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OP-ED | Connecticut’s Health Insurance Exchange Must Negotiate For Consumers

by | Nov 19, 2012 9:36am () Comments | Commenting has expired | Share
Posted to: Health Care, Opinion

Health care costs in Connecticut are among the highest in the nation and are expected to increase annually by up to nine percent in the coming years. At the same time, in little more than one year, every American will be required to have health coverage.

While the federal Affordable Care Act (ACA) includes many provisions to reduce those costs and to make sure it actually covers what people need, Connecticut’s marketplace is currently planning to reject the best tool for reducing costs — negotiating for the best price.

Health insurance exchanges, created under the ACA with millions in federal funds, are intended to provide a fair, transparent market where consumers and small businesses can purchase affordable, decent health insurance. One in 10 state residents is expected to purchase coverage through the exchange, including the 140,000 state residents who are eligible for affordability subsidies and required to purchase insurance there.

The best hope to keep costs down in the exchange is through negotiation with insurance companies. It is a practice called active purchasing. Small businesses pay 18 percent more than large companies for health insurance, in part because large companies have the volume to negotiate for better rates and quality. Insurance companies compete for their business, keeping costs down. Because the Connecticut exchange will be far larger than any private company in the state, it seems only logical that the exchange would leverage that market strength to get better bargains for individual consumers and small businesses.

Indeed, such negotiations for better rates for larger groups is the basic premise of the so-called “pooling” bills, advocated by legislative leadership and supported by Democrats statewide for several years.

Yet the Connecticut Health Insurance Exchange has said active purchasing would be too difficult to implement, and they do not expect to even attempt it.

Other states recognize the benefits of active purchasing. Massachusetts and California’s exchanges use active purchasing to promote value. Massachusetts’ exchange saves consumers up to $20 million each year in premiums through negotiation and has kept the rate of increase in health costs to half of that outside the exchange.

By contrast,  Utah’s insurance exchange includes plans from any insurer who applies, as Connecticut is proposing, and premiums inside that exchange are actually $60 to $150 per month higher than in the rest of the market.

Connecticut consumers and small businesses are already skeptical about the value of health insurance and of the benefits of the government-run exchange, recent research shows.

But the same consumers and small businesses were far more supportive of active purchasing. In fact, they believe it is the most attractive feature of an exchange. They liked that “big insurance companies [would] compete for their business.” If the exchange rejects active purchasing, it is unclear what value they add to an already consumer-hostile marketplace.

State law encourages Connecticut’s exchange to negotiate for consumers and the federal government has supplied the state with millions of dollars to implement a competitive system. States ahead of us like Massachusetts and California provide valuable templates for the successful implementation of active purchasing.

We have a unique opportunity, but it isn’t open ended. Connecticut is the land of steady habits. If we don’t open the Exchange with active purchasing, it will never happen.

Affordability is key to getting Connecticut residents, and indeed, everyone, covered by health insurance. Consumers both inside and outside of the exchange would benefit from active purchasing and lower premiums. If Connecticut doesn’t do anything differently with this historic opportunity, what is the point of the exchange?

Ellen Andrews is the executive director of the Connecticut Health Policy Project.

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(4) Archived Comments

posted by: GoatBoyPHD | November 19, 2012  11:37am


Let’s consider what the state has done for Health Care in the last couple months.

The merger between St Mary’s and Waterbury Hospital and the construction plan to build a new $400 million hospital was canceled because the state would not back off on their imposition of secular mandates on the Catholic Wing of the proposed Hospital.

That’s what state intervention and negotiation leads to. Grotesque incompetence and grandstanding at the expense of public health outcomes.

I missed that at Bushnell Park this Summer when the bigots and their bull horns were yapping about the “War on Women”. It’s was a war on health care alright—health care for those opposing abortion and for everyone else caught in the wake of the pro-abortion lobby.

What the board is asking to is to politicize the purchasing process to micro-manage their social agendas.

Just another form of corruption and incompetence waiting to happen. Let the free market do its job and let the exploiters wanting to turn health care into politicized circus step aside.

Then there’s the Mediciad waivers to balance the budget and the “No SustiNet for us” union contract that effectively creates a whole new class of citizen in the US.

State managed Health care is rife with corruption and payoffs. Let’s end it now.

posted by: Noteworthy | November 19, 2012  2:38pm

Ellen is spot on. Taking millions in federal dollars to set up an exchange which in its current incarnation, is nothing but a storefront with pre-packaged plans - all of them premium rated and unnegotiable. To be perfectly frank, any ninny can open a store and stock it with over priced products but where is the value? I am exactly the consumer to whom Andrews refers - I see little to no benefit for my family or my business in the current set up. When healthcare costs are rising at 9% per year, it easily outstrips any other costs associated with my business or personal life. Insurance companies have no incentive to offer the best rate and indeed they won’t. Like everything else in Connecticut, it is overpriced.

I’ve asked the qeustion before, if the current people on the Exchange board are only going through the motinos and checking off the boxes in order to get the federal dollars, and what they have to offer is of little value to saving us money, what the hell is the point?

Do it right or don’t do it at all; or get off the Exchange Board and let’s get people on it who actually care about the value they bring to the public. BTW, did the public ever get the Healthcare Advocate or a citizen advocate with voting power on the board? Or is it still stuffed with all the insurance company respresentatives?

posted by: middleoftheroad | November 19, 2012  10:31pm

Ellen and Noteworthy are correct. 

If things don’t change in CT now, when will they ever change?

The Exchange is all that is left of many efforts over the years to do something to help our residents.  If we give up on changing the plans that we offer, we may as well give up now.

To GoatBoy, we have been relying on the free market.  How’s the free market working for us?  Higher rates, no coverage.  The insurance companies just love the free market.

posted by: GoatBoyPHD | November 20, 2012  3:23pm


Active Purchasing? Oh Please. In Mass this meant raising the Medical Loss rations high enough and then making exceptions for companies performing outreach to the still uninsured and allowing them extra margin to go after hard-to-reach communities and demographics.

Now theyv’e finally gotten somehwere valuable; challenging the teaching hospitals like Harvard to lower their rates. When it was all said and done the for-profits weren’t the biggest problem—the problem became costing in the chain from the elite non-profit providers. In thsi state that would be Yale and UConn Med, etc

What they are almost ready to admit is they need a medical records system that gives them complete visibilty into a hosptal’s, nursing home’s, or other provider’s operations not just a roll up of a patient record. In other words they need to manage the physical plant and inventory and utilization and financial return analysis like a business.

When America gets to that point then we can get somewhere with controlling costs. Otherwise its simple brute force demands to pay less which backfires via various cost-shifting techniques throughout the system including miscoding of patients ICD-10 paperwork to augment billing.

All active purchasing will do in CT is create more Ent Moots. And more opportunity to mismanage the system and push social agenda items via micro-management.

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