Transcript Making It Happen!

The Massachusetts
Health Reform
IAHU Presentation
April 12, 2007
Adam Brackemyre
Director of State Affairs
National Association of Health Underwriters
The Massachusetts Reform
 Background
 The
reform (it’s complicated)
 How would this reform work in Idaho?
2
MA Insurance Pre-Reform




The MA nongroup market was guaranteed issue
and community rated, and suffered from adverse
selection
High health care costs
Generous MassHealth (Medicaid) program
$1 billion uncompensated care fund
 Partially
funded by a Medicaid waiver
 The waiver drove this reform- you will understand this
statement in a moment
3
Massachusetts


In April 2006, Gov. Romney signed
major health insurance reform
The motivation behind the reform was
to preserve $385 million in annual
federal funding (via a Medicaid waiver)
 MA
had to craft a plan that would reduce
the number of uninsured to renew the
funding
 No reform, no money
4
Politics



Former Gov. Romney is a Republican
The Legislature is overwhelmingly Democrat
Time was an issue
 CMS


had a waiver application deadline
The Governor, Senate President and Speaker
were able to agree on some compromises, but
they left many important details to the regulatory
process
Regulators continue to fill in the details
5
Insurance Coverage Expansion

Insurance coverage was expanded in
three ways:
Private insurance sold through the
“Connector” (over 300% FPL)
2. Subsidized “Commonwealth Care”
insurance (100 to 300% FPL)
3. MassHealth (Medicaid) expansion
1.
6
The Connector

The Connector is a purchasing pool that will
offer nongroup insurance to groups of 1-50
 Small
groups can purchase from the Connector or the
traditional small group market
 The nongroup market is the Connector



Policyholders pay for the Connector’s operations
through a policy surcharge
All MA employers must establish a Section 125
plan so employees have the option to buy from
the Connector
Enrollment begins in May 2007
7
Connector Plans

The plans were recently named the Gold,
Silver and Bronze plans
 The
Bronze plan has the highest cost-sharing
and lowest premiums. It is also the most basic
plan that will qualify as minimal creditable
coverage.
 The Gold plan is “Cadillac coverage”

The next slide shows individual premiums
8
Bronze Plan Premiums- Boston
19-years old 35-39 years old 56+ years old
Neighborhood
Health Plan
$173.50
$175.15
$347.00
Tufts Health
Plan
$230.36
$241.68
$460.72
Harvard Pilgrim
$206.83
$288.31
$413.65
Blue Cross
$252.35
$275.31
$504.69
Includes prescription drug coverage
9
Gold Plan Premiums- Boston
19-years old 35-39 years old 56+ years old
Neighborhood
Health Plan
$300.73
$303.59
$601.45
Tufts Health
Plan
$387.57
$406.61
$775.13
Harvard Pilgrim
$418.54
$583.41
$837.08
Blue Cross
$432.45
$471.63
$864.89
10
Commonwealth Care





Once fully operational, cost: $20 million/yr
Utilize current Medicaid HMOs
Sliding-scale subsidies provided for those
earning less than 300% federal poverty level
No Commonwealth Care product has a
deductible. Co-pays vary by income.
Monthly Sample Premiums (annual salary)
 Single
adult ($14,000) = $18/mo
 Two adults, two children ($47,000) = $180/mo
11
Commonwealth Care Monthly
Premiums
Federal Poverty
Level Bracket
100.1% to
150%
150.1% to
200%
200.1% to
250%
250.1% to
300%
Single adult
$18
$40
$70
$106
One adult, one
child
$18
$52
$90
$134
Two adults
$36
$80
$140
$212
Two adults, one
child
$36
$92
$160
$240
Two adults, two
children
$36
$104
$180
$268
Two adults, three
children
$36
$116
$200
$296
12
MassHealth (Medicaid)



Children whose guardians earn up to 300% FPL
are now eligible for MassHealth
The reform restores adult dental, vision and
chiropractic, prosthetic benefits cut in 2002
Medicaid payments to doctors and hospitals
increase by:
 $90
million in FY 07
 $180 million in FY 08
 $270 million in FY 09
13
Connector Commissions

If an agent brings group risk to the Connector,
he or she shall be compensated $10 PSPM
 Mass
AHU worked very hard to get agent
compensation put into the legislation

Previous legislation eliminated commissions
from nongroup products
 The
Connector board had the opportunity to set a
commission on nongroup products, but chose not to
do so

Individuals can buy directly from the Connector
14
Individual and Business Mandates

All individuals will be required to have insurance
by July 1, 2007
 First-year
penalty: Loss of personal tax exemption
 Penalty thereafter: A fine equal to half the cost of the
lowest-priced product

Businesses (11+ employees) must offer a health
insurance contribution
 Businesses
must offer to pay 33% of premiums or
have 25% of the group accept coverage
 Penalty for noncompliance: $295/yr per employee
15
Insurance Regulation Changes
HSA-compatible plans available for HMOs
 Mandate-lite plans for those ages 19-26
(young adult plans, or YAPs)
 Dependent age increased to age 27
 Two-year moratorium on new mandated
benefits

16
What We Don’t Know…


How many people choose to remain uninsured and pay
the penalty?
How well will the reform contain health care cost
increases?




Health insurance premium increases will mirror health care cost
increases
The reform established a Cost-Quality Council, statewide
infection control program, pay for performance
Expands preventive programs
How effectively will MA track the health insurance status
of its 6,500,000 residents?

Most states mandate auto insurance, but coverage is not
universal

Health and auto uninsurance rates are similar
17
Final Questions

How much will this reduce bad debt and
charity care?
 If
uncompensated care decreases, more
dollars will be available for subsidies
 About 100,000 more MA residents are
covered, mostly through Medicaid and the
Commonwealth Care Plan 1.


Plan 1 is designed for the low income. No
premiums. Minimal cost-sharing.
Can universal coverage be achieved with
the established budget?
18
Idaho Implications

Will CMS approve a Massachusetts-like
Medicaid waiver?
 Federal
money is necessary
How many state dollars would be needed?
 Will policymakers want to duplicate the MA
results?

19
Massachusetts vs Idaho

Massachusetts
 550,000
uninsured
 Very high health care
costs
 Median household
income $54,500
 Expensive nongroup
market
 $1 billion
uncompensated care
pool

Idaho
 215,000
uninsured
 Moderate health care
costs
 Median household
income $45,000
 Affordable nongroup
market
 No uncompensated
care pool
20
MA and ID Comparison
ID median household income is about
17.5% lower than MA
 ID has over twice as many uninsured per
capita
 MA health care and insurance costs are
much higher
 ID much more rural
 ID has a vibrant individual insurance
market

21
Will It Work Here?


The MA reform is not one-size-fits-all
MA individual and small group products were
guaranteed issue and community rated (rare)
 ID

uses rate bands
ID and MA seem to have some major
differences (income and percentage of
uninsured)
 Will
the numbers work?
 ID needs to find subsidies for much larger portion of
the population than MA and create a subsidization
pool (MA had the uncompensated care pool)
22
Some States May Look to Add MA
Reform Components

Implement an individual mandate
 Must
define what people must buy to meet the
mandate

This can affect both fully and self-funded plans
 Must
have subsidies to help the lower income
meet the mandate
 Must define penalties for noncompliance
 Must create some way to monitor health
insurance status
23
Massachusetts Components

Implementing a stand-alone Connector
 Merge
the small group and individual
markets?
 Allow a small group market outside of the
Connector?
 How will the products be rated?

Include health status?
 If
the individual market is included, will this
affect the high risk pool?
 Who determines agent commissions?
24
Final Observations

People are uninsured for different reasons
 Don’t
see the value in the product
 Cannot afford it


Nationally, about 20 percent of the uninsured
could afford insurance, but do not buy it
There is pressure to expand public program
eligibility, but many could be covered now:
 Between
25 to 33 percent of the uninsured are
eligible for public programs (CHIP and Medicaid), but
not enrolled
25
NAHU Supports







There is no “silver-bullet” solution
Medical underwriting & rate bands
High-risk pools
Flexible benefit designs to meet consumer
choice
Price transparency and wellness
Targeted tax incentives and subsidies
We have created a “Real Choice” Working
Group to update NAHU’s solutions for the
uninsured.
26
Contact information
If you would like to reach me:
Phone (703) 276-3808
Email: [email protected]
27