By ROGER COLLIER
With the passage of insurance exchange legislation in California, and the release of a template for state exchange statutes by the National Association of Insurance Commissioners, many state eyes are turning towards the only existing exchange comparable to that required by PPACA: Massachusetts’ Connector.
The Connector, which offers Commonwealth Care subsidized coverage for those with incomes below 300 percent of FPL but not eligible for Medicaid, and Commonwealth Choice private plans for other families and individuals and small employer groups, has been touted as a major success by current and former Commonwealth officials and many national reform advocates.
But, after four years of operation, just how successful has the Connector really been? Has it simplified health plan choice and enrollment, increased the number of insured, reduced marketing costs, created competition, or driven down premiums? It turns out that the answers are far less positive than the Connector’s boosters have admitted.
HAS THE CONNECTOR SIMPLIFIED PLAN SELECTION AND ENROLLMENT?
For some, at least.
For the 33,000-enrollee unsubsidized CommChoice program the answer is yes. Health plan selection and enrollment for the seven plans (with six levels of benefits each) is directly available via the Connector website, with simple well-designed screens and navigation, and easy comparison of alternatives. Even so, only half of thepost-reform non-subsidized insured have chosen coverage via CommChoice.
For the 155,000-enrollee subsidized CommCare program, applicants face enough complications that a 13-page booklet is necessary to guide them through the process. Plan selection and enrollment for CommCare’s five Medicaid managed care plans require applicants to first complete a benefit request form with income and other details; only after eligibility is determined by the state Medicaid agency is plan selection possible, either on-line or, for those without convenient web access, through submission of a paper form. Not only can this be a time-consuming process, but it’s one that is explained on the Connector website in language that may require a higher level of education than many potential applicants possess.
HAS THE CONNECTOR INCREASED THE NUMBER OF INSURED?
Only marginally, at best.
A few CommChoice enrollees may have purchased coverage as a result of the easy-to-use Connector enrollment procedures, but—given the pressures of the individual mandate and its associated penalties—most would otherwise have bought insurance through brokers or directly from carriers.
CommCare enrollees are even less likely to have acquired coverage because of the Connector’s capabilities. Most CommCare enrollees pay no premiums and presumably would have submitted applications for coverage regardless of the Connector.
Overall, although the Connector provides a useful source of information, most of Massachusetts’ post-reform insured were probably influenced more by media coverage of the individual mandate and other reform details than by the Connector. In fact, neither the media nor the Connector has persuaded all eligibles to be covered. The latest Census Bureau figures show Massachusetts—while having the lowest uninsured rate in the US—still with five percent uninsured, while a 2010 Robert Wood Johnson Foundation study estimates that almost half of these are eligible for either CommCare or Medicaid.
HAS THE CONNECTOR REDUCED MARKETING AND ENROLLMENT COSTS?
Probably not.
For CommChoice, the Connector’s costs (funded by a 4.5 percent levy on premiums, roughly equivalent to broker commissions) are additive to health plans’ own administrative costs. Although the plans presumably incur somewhat less enrollment effort as a result of the Connector, the volume of enrollees gained (less than 5 percent of total enrollment) isn’t large enough to influence plan costs significantly.
For CommCare, the Connector’s costs (funded by a 4 percent levy on premiums) also are additive to plans’ administrative costs. However, because the Medicaid managed care plans contracted by CommCare have cost structures that assume enrollment is a state function, plan costs are not affected by use of the Connector.
Connector administration costs to date are actually significantly higher than the premium levy amounts indicate, since initial implementation efforts were funded by a one-time $25 million appropriation.
HAS THE CONNECTOR CREATED A COMPETITIVE MARKET FOR COVERAGE CHOICES?
Only to a limited extent.
The Connector website allows applicants to compare costs of plans with similar benefits—essential for a competitive market. Initially, the Connector allowed choices between “actuarially equivalent” plans, but more recently has switched to offering plans whose benefits are almost identical in order to facilitate price comparison.
For CommChoice, price seems to have played a significant role in plan and benefit choice: most enrollees have chosen the lower Bronze or Silver benefit levels, with less costly plans being most popular. However, with CommChoice enrollees representing fewer than five percent of the individual and small group market, the Connector’s price-comparison capability is unlikely to have influenced overall market competition.
For CommCare, most enrollees pay no premiums so that price comparisons are meaningless. For the remaining CommCare enrollees, premium differences between plans are small and seem not to have been a major influence on plan selection.
HAS THE CONNECTOR RESULTED IN LOWER PREMIUMS?
Possibly, for the subsidized CommCare plans, but not for CommChoice.
Connector administrators have taken activist roles in trying to control premium increases, especially for CommCare, rejecting plan proposals until lower rates have been offered. For CommChoice (whose plans are available in the general market), Connector administrators supported the state insurance regulators’ rejection of rate hikes that led to a brief “insurance strike” in the spring of 2010 and ultimately to reduced increases. What is not known for either program is the extent—if any—to which state pressures on individual market premiums may have resulted in cost shifting elsewhere.
Although Connector officials have claimed in Congressional testimony that CommChoice’s creation led to a dramatic drop in non-group premiums, the reality is that this was primarily due to the state’s combining of the small group and individual markets, something that also resulted in premium increases for small groups. The very small CommChoice enrollment is too little to influence the overall Massachusetts market (which has the highest health insurance premiums in the nation): the tail does not wag the dog.
SO, DOES THIS MEAN PPACA INSURANCE EXCHANGES WILL BE EQUALLY UNSUCCESSFUL?
In a sense, the very existence of the Connector—a pioneering state effort to offer truly competitive—and easy—health plan selection—represents a success. However, this success is due in part to the factor that undermines the Connector’s effectiveness: the very low enrollment numbers. Establishing the Connector would almost certainly have been much more difficult and faced far stronger opposition if Massachusetts had had more pre-reform uninsured, especially those above the 300 percent FPL level, as will be the case in most other states who must establish PPACA insurance exchanges.
The real value of the Massachusetts experience is likely to prove not to be to the Commonwealth itself, but to other states. Whether they can achieve greater success, and the lessons they can learn from Massachusetts, will be the subjects of a subsequent article.
Roger Collier was formerly CEO of a national health care consulting firm. His experience includes the design and implementation of innovative health care programs for HMOs, health insurers, and state and federal agencies. He is editor of Health Care REFORM UPDATE [reformupdate.blogspot.com].
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I worked for the family company in Mass for a number of years. Times were tough and I never regularly made much more than 60K/year. Healthcare had grown to almost 20K for my family of four.
The business folded and I’ve been on unemployment since the summer. It’s the best thing that ever happened to me. Half salary and I have free healthcare! No copays! No charge for medicines. Oh yea, now my kids have dental and my wife and I get two cleanings per year. I never had any dental before. Ever. Time to get my daughter her braces.
I’m 20 weeks into unemployment and part time consulting work looms on the horizon. It’s short term and if I take it it will royally screw up my unemployment and healthcare.
I just logged into the connector and put in my zipcode and did a search for individual healthcare, hoping the price is decent. The results were Zero providers in my area. GREAT.
OK, so I put in the Boston zipcode. Crap insurance with all sorts of copays is $900/month or $10K/year. Good insurance is $1600/month or $19K/year. Right now I’m collecting at the rate of $32K/year. Add in 19K and I’m up to 51K equivalent. Add in taxes and clearly I’m better off than I was making $60K/year.
Although it is very difficult to pay the bills, I’m a much saner person. My wife isn’t all over me about the stress of not being able to afford to go to the doctor.
This system is broken. Really broken.
You may think I’m immoral, but I’m just an immoral cog in a massively immoral system. For years I refused to turn just based on the principle of it. My morality brought nothing but misery, so now I’m just going with the flow.
Dear sir
I know the difference between Commonwealth Care and Commonwealth Choice. When I said Commonwealth Choice in my comment above I mean Commonwealth Choice, the insurance broker/exchange, not the Commonwealth Care welfare program.
It appears that you are not based in Massachusetts and do not understand Romneycare fully. Your comment to MG criticizing the Utah exchange seems to verify that.
The Connector is probably one of the worst web sites ever put up and is one of the worst run “businesses” I have ever seen.
— As for the web site, the Perot people I talked to when I called in (had to becasue the web site is so bad and as I said in my comment finally had to go to the insurer anyways) seem to agree but say they can do nothing about it. Political appointees force the flow to favored choices.
— As for the “business” aspect, twice during 2010 it has even stopped selling insurance, most recently starting October 1. Note that I said “selling.” The Connector gives insurance away just fine. The people getting the free insurance have already gone through the processes you describe for other welfare purposes and they are simply rubber stamped for the free insurance.
Beginning in 2014, all people in the U.S. (typically self-employed individuals) forced to use exchanges by Obamacare are going to experiences the same problems I had in Massachusetts.
Dennis Byron
A few responses to comments:
Michael Doonan – I agree that CommCare has been generally more successful than CommChoice. However, although the Connector has been touted as the prototype state insurance exchange, CommCare’s achievements have been mostly outside the exchange function, and not too different from what Medicaid agencies like Arizona’s AHCCCS and California’s Cal OPTIMA have done.
Peter and tcoyote – Obviously, savings from squeezing insurers are going to be limited. Massachusetts has already had an insurance “strike” as a result of state regulators rejecting premium increases in the small group/individual market. A compromise was reached, but the state clearly isn’t going to get much more blood out of these turnips. As California’s CalPERS has demonstrated, where savings should come is in price competition, with individuals being able to choose cost-effective coverage that best meets their needs. In the context of Massachusetts, this means real competitive pressure on insurers that in turn is transmitted to major providers like Boston’s prestigious but egregiously costly hospitals. Although CommChoice provides the mechanism for competition, it has failed to attract enough enrollment for insurers to care.
MG – I didn’t mention Utah’s so-called exchange for a couple of reasons: (1) my focus was on the Connector; (2) Utah offers little more than one could get from a Google search on “health insurance.” It’s a low-budget operation (unlike the Connector), but not really an exchange.
Dennis Byron – What you are describing sounds more like the CommCare process, which does involve delays while eligibility is verified. Unfortunately, the PPACA exchanges are going to be stuck with a similar process for potentially subsidized individuals—and maybe worse, since both federal and agencies will be involved. Yikes!
Sorry, that should have read “to get enrolled, I had to go to four government agencies including the connector.”
— Dennis Byron
“… Health plan selection and enrollment for the seven plans (with six levels of benefits each) is directly available via the Connector website, with simple well-designed screens and navigation, and easy comparison of alternatives. Even so, only half of thepost-reform non-subsidized insured have chosen coverage via CommChoice.”
As someone that just went through the process of getting insurance through Commonwealth Choice I disagree.
Navigation is not easy (e.g., you have to go back to the beginning of the process and re-enter your zip code if you want to compare more than three options) and the comparisons are simplistic (e.g., statements such as bronze is lower cost than silver; dah!) To really get the detail you have to call the insurer, defeating the purpose).
Then to get enrolled I had to go to four government agencies in addition to the Connector including the Department of Insurance and the Department of Public Health.
The Massachusetts Connector is the perfect example of what everyone has been warning about nationally when it comes to your health: it is going to be run like the Registry (that’s the DMV if you come from outside Mass.)
— Dennis Byron
Nothing about the Utah Exchange which is shaping up quite differently than the MA Connector program?
Peter has grasped the essential problem not only with Massachusetts reform but the national analog. The risk hasn’t changed at all, and neither has provider behavior.
The national law actually is more ambitious, since it markedly restricts the ability of the insurers to price to risk (by eliminating pre-existing conditions restrictions, instituting age bands on pricing, guaranteed issue/guaranteed renewal). Moral hazard and risk selection will not disappear, but could well increase as people try to take advantage of the numerous loopholes. . .
The political gamble is that the politicians can intimidate the carriers into accepting lower margins (e.g. lower than the 3-4% they earn in good times). We will see first in Massachusetts if this charade actually bankrupts the insurers.
So, are specialists, hospitals, labs accepting less payment under MA connector plans? Where are the “savings” derived, insurance profits administration?
“For CommChoice, price seems to have played a significant role in plan and benefit choice: most enrollees have chosen the lower Bronze or Silver benefit levels, with less costly plans being most popular.”
Looks like enrollees are trying more to beat the non-insurance penalty that getting the right and needed coverage.
The MA plan is a joke. Trying to keep everything the same while trying to get something different. If premium costs reflect health care risk then how is changing the insurance buying structure going to change the cost structure?
Mr. Collier,
I am not sure you give enough credit to the Connector and particularly its board for creating the CommCare program including their work on minimum creditable coverage, affordability standards, eligibility criteria, standards for the mandate and a range of issues unanticipated by the law. Without this work the program wouldn’t be possible. Sure a lot of this was done with the help of Medicaid and other agencies, but it was path-breaking. As you suggest the Connector also deserves considerable credit for negotiating and working with CommCare providers.
Commchoice is a different situation and you point out the key challenges they have and continue to face. Readers should note that their ability to negotiate premiums is exceedingly limited by statute. Plans offered inside the Connector need to be offered outside the Connector at the same price. There is some savings in the individual market, but increases in the merged small group market. Bottom line is that they weren’t given the tools to control premium and it may not be fair to judge them on this standard.
I used to live in Mass. (North Reading) and knew a number of individuals and families who didn’t earn enough for some programs, but slightly too much for others. They really did fall betweeen the proverbial “cracks.” I think this program may indeed be a “PR coup” but I also think that it is a success. There is now some hope for families marginalized by their too low/too high income for health insurance.
– David
A lot of conjecture and premature assessment. I have no position on the success or failure of the Mass Connector at this point in time, yet, this post has not drawn me any closer to forming any opinion.
The ACA x-changes will have greater responsibility and serve greater numbers, as you state. I think each has to be judged on its own over time.
The Connector is a gross invasion of privacy.