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How Health Insurance Exchanges Will Affect Employers and Health Plans Shawn Nowicki, MPH Director, Health Policy HealthPass | New York Business Group on Health A Presentation for the National Congress on Health Insurance Reform Pre-Conference on Health Insurance Exchanges

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slide1

How Health Insurance Exchanges Will Affect Employers and Health Plans

Shawn Nowicki, MPH

Director, Health Policy

HealthPass | New York Business Group on Health

A Presentation for the National Congress on Health Insurance Reform

Pre-Conference on Health Insurance Exchanges

Ritz-Carlton Hotel, Washington, DC

January 19, 2011

slide2

Today’s Agenda

  • About HealthPass
  • How Exchanges Affect Employers
  • How Exchanges Affect Health Plans
  • Questions
slide4

A Commercial Health Insurance Exchange for NY Small Businesses

  • Commercial health insurance exchange started in 1999
  • Joint collaboration between:
    • Northeast Business Group on Health
    • Mayor’s Office of the City of New York
    • Health insurance industry
  • Missions:
    • Grant small businesses greater access to healthcare
    • Help stem the tide of the working uninsured
an employee choice model
An Employee-Choice Model
  • Employee-choice, defined contribution model for small businesses in a pure community-rated environment
  • Menu of carriers and benefits
  • Serve 5 boroughs of NYC, Long Island, Mid-Hudson Valley
slide7

SHOP Exchanges Must Be Attractive to Employers

  • Must be a simple, streamlined purchasing experience
    • In Utah Exchange pilot, 20% of eligible groups didn’t enroll because employees couldn’t complete application
  • Defined contribution model encouraged
  • Broad, but not overly complicated, range of choices needed
  • Simplified administration & a suite of solutions
    • One-page group election and employee enrollment forms
    • Robust member services/call center
    • Ancillary services
  • Employee choice (at the point of enrollment)
    • Relieves employer from choosing coverage plan that may or may not fit employees’ needs and budget
slide8

Exchange Must Streamline

Health Benefits Services

Size of small business correlated with HR capability

slide9

Choice at What Level?

DESIRABILITY

Defined fixed-dollar employer contribution recommended across all options

slide10

A True One-Stop SHOP

Carrier A

CarrierB

Carrier C

Carrier D

Carrier E

E

P

E

P

P

P

E

E

E

P

Carrier Reconciliation

Broker/ Navigator

Facilitate Compensation

Exchange

P

E

I: One consolidated “list” bill

(P) – Group Premium Payment

(I) – Premium Invoice

(E) – Plan Selection, Enrollment

Tax Credit Mechanism

IRS

Employer

Adopted from: Terry McCorvie, Workable Solutions, Inc.

slide11

Employers & Health Plans May

End Up Financing Exchanges

Anticipate Exchange needing 2.5% - 4.0% of premium rate

for self-sustainability

slide12

Brokers & Agents Are Vital

Broker/agent assists, educates, & services

Considerations:

- Equality between brokers and navigators?

- What about other feeder groups?

employer employee benefits
Employer Benefits

No need to pick one plan for different employees

Curbs wasted healthcare spending

Helps to attract and retain key employees

Empowers employees to participate in making informed healthcare decisions

Defined contribution sets a benefits budget

Simplified administration

Robust client support

Home billing of COBRA and COBRA administration

No need to shop for insurance every year

Employee Benefits

A voice in a personal decision – healthcare

Choice of plan types (e.g., HMO, EPO, POS, PPO, HSA)

Choice of insurer

Annual choice to meet individual healthcare and budget requirements

Pre-Tax contributions (thru Section 125) minimize out of pocket costs

Robust member and advocacy services

Employer & Employee Benefits
slide16

Product Mix Dependent on Governing Model, Regionalization, & Market Rules

  • Active purchaser?
  • Selective contractor?
  • Passive clearinghouse?
  • Regional exchanges?
  • Regional sub-exchange(s) within a state?
  • One statewide exchange?

PRODUCT & STRATEGY

  • Rules mirrored inside and outside exchange?
  • State rules stricter than PPACA requirements?
  • Benefit mandates?
  • Benefit plan standardization?
slide17

Exchanges Will Attract Varying Populations

Likely to be regional and geographic differences in enrollment levels across Exchanges

1Cunningham, PJ. (2010). Who Are the Uninsured Eligible for Premium Subsidies in the Health Insurance Exchanges? (No. 18).Center for Studying Health System Change.

slide18

Other Considerations

  • Exchange enrollment projections
    • CBO: 24-30 million enrollees by 20191
    • Urban Institute/RWJF: 44 million enrollees by 20172
      • 23 million in AHBE; 21 million in SHOP
  • Brand & marketing/outreach will matter, especially with standardized options
    • Competition based on value, quality, & member services
    • Efficient administration
  • Demonstrate ongoing value
  • National & regional start-up carriers will consider entering markets
  • Medical loss ratio (MLR) considerations

1Congressional Budget Office. (2010) Estimate of the direct spending and revenue effects of an amendment in the nature of a substitute to H.R. 4872, the Reconciliation Act of 2010. Washington, DC: U.S. Government Printing Office.

2Buettgens M, Bowen G and Holahan J. (2010). America Under the Affordable Care Act. Washington, DC: Urban Institute.

slide21

Contact Information

Shawn Nowicki, MPH

Director, Health Policy

61 Broadway

Suite 2705

(212) 252-8010 x227

snowicki@healthpass.com

www.HealthPass.com