In this week's HIX Digest, policy makers breath a sigh of relief after HHS extends the blueprint deadline; Republicans are still on the fence; and a new report looks at how the Massachusetts Connector impacted the small group market.
HHS extends blueprint exchange, pending regulations
After previously cautioning weary state policy makers that the November 16 health insurance exchange blueprint deadline was “soft,” the Department of Health and Human Services has extended the deadline to December 16.
So far, 13 states have committed to creating their own exchanges, and about 30 weren’t sure as of early November. States governments will have to show the HHS thier plans for certifying health plans, determining eligibility, finding vendors for website, IT and administration management and more.
CMS’s Center for Consumer Information and Insurance Oversight is also set to issue several key guidance rules this week on essential health benefits, including the minimum requirements for drug coverage, enforcement of nondiscrimination rules and the federal oversight of states in exchange implementation.
Some Republicans turn reluctantly to state HIXs
For months, Republican governors and state lawmakers from Pennsylvania, New Jersey, Iowa and elsewhere have said they’d wait for the results of the presidential election to decide whether to create their own exchanges, partly hoping they wouldn’t have to.
It’s likely to be a topic discussed at the Republican Governors Association annual conference in Las Vegas in this week. Oklahoma Governor Mary Fallin, for one, said she’s going to chat with other governors on the pros and cons of a state HIX.
Iowa Governor Tim Branstad is going to explore HIX options with a working group of industry and consumer stakeholders. "An exchange built by Iowa, for Iowa, is better than a one-size-fits-all exchange built by bureaucrats in Washington," a spokesman for Governor Tim Branstad said in a statement to the Associated Press.
In Missouri, where voters approved a largely symbolic ballot initiative aimied at opposing the creation of a state HIX, the Republican House Speaker said he was “not overly excited about the prospect of setting up an exchange,” but added that he also was “not interested in giving the federal government any more power.”
HIX impact lessons from Massachusetts
As public health insurance exchanges are created one way or the other, a report from the Robert Wood Johnson Foundation has some lessons on how employers have used the Massachusetts Connector, based on surveys of regulators, brokers and other stakeholders.
The exchange has not been very successful in the small group market. Of the roughly 40,000 Massachusetts residents who buy insurance through the Connector, about 10 percent are part of an employer group, and most have five or fewer employees.
Businesses have not really had much of a financial incentive to purchase plans in the Connector, in large part because they can buy similar plans at similar prices on the open market, as mandated by community rating rules requiring insurers to offer plans of equal actuarial value at the same prices in and outside of the exchange.
“It’s been really, really hard to figure out” what value proposition the Connector has to offer, one veteran Massachusetts health official said. And a number of brokers told RWJF researchers that some insurers were charging slightly more for some plans in the Connector.
The Connector also impacted the greater market when it eliminated the broker fee paid by small employers. In Massachusetts, most insurers other than Blue Cross Blue Shield don’t sell small group coverage directly to groups smaller than six employees, and instead sell through trade groups like the Massachusetts Business Association, who prior to the Connector charged employers a monthly service fee of $35 per employee for purchasing health insurance.
The Connector reduced the fee to $10, then eliminated it altogether, and later the two leading trade groups followed suit, ending the Connector’s one-time price advantage. The Connector did not entirely eliminate the fee, though. As one Connector board member admitted in the RWJF survey, the exchange essentially transferred the fee to insurers as a way to support the administrative and sales costs, with an administrative fee of 2.5 percent for group plans and 3.5 percent for individuals.