When Is The Right Time To Negotiate?
By the end of November the Connecticut Health Insurance Exchange Board is expected to make a decision about whether the state should actively negotiate with insurance companies offering a plan on the exchange.
The exchange will be the virtual marketplace where consumers will be able to shop for insurance starting in Jan. 2014. It is expected that one in 10 Connecticut residents will eventually purchase coverage through the state’s insurance exchange.
Insurance Exchange CEO Kevin Counihan said last week that no decision has been made but he expects that his staff will recommend not negotiating with insurance companies on the exchange. That means — if the exchange board approves the decision — insurance companies will simply be able to offer their plans through the virtual marketplace on a website hosted and promoted by the state.
The web site will give consumers an opportunity to shop and compare plans in one location, but it won‘t negotiate the premium price or benefits, as long as the benefits comply with the federal Affordable Care Act.
The passive proposal is infuriating to Ellen Andrews, executive director of the CT Health Policy Project, who believes the state should be actively negotiating.
“Small business pays 18 percent more in premiums because it can’t negotiate,” Andrews said. “The exchange was supposed to solve that issue for individuals and small businesses who can’t negotiate now.”
Like large employers, other state exchanges negotiate with insurers on behalf of members to maximize value and affordability, she said. Connecticut’s law creating the exchange permits negotiation, but does not mandate that the state do so.
Andrews argues that if the state doesn’t negotiate, then the value of the exchange is diminished for consumers.
But Counihan argues that it’s impossible for the state to negotiate because it doesn’t know for certain which individuals, or even how many of them, will participate in the exchange.
“It’s very hard to negotiate when you have no market share,” Counihan said.
Without knowing who will participate it’s impossible to know if sicker, older individuals or younger, healthier individuals, will participate.
However, Andrews argues there already are enrollment estimates and insurance companies could easily have actuaries draw up estimates for the morbidity and health of those buying insurance through the exchange.
Connecticut’s exchange is expected to enroll 250,000 to 300,000 state residents, more than the state employee or any private plan in the state, well large enough to effectively negotiate on behalf of members, she said.
But Counihan, who ran the Massachusetts exchange, called the Massachusetts Connector, disagrees.
“It’s ill-advised and unrealistic” in the first year, Counihan said.
He said the health plans that meet the seal of approval in Connecticut will have to comply with the federal Affordable Care Act, which takes away gender underwriting, exclusions for pre-existing conditions, and mandates that all plans to offer maternity coverage.
There is currently only one plan on the individual market in Connecticut that offers maternity coverage.
“There’s a lot in there already that’s pro-consumer,” Counihan said of the Affordable Care Act.
The plans on the exchange will be structured in medal tiers — gold, silver, and bronze — based on the level of their benefits. Information about the tier levels will be standardized to help consumers compare price and the quality of covered services.
“Like the ACA, Exchanges and its [sic] purchasing models are iterative,” Counihan and his staff wrote in this paper.
“The purchasing model deemed appropriate during Exchange implementation will evolve as knowledge of carrier participation, member enrollment, product selection and mix, rates, and service needs of individuals and small groups become clearer.”
But advocates like Andrews aren’t giving up on the idea of “active purchasing.”
“Detailed information on the risk profile and health needs of the exchange population is not needed to elicit bids from health plans,” Andrews argues in a paper on the benefits of active purchasing.
The Health Insurance Exchange Board could make a decision as early as Nov. 29 on whether to actively negotiate with insurance plans participating in the exchange.