as to reach the target population and avoid crowd out?  Can existing public subsidy programs be administered by, and/or consolidated within, the exchange?  Is it possible and optimal to utilize existing infrastructure and/or state agencies to handle the eligibility determination process for those newly eligible for premium assistance?

Within the commercial market, the focus of the exchange should be on complementing —not simply replicating —existing functionality and capabilities. Is there a central point, or points, of access for information that allows consumers to compare health insurers and health plans?  What types of information may be lacking and can be filled by the exchange?  How can the exchange drive administrative efficiencies and help streamline the enrollment process?  How will the exchange interact with the state’s health insurance regulator?

Conclusion

While it is likely that the federal health reform law will set guidelines for the operation of state-based exchanges, there will be a host of state-specific policy and administrative decisions that will need to be made in order to effectively and efficiently implement an exchange.  These decisions will influence whether the exchange can help meet the objective of increasing access to affordable health insurance for individuals and small businesses.  Setting the rules for health insurers to participate, providing consumers with relevant and useful information to make informed decisions, streamlining administrative processes, and shifting the insurance market from a competition based on avoiding risk into a competition based on price and quality will take time.

In establishing an exchange, policymakers must be mindful of the particular market conditions that exist in their own state. They will need to engage a broad cross-section of stakeholders—some with competing interests—in order to craft a program that improves the delivery of health insurance.

In some ways the exchange has become a sort of Rorschach test, with people making very different predictions—and having different expectations—about its value and how it can help transform the health insurance market…or not. While an exchange can be a useful vehicle for delivering health insurance and improving competition, major changes to the health insurance markets, and any attempt to lower the cost of health care, will require much more fundamental and substantial health care restructuring than anything an exchange might provide.

About the Author

Bob Carey is the principal of RLCarey Consulting, a health and welfare benefits consultancy that specializes in health insurance reform, in both the public and private markets, health benefits analytics and design, and health and welfare vendor procurements.

Previously, Mr. Carey was director of planning and development for the Commonwealth Health Insurance Connector Authority, an independent authority established pursuant to Massachusetts’ landmark health reform law of 2006 to expand access to affordable health insurance for Commonwealth residents.  In this role, Mr. Carey worked closely with the executive director and the board of the Health Connector to implement new health insurance programs, including designing public and commercial health benefit plans, as well as developing health care financing arrangements.

In addition, Mr. Carey served for several years as the director of policy and program management for the Massachusetts Group Insurance Commission, the state agency responsible for providing health and welfare benefits to over 300,000 state and municipal employees, retirees, and their dependents.

Acknowledgements

The author would like to thank Enrique Martinez-Vidal and Isabel Friedenzohn from the State Coverage Initiatives program for their helpful comments and suggestions. He also gratefully acknowledges Amy Lischko from Tufts University for her helpful comments and insights.

Endnotes
1     Fronstin, P. and M. Ross. “Addressing Health Care Market Reform Through an Insurance Exchange: Essential Policy Components, the Public Plan Option, and Other Issues to Consider,” Employee Benefit Research Institute, Issue Brief 330, June 2009.
2     For additional information, see http://www.census. gov/hhes/www/hlthins/hlthins.html, www.mass. gov/dhcfp, and http://bluecrossfoundation.org/ Policy-and-Research/Roadmap-to-Coverage.aspx.
3     Children of parents eligible for Commonwealth Care are typically covered by the state’s Medicaid program.
4     The Commonwealth Care program has three “plan types,” with different premiums and co­payment schedules, based on the income category of the enrollee.  The plan type for higher-income enrollees charges higher co-payments than the plan type available to lower-income enrollees.
5     For a comprehensive review of the experience of these health purchasing cooperatives, see Wicks,
E. et al. “Barriers to Small-Group Purchasing Cooperatives: Purchasing Health Coverage for Small Employers,” Economic and Social Research Institute, March 2000.
6     Ibid.

In Utah where the economy is flailing under the weight of this recession the construction industry has been hit most painfully as you can guess.  And this poor guy got laid off, and being that he was over 50 he elected Cobra.  Why?  Because the Cobra insurance plan came in cheaper for him.  This is usually not the case but can happen when you work at a large company and are over 50 at a company with where the majority of the workforce is younger males.  The older guy gets the benefit of the same rate class that the younger guys get.  But this article is not about group health insurance premiums.

What is most sad, is that he was perfectly healthy at the time he elected Cobra and could have had his choice of Utah health insurance companies.  Within a few months he developed cancer, and about a year after that, his Cobra expired.  Now he is left with only one decision, go on a Cobra HIPAA conversion plan where the premiums are usually close to the 3 times the average health insurance premium.

So he called us yesterday and we gave him some solid advice but basically he left us searching for loopholes which we found of course, but many other people aren’t so lucky.  This is why it is critical that you not take a Cobra if you can qualify for an individual health insurance plan.

I can go on and tell some even more gruesome stories of pain and suffering caused by Cobra, but will instead just give a piece of solid advice.  Call us at 888-803-5917 for help figuring out the best coverage for you.  We are happy to help you even if there is no commission involved, because frankly if we don’t do it no one else will.  Seriously no one cares about your problems.  I can tell you all the places that this guy called before reaching us and how awful the advice he received was, if he received any help at all.  We will take the time with  you to explain all of your options and are the only brokerage in this country that know everything about health coverage from Medicaid, to free clinics, to Cobra, and all state health insurance laws as well.

What is his chief complaint?  I would have guessed it to be something like rising health care costs are symptomatic of fraud and mismanagement.  But instead he targeted transparency in his summation.

Part of the problem he outlined including the contracts that Aetna is forced to sign with medical providers include gag orders which prevent Aetna from disclosing the contracts to the public.

Aetna and the other major health insurance companies are under increasing heat to justify their rate increases which I guess they can’t in that it would violate their contracts with providers.

A recent study of two cities in Texas by a Harvard surgeon found that in McAllen, Texas where health care costs are much higher than El Paso, there is no significant difference in outcomes.

Due to the scapegoating of the health insurance industry, people tend to blame the rising costs on them instead of the hospitals and doctors that the costs originate from.

Aetna for its part is jumping on the bandwagon by introducing new programs that test pay-for-performance models  most involve financial incentives for health care providers but also include pay fines for bad results.

A great point is that Aetna is raising premiums for people in its individual health plans and furhter described the individual market as deteriorating. It “has been in decline over a long time. In New York it took three years.

He went on to point to the failure of the individual market in New York which is a risk pool which many decide not to participate in.  And looking at health insurance premiums in New York, there can be no doubt as to the direness of health reform in this battered market.

The health-reform bills need a stronger coverage requirement so people won’t make a “rational” decision to pay the penalty instead of buying health insurance. “I think the individual mandate as currently structured is incredibly weak,” Bertolini said. “The result is it’s going to exacerbate the current problems in the individual and micro-group markets,” he said, referring to coverage for groups with fewer than 10 people in them. Much is riding on how much latitude the federal government gives states to enforce such a mandate, he said. “That could put this whole bill in the balance as to whether it will be successful.” Of course, insurers stand to gain as many as 30 million new customers if health reform passes and extends coverage as planned.

The only way the health insurance companies can control health insurance premiums is when they have a large market share and can forcibly keep down reimbursements.  When there is a greater choice in the network it leads to higher costs especially when you consider that when the doctor is popular or a hospital is a must for the insurance company, they must cave into whatever contracts the provider demands.

When the market is dominated on the other hand by a prominent company they can simply get rid of the provider.  Aetna has had to include pay raises so to speak for medical providers of more than 20% to large hospital networks.

In Connecticut for example the hospital Hartford had requested a 50% rate increase over three years, Bertolini said. When providers refused to accept Aetna’s lower offer, Aetna ended the contract and sent a letter to its members notifying them of the hospital’s exclusion from its network, which was to have become effective Jan. 1. (Patients with ongoing treatment were grandfathered in until a certain date, and new patients could still receive care there but at the higher out-of-network rates.) “You have to draw the line somewhere,” Bertolini said.

Hartford Hospital providers ended up accepting lower increases of 9%, 9% and 7% over three years, half of what they were looking for, and are now back in the network, he said. Aetna estimates 180,000 members would have been impacted if the termination had gone through.

Finally,  Bertolini was asked  if health insurers were any closer to settling on a standard and easier-to-understand explanation of benefits form, or EOB. He said he’d like to “get rid” of both EOBs and health-insurance ID cards in favor of an all-digital platform.