Public Health Committee

JOINT FAVORABLE REPORT

Bill No.:

SB-1204

Title:

AN ACT ESTABLISHING THE CONNECTICUT HEALTH INSURANCE EXCHANGE.

Vote Date:

3/30/2011

Vote Action:

Joint Favorable Substitute

PH Date:

3/23/2011

File No.:

1204

SPONSORS OF BILL:

Public Health Committee

REASONS FOR BILL:

To establish a state health insurance exchange pursuant to the Patient Protection Affordable Care Act.

Substitute language made the following changes:

● Line 762, delete reference to chapter 700c of the general statutes

● After subsection(12), Line 770, insert new language to read:

“(13) Recommendations to ensure that transitions between state health care programs, including, Medicaid, HUSKY Plans, Part A or Part B, and the Charter Oak Health Plan, other federally subsidized health care coverage and fully private health care coverage are centralized, seamless and preserve continuity of coverage and care; and”, then re-number beginning on line 771

● Line 946-947, delete reference to Sections 1902 (a)(10)(A)9i)(VIII) and insert same on line 968

● Strike lines 971-972 in their entirety

● Line 973, strike “amended from time to time”

● Line 977, after “individuals” insert “under sixty-five years of age”

● Line 986, strike “parents” and insert “, but not be limited to, parents and other caretaker relatives”

RESPONSE FROM ADMINISTRATION/AGENCY:

Jeannette DeJesus, Deputy Commissioner, Department of Public Health (DPH): There have been three legislative proposals that have been introduced to authorize the development of an Insurance Exchange. We have concerns with the proposal:

● Composition of the Board of Directors

● Sate mandated insurance benefits

● Limiting health plan in the exchange

● Basic health programs

SB 1204 proposes only a seven member Board of Directors with the Governor making only one appointment. The other six appointments are made by legislative leaders. Four State agencies and the Health Care Advocate are included on the Board but as non-voting members. The Executive Branch representation on the Board is insufficient and should be given more voting representation given the collaboration required with public medical assistance programs and information technology, the impact on health insurance markets and regulation, and the potential State policy and budget impact.

This bill would require that health plans sold through the Exchange not only include the federally required Essential Health Benefits (EHB) package but also all additional state-mandated insurance coverage. The federal government has not yet developed the EHB and due to the potential cost to the State if required to cover benefits above the EHB, it would be advisable to wait until the federal government determines the EHB and what the premium subsidies would be.

SB 1204 requires the Exchange to limit the number of health plans to be offered. Without federal guidance on this issue, we have serious concerns over making a policy decision like this. The goal should be to create an Exchange that provides Connecticut residents with the most choices for quality, affordable health insurance coverage.

We also have concerns with the provision to require the Department of Social Services to establish a Basic Health Program (BHP) beginning in 2014 as allowed by the Affordable Care Act. Until the federal government provides guidance on the Essential Health Benefits package, and we have a better sense of the funds that might be available for a BHP, it would be premature to require the State to establish a BHP.

Senator Donald E. Williams, President Pro Tempore: The federal health care reform law relies heavily on health insurance exchanges to implement and effectuate reforms. The exchanges are to promote effective competition and provide affordable, quality coverage options for individuals and small businesses. The Affordable Care Act relies primarily on states to design their own exchanges and gives states great flexibility in how they are structured.

Key exchange related issues to consider this session are: 1) the structure of the exchange; 2) the makeup of its board; 3) avoiding adverse selection that can destroy the viability of the exchange; and 4) how the exchange will exercise its regulatory obligation to certify health plans as meeting exchange requirements.

NATURE AND SOURCES OF SUPPORT:

Anthem Blue Cross and Blue Shield: We would like to offer some suggestions for consideration as the discussion on creating a health insurance exchange progresses.

● States should design and operate their own exchange

● Exchanges should be formed under existing regulatory rules

● All carriers with plans that meet QHP standards should be permitted to offer such plans in an exchange

● Exchange governance must ensure broad stakeholder representation, accountability and protection from undue influence

● Individuals and small employers should have the option to purchase coverage outside the exchange

● Employer participation in exchange should be limited to small employers to ease transition and limit adverse selection

● Exchanges should be responsible for determining eligibility for premium subsidies and public programs

● Carriers should maintain the ability to design and manage product offerings. Plans outside of exchange must still meet the requirements of the ACA, be able to offer any combination of the different plan levels available within the exchange that they choose, or not offer coverage outside the exchange at all

Jane McNichol, Executive Director, Legal Assistance Resource Center of Connecticut, Inc.: The federal Affordable Care Act established the option of a Basic Health Program to enable states to protect low-income residents from unaffordable cost-sharing requirements in the exchange.

The Basic Health Program described in Sections 18 and 19 would provide a health care program that mirrors Connecticut's Medicaid program for individuals under 65 with incomes between 133% and 200% of the federal poverty level (FPL).

In 2014, Connecticut will have the option of continuing parental coverage under Medicaid. There is a significant financial incentive to end Medicaid coverage at 133% of the FPL but to ensure that these parents do not lose health care benefits currently available to them, Connecticut must either continue coverage under HUSKY parents at 185% of FPL or establish a Basic Health Program with features that parallel Medicaid.

Bob Rodman, AARP Volunteer: The bill meets all of federal requirements for an Exchange and includes 3 important objectives; 1) conflict-free governance structure, 2) limited number of plans, and 3) requires plans allowed in the Exchange to be offered outside the Exchange at the same rates.

American Cancer Society: The Patient Protection and Affordable Care Act (PPACA) requires creation of state-based health insurance exchanges for individuals and small businesses to purchase insurance by January 1, 2014. The federal government will set minimum standards but the new law gives primary responsibility for governance and operation of the exchanges to the states.

Proper governance is critical to the success of the exchange. The bill reduces the potential for a conflict of interest by specifying that the Directors may not be employed by the insurance industry, health care providers or hospitals. SB 1204 also minimizes the potential for adverse selection, an essential key to the long-term viability of exchanges.

Paul E. Smith: Provided testimony explaining the continued need for licensed agents/brokers to assist small businesses by providing advice and assistance with the complexity of the health insurance marketplace.

A broker, agent or producer has expertise in multiple areas and would be a valuable asset in the governance of the Connecticut Health Exchange and with that understanding offered the following suggestion: to delete in line 169 [(ii) an insurance producer or broker,] referring to appointee not eligible to be a director.

Sharon D. Langer, Connecticut Voices For Children: We support the inclusion of a basic health program to ensure that Connecticut's low-income working parents, other caretaker relatives, and other adults have access to affordable health care.

The state will have several options to choose from to determine how low-income adults will access health coverage. The Basic Health Program (BHP) provides the best protection for low-income HUSKY parents with incomes between 133% and 200% Federal Poverty Level (FPL). Since the federal government will pay 100% of the BHP, this is the most fiscally prudent option for the State.

We suggest the following changes: to Section 18 to clarify that childless adults are eligible for Medicaid under Section 1902 of the Social Security Act; adults under the age of 65 are eligible for the BH program per federal law, and that caretaker relatives are also currently eligible for HUSKY A, and should be eligible for the BH program. The reference to Section 1331 of the Affordable Care Act in lines 971-973 are misplaced since Section 1331 defines BH program, not the Medicaid expansion group. Section 1331 is correctly referenced in lines 975-976.

Phil Boyle, member of National Association of Health Underwriters (NAHU) and National Association of Insurance and Financial Advisors, Connecticut (NAIFA): Provided suggestions on how to improve the operation of the Exchange, defined in the federal health reform legislation that is developed in Connecticut.

● Professional Insurance Brokers to address the consumers' needs quickly and provide accurate information about their health coverage options

● Board of Directors for the Exchange should be expanded to include 3 members (1) with experience in health insurance company operations, (1) with medical insurance actuarial experience, and (1) a professional medical insurance broker

● Number of health plan offerings should not be limited

● Language should not preclude the operation or establishment of a privately run insurance exchange or the ability of an individual or small employers to purchase health insurance directly from a medical insurance company outside of the exchange or to purchase health insurance by consumers if an exchange is not in existence.

Andy Markowski, CT State Director, National Federation of Independent Business (NFIB): The National Association of Insurance Commissioners (NAIC) is developing language that Connecticut could use in establishing its exchange. NFIB recognizes the need for Connecticut to begin planning for the establishment of its exchange but suggest that the legislative effort be tabled until the NAIC model language is fully vetted and released and additional federal regulatory guidance is developed and issued.

The NFIB suggests that the exchange should include the following:

● Provide opportunities to purchase quality health insurance for consumers

● Provide small business and their employees with helpful information about their healthcare and healthcare financing options, including information on aggregating premiums from multiple employers for a single employee

● Provide a mechanism for employers and employees to compare and choose a health insurance policy that meets their needs

● Provide a standardized application

● Provide all small businesses with an easy “one check” option to pay for the health insurance for multiple employees, policies and carriers

● Enable purchase of coverage with pre-tax dollars through Section 125 plans

● Allow “pooling” of premiums for part-time workers

● Offer easy-to-understand education, outreach, and assistance programs/advice

NFIB also suggests that there be a place on the Board specifically for the small business community to be represented.

Delta Dental of New Jersey: Delta Dental Insurance Company is licensed as a health insurer in Connecticut and writes dental insurance coverage.

We support Section 18(a)(13) of the bill expresses a provision for “dental only” coverage on the exchange as long as the plan also covers pediatric benefits as described in Section 1302(b)(1)(J) of the Affordable Care Act. This will not only increase options for persons looking for dental benefit coverage but facilitate competition among carriers who provide dental benefit coverage.

Currently, the bill permits “bundled” pricing with health and dental. To assist consumers in making fully informed price comparisons, each dental plan offered should be priced separately. We suggest adding the following to section 6:

(20) Ensure transparency in premium pricing by requiring that dental benefits provided through the exchange are priced and offered separately from the other categories of essential benefits that are offered through the exchange.

Dr. Linda Erlanger, Advocacy Consultant for the Connecticut Oral Health Initiative (COHI): We appreciate that the Affordability Care Act under Federal reform requires that State's establish health insurance exchanges. We would like to see dental services, especially preventive and basic restorative care, be required for adults in the Exchange, similar to the way it is for children.

Ellen Andrews, PhD, Connecticut Health Policy Project: SB 1204 includes strong conflict of interest provisions in establishing the governance of the CT Health Insurance Exchange, prohibiting people with financial ties to insurers and providers from serving on the governing board. Including insurers and providers on the Board of Directors could create legal problems for the state delegating authority to an entity with a potential conflict of interest.

Employees of large companies have human resource departments or unions to assist them with the complexities of selecting health insurance whereas small businesses do not. Allowing the Exchange to set reasonable standards for policies offered give small businesses the same benefits as larger companies. Competition to participate will raise the bar and improve the quality of all insurance products in the state, even those offered outside the Exchange.

Connecticut Hospital Association (CHA): CHA supports the creation of Exchanges that will impact healthcare and hospitals in Connecticut. We request the bill be amended to provide a representative from CHA on the Connecticut Health Insurance Exchange.

CHA is concerned with the establishment of a Basic Health Plan since it does not provide a way to improve access to non-hospital based services for Medicaid patients. It does not address the underfunding of hospitals that result in costs being shifted to Connecticut businesses and employees. A better approach would be the Medicaid Modernization solution developed by Connecticut hospitals which mainstreams these individuals into the health insurance exchange and use federal funding to provide them with the resources necessary to cover any out-of-pocket expenses and missing services.

NATURE AND SOURCES OF OPPOSITION:

Eric George, Connecticut Business and Industry Association (CBIA): CBIA supports establishing a health insurance exchange in Connecticut in an attempt to comply with the recently enacted Federal Patient Protection and Affordable Care Act. We do suggest that in the efforts to create a health insurance exchange that it is done in a way that strengthens our existing private market. This is important so that we reverse our existing job loss trend and begin growing Connecticut's workforce and our economy.

Section 2(b)(4) is bad public policy in that it states that anyone with genuine experience in the health insurance field is prohibited from serving on the Exchange's Board.

CBIA would urge the committee to reject SB 1204 and support SB 921.

Dr. William Bradbury, NorthEastern Connecticut Cardiology Associates, PC (NECCA): My office has been using the services a purchasing advisor for the office's healthcare insurance. In spite of an MD and an MBA in healthcare administration, calculating value for a healthcare plan has become more complex. Healthcare plans are not evolving in a rational sense, so advisors like the one I use will play a more important role in the future.

Reported by: Lori Littmann

Date: 4/7/2011