the second opinion

Exchange Watch: growing pains in Connecticut

Is the state's model insurance plan unaffordable?
February 19, 2013

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.

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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.

My little investigation in Connecticut shows, however, what reporters are up against–bureaucrats who don’t particularly want to talk, and who must walk a fine line between the insurance industry’s needs to sell and make a profit and the public’s needs to buy at a reasonable price. Plus: reporters–and customers–are up against insanely complex products, which some insurers are not keen for the world to understand. Here is where you need a expert, perhaps a friendly actuary.

Perhaps all that helps to explain some of the coverage in Connecticut so far. The Exchange website lists and links 19 stories between the end of June and mid-December. Many have been the soft variety–the Hartford Courant announcing the schedule of town hall meetings the Exchange has conducted with state residents; greenwich reporting Connecticut is ready for Obamacare; telling readers about the selection of Counihan as CEO. There have been others. Madrak said “we’ve been mentioned in the press hundreds of times in the last couple of months.” But, observes Jill Zorn, senior program officer for the Universal Health Care Foundation of Connecticut, “nobody is covering it regularly.” Janet Davenport, the foundation’s vice president for communications, says the exchange does not generate “the kind of news that would draw television.”

Still there are some exceptions to the generally soft coverage. Controversy draws reporters, and there has been plenty of that in Hartford. Arielle Levin Becker, who covers insurance for The Connecticut Mirror, an online operation, reported on the unhappiness of consumer advocates about who had been appointed to the board. Connecticut state law prohibits exchange board members from being affiliated with insurers or health industry groups, but consumer advocates said three members had come out of the insurance industry.

The CT News Junkie, meanwhile, reported that healthcare advocates also questioned the investments of some board members. One had investments in such companies as Pfizer, Quest Diagnostics, and Aetna. The News Junkie reported the board member Grant Ritter had no plans to divest himself from his assets unless he was asked to. He said disclosure was enough. Time will tell if it is.

Levin Becker advised reporters not to shrink from writing about “the really basic stuff.” “I’ve been surprised by how many generally well-informed people have told me they don’t understand what an exchange is,” she said.

And explainers are only one part of this new beat. Much of what exchange officials do “is fairly controversial,” she said. Levin Becker pointed to one issue she has tackled that is critical to consumers’ options: How selective should exchanges be in choosing health plans to sell to the public? Should they choose only the best plans or allow all carriers to offer products? For now, Connecticut’s exchange will allow any plan that meets certain standards. The exchange could get crowded, though, and board members might reconsider.

Another critical and potentially controversial question: How much authority should the exchange should have to regulate insurance premiums? Levin Becker wrote an interesting and substantial story about the exchange’s contentious late November meeting, at which the board decided it would not negotiate rates with the carriers. Greg Bordonaro, writing for the Hartford Business Journal, described the looming battle over negotiating rates. While the Connecticut exchange board has already chosen not to negotiate rates with insurers, leaving that task up to insurance regulators–who are cozy with the industry in the Insurance Capital of the US–the state legislature may have other thoughts. Bordonaro’s good piece laid out a scenario that could break up the customary relationship between regulators and the regulated.

And that circles back to the big news question that came out of the Connecticut exchange’s December meeting, though apparently ignored by the press: Those whom Obamacare is intended to help may not be helped at all, if they can’t afford the insurance.

The Second Opinion, CJR’s healthcare desk, is part of our United States Project on the coverage of politics and policy. Follow @USProjectCJR for more posts from this author and the rest of the United States Project team. And follow Trudy Lieberman @Trudy_Lieberman.

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Trudy Lieberman is a longtime contributing editor to the Columbia Journalism Review. She is the lead writer for CJR's Covering the Health Care Fight. She also blogs for Health News Review and the Center for Health Journalism. Follow her on Twitter @Trudy_Lieberman.