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CBIA HEALTHCARE UPDATE
Michelle ZettergrenSr. Vice President, Chief Sales & Marketing Officer
ConnectiCare, Inc. & Affiliates
September 21, 2011
The Environment TodayThe 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
•Texas 24.6%•New Mexico 21.6%•Nevada 21.3%•Mississippi 21.1%•Florida 20.8%•South Carolina 20.6%•Louisiana 20.0%•California 19.4%•Georgia 19.4%•Arizona 19.1%
Uninsured RatesUninsured Rates
•New Jersey 15.4%
•New York15.0%
•Rhode Island 11.4%
•Connecticut11.0%
•Pennsylvania11.0%
•New Hampshire10.3%
•Maine 9.4%•Massachusetts
5.0%
Massachusetts – A Success Story?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 MarketplaceImpacts 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…
SustiNetSustiNet• Not implementing• Create giant pool including public
employees & Medicaid
Public ExchangePublic 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
What is Happening in Connecticut?What is Happening in Connecticut?
• Passed several benefit mandates• Expanded coverage – Impacts cost
2011 Legislative Session
Connecticut Has An Exchange TodayConnecticut Has An Exchange Today
• “Best Practice Model” recognized nationally
• Sophisticated administrative system
• Uniform benefits
• Employee choice
• Encourages competition
Minimum Loss RatioMinimum Loss Ratio(Five Minute University Version)(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” What counts as “claims” or “quality” improving the ratio? 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 RebatesMLR 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 CoverageUniform 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 IndustryImpacts 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
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