CBIA HEALTHCARE UPDATE
Michelle Zettergren
Sr. Vice President, Chief Sales & Marketing Officer
ConnectiCare, Inc. & Affiliates
September 21, 2011
The Environment Today
• U.S. Census
- 49 million Americans uninsured in 2009
- 49.9 million Americans uninsured in 2010
• Worst recession in the last 80 years
• Inflation-adjusted median household
income in the U.S. fell 2.3% in 2010, to
$49,445
Uninsured Rates
• Texas
• New Mexico
• Nevada
• Mississippi
• Florida
• South Carolina
• Louisiana
• California
• Georgia
• Arizona
24.6%
21.6%
21.3%
21.1%
20.8%
20.6%
20.0%
19.4%
19.4%
19.1%
New Jersey
• New York
• Rhode Island
• Connecticut
• Pennsylvania
• New Hampshire
• Maine
• Massachusetts
•
15.4%
15.0%
11.4%
11.0%
11.0%
10.3%
9.4%
5.0%
Massachusetts – A Success Story?
• First Public Exchange – the
Commonwealth Health Insurance
Connector
• Goal – provide universal health
coverage for Massachusetts residents
• Coverage required or pay penalties
• Small Group and Individual Markets
merged
• Government funded subsidiaries
provided for low income individuals
• Uncompensated care fund
Impacts on Massachusetts Marketplace
• Many employers had to increase benefit coverage
• Providers struggle with increased demand
• State regulators artificially suppress premium increases
• Uncompensated care expense continues
• Health care cost continue to increase…
What is Happening in Connecticut?
2011 Legislative Session
•
•
Passed several benefit mandates
Expanded coverage – Impacts cost
SustiNet
•
•
Not implementing
Create giant pool including public
employees & Medicaid
Public Exchange
•
•
•
Benefit will be defined by Federal government
5 Specific levels of benefits
Carriers must charge same rate in and out of
exchange
•
•
One pool (small employers & individuals)
Reinsurance mechanisms in and out of exchange
Connecticut Has An Exchange Today
• “Best Practice Model” recognized nationally
• Sophisticated administrative system
• Uniform benefits
• Employee choice
• Encourages competition
Minimum Loss Ratio
(Five Minute University Version)
Requires insurers to pay out at least 80% of premium revenue,
as claim payments or quality improvement expenses, for the
small group and individual policies; 85% for large group policies
If not  must issue rebates to insureds
MLR =
Claims + Quality
Premiums – (Taxes + Fees)
What counts as “claims” or “quality”  improving the ratio?
Minimum Loss Ratio
• Payments made for clinical services provided to enrollees
• Activities that improve health care quality:
-
Increase the likelihood of desired health outcomes
-
Direct interaction with enrollees
-
Improve patient safety
-
Promote wellness and health
-
Enhance quality through meaningful use of HIT
• All other expenses are administrative and have a negative effect on MLR
MLR Rebates
• First rebates are due on August 1, 2012, based on calendar year 2011
premium and claim/quality payments
• Calculations are per business segment, per issuing company, per state
• Rebates are intended to go to the entity that paid the premium – employer
and employee
• Employers will have to be involved in paying any group rebates to their
employees
• Rules are complex and new for everyone
• Results will also change over time as new Exchange-related risk adjustment
rules come into effect in 2014
Uniform Summary of Benefits and Coverage
•
Effective March 23, 2012 proposed rules issued August 17, 2011
•
Insurers must provide to employers and beneficiaries
•
1.
Pre-application (and with application if any changes)
2.
Post-application
3.
Upon material modification to the plan
4.
At renewal
5.
Upon request
Penalties of up to $1,000 per enrollee for violations
Impacts on Health Care Industry
•
Rules are complex and much has not been developed or outlined
•
Timing has been delayed causing impacts on internal development and
preparation
•
One size does not fit all – complexity adds cost
•
PPACA does not acknowledge uniqueness of each state
•
Reform does not address cost drivers