On October 1, state health insurance exchanges throughout the country, called Health Insurance Marketplaces, will start enrolling people eligible for health insurance, as well as those eligible for federal subsidies to help them purchase it. Fewer than half the states have agreed—as Connecticut has—to run their own exchanges. Others will either partner with the federal government or have the federal government run it for them. In the coming months CJR’s healthcare desk, The Second Opinion, will keep an eye on the exchange rollout in states in all three of those categories. Their debut is a big local story, and the fate of Obamacare rides on their collective success. Meanwhile, unless the public understands the decisions that these exchanges will be making, insurance industry interests will tend to rule.
Right before Christmas, the governing board of Connecticut’s new health insurance exchange—named Access Health CT— turned to the question perhaps most crucial to the success of Obamacare: Can the public afford the policies that insurers will sell through these new state exchanges that the law requires?
In designing the policies that carriers can sell, states were to supposed to pick from a menu of options a “benchmark” plan—outlining essential benefits that all other plans must include. In late September, after contentious discussions, Connecticut chose as its benchmark one of the state’s most popular plans sold to small employers. It had been sold by ConnectiCare, an insurer that once operated as a nonprofit but now is part of EmblemHealth, a New York City regional for-profit conglomerate. This plan was similar to others the exchange considered though it offered somewhat richer benefits.
But: the biggest news of the December meeting came when board chairman Kevin Counihan announced: “We have a benchmark plan that is uncompetitive. When we adopted it, it was [competitive]. It isn’t now, because it’s too expensive.”
In fact, according to board minutes, ConnectiCare currently doesn’t even sell it. What? The benchmark on which all other policies sold in the exchange will be based is too costly for people to buy?
The meeting was open to the public and the press, but it’s not clear the press was in attendance. Jason Madrak, the marketing director of Connecticut’s exchange, told me there was no signup sheet so he couldn’t tell whether anyone from the media heard Counihan’s news. As far as he knows, “no stories specifically about that board meeting” were reported.
One person at the meeting who did take note was Ellen Andrews, the executive director of the Connecticut Health Policy Project, an education and research group. Andrews also contributes to a blog sponsored by consumer and small business advocates called the CT Health Insurance Exchange Watch. Andrews reported additional news from the meeting: officials talked about an attempt by the exchange staff and the state insurance department to make policies affordable—by reducing benefits, in the benchmark benefit package the board had approved earlier. Andrews reported this decision was made in an evening conference call that was not open to the public.
Counihan’s announcement and Andrews’s blog post sparked my interest. This was and is a big story. I asked Madrak what made a policy that a few months before was the state’s shining star suddenly turn so dim. Madrak began by telling me that health insurance is unaffordable for “all the US,” and “in Connecticut, it’s unaffordable for most residents.”
Well, yes, that might be, but that didn’t answer my question. What specifically was the problem with the benchmark plan? Madrak explained: “The entire package is difficult for certain segments to afford. All the premiums are going to be expensive” for the 120,000 people in Connecticut expected to buy policies in the exchange next year.
Three factors “are going to put upward pressure on prices,” he said. First, there will be fewer opportunity for insurance companies to segment the market by the age of policyholders. Under Obamacare, carriers can only charge older people three times more than younger ones, instead of six times as much, which Madrak said has been the case in Connecticut. Furthermore, insurers can’t charge women more than men, and can no longer exclude sick people from coverage. These factors may increase fairness, but may also cause the insurance companies to raise prices.
Journalists, take note! How insurance companies negotiate these challenges, and price the policies they sell in the exchanges, is a major story, one reporters need to follow right from the start.