This afternoon, Gov. Patrick, Sects. Kirwan and Bigby, and Connector Authority officials held a 2pm press conference at the State House to announce that bids from seven commercial insurance carriers will be submitted to receive the Connector’s Seal of Approval. These are the so-called “Commonwealth Choice” health insurance policies for small businesses and for individuals who do not quality for the “Commonwealth Care” subsidized plans — mostly folks with income above 300 percent of the poverty line, or more than $30K for a single adult.
The very good news is that the premiums for all plans are way below the $380 figure quoted and circulated nationally in January. The lowest bids across the state came from spunky little Neighborhood Health Plan, the HMO started in the 1980s by the Mass. League of Community Health Centers. For a 35-39 year old, the premium without drug coverage will be $156 monthly, and with drug coverage will be $175 per month. If the individual purchasing this policy works for an employer who sets up a so-called Section 125 plan, then the premium is treated as non-taxable income, lowering the effective with-drug premium to about $109 for a single adult making around $50K. A spreadsheet with more details is available here.
Here’s the Patrick Administration’s press release from this afternoon:
BOSTON – Saturday, March 3, 2007 – The average uninsured Massachusetts resident will be able to purchase health insurance for $175 per month this spring based on new bids recently submitted to the Commonwealth Health Insurance Connector Authority.
“This is a big improvement from the first round of bids and a big step forward for health care reform,” said Governor Deval Patrick. “I want to thank our insurance carriers for working with us to develop more affordable plans.”
The Connector’s board of directors is expected to issue its Seal of Approval to a range of health plans at its March 8 meeting. Hundreds of thousands of Massachusetts residents will be eligible to purchase these Commonwealth Choice plans through the Connector starting May 1, with a July 1 effective date.
“Offering affordable health insurance is critical to expanding coverage and realizing the promise of health care reform,” said Leslie Kirwan, Secretary of Administration and Finance and Chair of the Commonwealth Health Insurance Connector Authority. “I am pleased that the Connector and our insurance carriers have risen to the occasion and provided a range of quality health insurance options for individuals throughout Massachusetts.”
The Connector will offer different benefit levels for buyers to choose from with premiums that vary by plan design, network of providers and cost sharing. There will also be even lower-priced Young Adults Plans specifically tailored for uninsured individuals between the ages of 19 and 26.
“The Legislature charged the Connector with the difficult task of negotiating affordable health insurance plans that give uninsured residents a range of innovative choices,” said Senate President Robert E. Travaglini. “These bids are evidence that the Connector is making tremendous progress towards implementing health care reform in the Commonwealth.”
“Today marks the approach of another milestone on the road to affordable, quality and accessible health care for everyone in Massachusetts. As the historic health reform became law, we knew implementation would require our unwavering commitment and best efforts. I applaud everyone who worked so hard to make today possible,” House Speaker Sal DiMasi said. “From the outset, the House of Representatives knew that no one will benefit from our hard work if there weren’t good options and affordable products. Today’s announcement is a huge step toward making affordable health care a reality for people who really need it.
“As always, though, there is no time for resting on our accomplishments. As the Connector Board proceeds with the critically important task of approving plans of high value and good quality for our residents, we are mindful of the difficult work ahead,” DiMasi said.
“Choice and affordability will be the hallmark of these plans,” said Connector Authority Executive Director Jon Kingsdale. “Individuals can select the plan that best suits their needs.”
The majority of today’s uninsured, typically those 37 years old or less, who select Commonwealth Choice coverage, will be able to purchase plans for about $175 per month. If purchased on a pre-tax basis, the net cost of coverage is reduced to $109 per month for someone earning $50,000 per year. Specific prices for each individual vary based on plan, age and region.
The Connector is also developing regulations to encourage pre-tax payroll deduction to further reduce the cost for these plans.
“We are honored to be part of this historic undertaking,” said Deborah Enos, President and CEO of Neighborhood Health Plan, which submitted the least expensive plan proposal. Access to affordable health care will benefit every citizen of Massachusetts.”
The Connector Authority received bids from 10 insurance carriers. At the board meeting on Thursday, staff will recommend the Seal of Approval be given to seven of them. They are:
Blue Cross and Blue Shield of Massachusetts
ConnectiCare
Fallon Community Health Plan
Harvard Pilgrim Health Care
Health New England
Neighborhood Health Plan
Tufts Health PlanAimed at individuals and businesses with fewer than 50 employees, Commonwealth Choice is also expected to attract many part-time workers and contract employees who historically have not been offered employer-based health insurance.
The three plan levels will all offer comprehensive coverage, including inpatient and outpatient medical care, emergency care, mental health and substance abuse services, rehabilitation services, hospice and vision care. Co-payments, deductibles and out-of-pocket contributions may vary among plans.
Today’s announcement comes three months after the Connector Authority requested bids from insurance carriers. When initial bids came back too high, the Connector, and in some cases the governor himself, asked the carriers to sharpen their pencils and come back with more affordable proposals. For the past several weeks, the Connector and the carriers have been back and forth as part of the normal procurement process, resulting in the bids announced today.
Separately, the Connector Board is expected to decide on Minimum Creditable Coverage standards at its March 20 meeting. Minimum Creditable Coverage will define the minimum level of health insurance that will satisfy health care reform’s requirement that residents of Massachusetts have health coverage.
“The Connector staff has done a tremendous job working to get this far, and I appreciate them. The citizens of Massachusetts came out ahead,” said Patrick. “I am committed to working with Senate President Travaglini, Speaker DiMasi and the Connector Board to deliver on the promise of providing quality and affordable health care.”
More on the significance of all this in our next post.
My understanding of the strategic alliance between Harvard Pilgrim and United is as follows: Each company will have access to the other’s network. Also, HPHC entered into a 10 year contract with United to switch over all of its technology based systems to United’s platform. The contract is worth more than $600 million over ten years to United. HPHC had been working with Perot Systems before this agreement was reached.
I’ve been wondering for a while what the HPHC/United relationship is all about. So I just looked around and read the below press release on it. I still don’t fully understand the deal.
Now that non-profit HPHC seems to be joined at the hip in a serious way with United, a MEGA FOR-PROFIT INSURANCE CO, is HPHC still enjoying its “Public Charity” tax exempt status (sales, property) in our state?
The final paragraph below gives me the feeling that it should not be… If anyone understands this business relationship better than I and Paul Levy seem to, could you please speak to it here?
If someone from the Division of Public Charities in Attorney General Martha Coakley’s office could perform this public service for us that would be great, or someone at Health Law Advocates, or both in order to give two perspectives. Thanks; I’ll check back.
— the below Press Release is from HPHC website
Newsroom:
Harvard Pilgrim Health Care and UnitedHealth Group form strategic business and marketing alliance
Relationship Strengthens Consumer Access and Affordability
Minneapolis, Minnesota (August 6, 2004) – UnitedHealth Group (NYSE: UNH) and Harvard Pilgrim Health Care (Harvard Pilgrim) announced today that they have agreed to form a strategic business and marketing alliance to improve service and overall value for national, self-insured customers.
This business alliance improves access and choice for consumers by combining the highly regarded Harvard Pilgrim network of 22,000 doctors and 130 hospitals in Massachusetts, New Hampshire and Maine with UnitedHealth Group’s national network, and by offering a simplified administration and care management portfolio in a single, integrated package. This comprehensive set of services is now available for large, self-funded, multi-location employers and their employees for January 1, 2005 effective dates of service.
“This alliance will provide significant value to people receiving their health benefits from large multi-location employers, as it builds on the strengths of our two organizations for their benefit. Employers will receive exceptional national network access and cost advantages as well as seamless administration on the UnitedHealth Group information technology platform,” stated Charles D. Baker, president and chief executive officer of Harvard Pilgrim. “UnitedHealth Group has spent more than $2 billion in targeted technology and business process improvement initiatives over the past five years, and our customers will directly benefit from their investments.”
Robert J. Sheehy, chief executive officer of UnitedHealthcare said, “Harvard Pilgrim has long been known as a facilitator of high quality health care services for people in Massachusetts and the northeast. It is the only health plan in the U.S. to achieve a top-ten rating for both member satisfaction and clinical quality in the National Committee for Quality Assurance’s Quality Compass 2003. We have the highest respect for Harvard Pilgrim’s expertise, and are pleased to bring a new relationship with this nationally renowned not-for-profit organization to our customers.”
About UnitedHealth Group
UnitedHealth Group (www.unitedhealthgroup.com) is a diversified Fortune 100 company that provides a broad spectrum of resources and services to help people achieve improved health and well-being through all stages of life. UnitedHealth Group offers products and services through six operating businesses: UnitedHealthcare, Ovations, AmeriChoice, Uniprise, Specialized Care Services and Ingenix. Through its family of businesses, UnitedHealth Group serves more than 55 million individuals nationwide.
About Harvard Pilgrim Health Care
Harvard Pilgrim Health Care is a not-for-profit health plan operating in Massachusetts, New Hampshire and Maine with a network of more than 22,000 doctors and 130 hospitals. Harvard Pilgrim provides innovative approaches to health improvement and disease management, unique online tools that speed and simplify key transactions for employers and providers and personalized health support at http://www.harvardpilgrim.org.
Forward-Looking Statements
This news release may contain statements, estimates or projections that constitute “forward-looking” statements as defined under U.S. federal securities laws. Generally the words “believe,” “expect,” “intend,” “estimate,” “anticipate,” “project,” “will” and similar expressions identify forward-looking statements, which generally are not historical in nature. By their nature, forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially from our historical experience and our present expectations or projections. A list and description of some of the risks and uncertainties can be found in our reports filed with the Securities and Exchange Commission from time to time, including our annual reports on Form 10-K, quarterly reports on Form 10-Q and current reports on Form 8-K. You should not place undue reliance on forward-looking statements, which speak only as of the date they are made. Except to the extent otherwise required by federal securities laws, we do not undertake to publicly update or revise any forward-looking statements.
I believe that United does its local work through Harvard Pilgrim, no?
This list reminds me of one important characteristic of most health plans in Massachusetts: they are independent and locally controlled. A few plans on this list are regional (HPHC, Connecticare)and several are for-profit. But none is part of a regional or national giant and none is publicly traded. I wonder how a United, Wellpoint or Humana would have responded to Governor Patrick’s calls? Two of the five largest national publicly traded health plans, Aetna and CIGNA, do operate in Massachusetts but they aren’t on the list–did they bid? We often debate the merits of for-profit vs. not-for-profit structure in health care. Control and ownership may just be more important…and another advantageous pre-condition for health reform in Massachusetts (just like our higher base of employer coverage, strong Medicaid program, and the resources available from the uncompensated care pool and the waiver).