A larger than usual crowd turned out for today’s meeting of the Small/Nongroup market merger commission, and got not much of a show. The Commission discussed baseline assumptions and rating factors, then went into executive session to discuss confidential information from insurance carriers.
The Uninsured
Next week the Commission plans to discuss assumptions about the demographics of the uninsured population. The assumptions will be based on data from the Division of Health Care Finance and Policy (DHCFP) and the Urban Institute. The Commission will make assumptions about which uninsured will buy insurance, what plans they will choose and what their health status will be. They will attempt to verify these assumptions via a survey to key informants including health economists and others with insurance expertise.
Baseline Projections
The Commission wants to establish a baseline in making projections about the effects of the market merger. It is creating two databases—one each for small group and nongroup data—and will use the data to make projections about the impacts of the merger on a range of variables. The Commission discussed assumptions on which to base those projections.
The key assumption is that plan value will continue to decrease, resting on the trend of increasing premiums causing small group enrollees to buy lower premium plans with higher copays. The merger is likely to increase premiums for small group members and may initially exacerbate this trend (though it may have the opposite effect on nongroup members, whose premiums will decrease). Amy Lischko, DHCFP Commissioner, reminded the Commission it must consider the effect the increased ability of employees to pay premiums with pretax plans (through 125 plans) will have on choice of benefit levels.
The Commission will also consider effects of Young Adult Plans (YAPs—not an official acronym, but seems appropriate). It is not yet sure how to take account of YAPs or who will be eligible to enroll in them (as opposed to having to purchase insurance from an employer or be covered as a dependent). The Commission stated its understanding that YAPs are subject to the same rating pool and rules as the rest of the merged market. They noted that as young adults are more likely to be healthy, the role of YAPs is to subsidize the rest of the pool, but if premiums are too high, young adults won’t buy the YAPs and the subsidy will be lost.
