Late yesterday, the Co-Chairs of the Legislature’s Joint Committee on Health Care sent a letter to Connector Executive Director Jon Kingsdale and the entire board. The Board is scheduled to vote on Thursday morning on standards for new private insurance products to be released 7/1/07. The two legislators were co-chairs of the Health Reform Conference Committee and thus speak with knowledge concerning “legislative intent.” Verbatim letter:
November 28, 2006
Jon Kingsdale, Executive Director
Commonwealth Health Insurance Connector
One Ashburton Place
Boston, MA 02111
Dear Mr. Kingsdale,
We write to you as the Connector Board faces one of the most significant and challenging decisions it will make: setting the definition of “creditable coverage” for the purposes of the individual mandate. The definition of creditable coverage will not only determine the minimum level of coverage that individuals subject to the mandate will be required to obtain, it will also send a powerful message to all sponsors of insurance about what the Commonwealth considers to be “acceptable” or “reasonable” levels of coverage. Connector Board members should have the benefit of a clear statement of legislative intent as they prepare to make these decisions.
Recently, information presented by Connector staff to the Board on Nov. 9, 2006, misrepresented the Legislature’s intent on this issue. Slide #10 of the presentation entitled “The Small Group Market and Minimum Creditable Coverage,” cites a $200 average monthly premium as the “Administration and Legislature reference point during development of health reform law.” While we understand that this is consistent with Governor Romney’s proposal as filed, the Legislature rejected this premium level as unrealistically low to finance a reasonable level of benefits given current health insurance premiums. During the development of Chapter 58, legislative support was clearly in favor of health care coverage with comprehensive benefits and reasonable deductibles. Conference Committee members were concerned that deductibles exceeding $1000 might discourage people from seeking care. We were also concerned that benefit limitations, such as pharmacy benefits that covered only generic drugs, could simply shift cost to the Uncompensated Care Pool, through the medical hardship provisions. For this reason, the Legislature used a target figure of $320 in its projections, a fact publicly discussed at the time of the law’s passage.
We also anticipated that, with the advent of the individual mandate, there might be new cost pressures on employers as more workers join employer-sponsored plans to comply with the individual mandate, and we were concerned that these new cost pressures might cause employers to reduce benefits. We explicitly considered how the definition of minimum creditable coverage might influence what employers decide to offer their employees, and considered the careful crafting of this definition to be an important mechanism to prevent significant erosion of employer coverage.
We wish to address a second issue as well. We created the Health Insurance Connector to be a central, easy-to-use source of high-quality, high-value insurance for small businesses and individuals. The value of the Connector is as an organization with a social mission to identify high-quality, high-value products for small business and individuals and to provide state-of-the-art systems to relieve small businesses’ administrative burden. While enabling consumers to have some choice of health product is a desirable goal, choice must be balanced against the potential for market disruption, risk selection and segmentation that could result from the Connector operating in ways that are different from the rest of the small group market. In particular, we are concerned about the detrimental effect of list billing by health plans offered through the Connector, especially at a time when so many other changes will be occurring in the health insurance market.
At this critical juncture, we urge you to take the time necessary for the Board to conduct a full review of these central issues and we remain available to clarify legislative language and intent.
RICHARD T. MOORE PATRICIA A. WALRATH
SENATE CHAIR HOUSE CHAIR
Cc: Julie M. Bowler
What does this mean? The Connector Board is heading toward approving low-cost plan requirements that significantly deviate from legislative intent as expressed in this letter. The Board’s Policy Committee approved a plan allowing deductibles between $1500 and $2000, and total Out-of-Pocket spending of $3000 to $4000, as well as prescription drug coverage for generics only — Legislators want deductibles no higher than $1000, as well as drug coverage that includes brand name drugs. The Connector Board is considering whether to permit “list billing” — premium bills to employers with different premium levels depending on an enrollees’ age — Legislators don’t like this. Re: last paragraph — the Board is also moving faster than the legislators seem to like.
In this transition period from the Romney to Patrick Administration, how will the Connector Board react?