What can we learn from Massachusetts’ Mistakes?
The small business program of the* Mass Connector* is often used as an example by those who predict that the SHOP Exchange will be unsuccessful in California. Indeed the Massachusetts small group program has has its problems.The program closed its doors to new business only a year after its launch, without much explanation as to why. Enrollment during this period was extremely low. The Connector has since focused its small employer efforts on another program, called “Business Express.” The primary focus of Business Express is reduction of costs for small businesses that purchase insurance through the Small Business Service Bureau (SBSB), the administrator for the Connector’s Choice products. While this program offers employers a small reduction in premiums, it does not allow employees any choice of product. In addition, the selection of carriers is extremely limited at this time. Business Express is currently operating without any of the major carriers (i.e., Blue Cross Blue Shield of Massachusetts, Harvard Pilgrim Health Care, and Tufts Health Plan) offering.
What went wrong in Massachusetts?
The Massachusetts version of the SHOP Exchange used an overly complex model in which participating employers selected a level (e.g.silver) of plan for their employees, and a base employer contributory amount was set depending on the employer’s selection of a plan within that coverage tier. Employees then took the employer contribution and were restricted to selecting any carrier’s plan within that tier of coverage. Because employees could not buy a product outside the tier selected by their employer, the employer still controlled the primary health care decision for its employees. In other words, the result was that a single 25-year old was essentially forced to purchase coverage similar to a 55-year old person with four kids, an opposite outcome of the intent of reform.
In addition, the Connector required employers to meet the same requirements that were in place in the market outside the Connector, that is, to pay at least 50% towards the premium and meet employer participation rules such as 70% of eligible employees had to be conered. This requirement overlooked the fact that these barriers were identified before the reform as reasons some smaller employers couldn’t offer health insurance.
Finally, the Connector limited the number of brokers who could sell this product in the state to 20, as well as restricting the client marketing pool.
How California Can Do It Right!
California has enough flexibility in implementing the SHOP Exchange to do it right. it is clear that lawmakers wanted SHOP to facilitate some employee choice. The health insurance exchange needs to have a choice model that features allowing employers to use a defined contribution, offering employee choice across all products, adding a premium aggregator that can collect premiums dollars from multiple sources (i.e. secondary employers, spouses), eliminating participation and contribution barriers, and opening the program to all brokers and all small employers. Such a model could provide greater choice for employees, valuable predictability for small employers, and possibly help to reduce overall cost trends through greater consumer engagement.