Small-business owners are getting their first look at the rough outline of a new health insurance exchange that will function as a one-stop shop for buying and selling insurance in Connecticut.
The Connecticut General Assembly passed a bill to create the Connecticut Health Center Exchange, which under the federal Patient Protection and Affordable Care Act must be operational by 2014.
Such state or regional exchanges are intended to provide a central marketplace for individuals and small employers to buy affordable health insurance from a choice of plans.
In the end, Connecticut lawmakers relied in part on model legislation from the National Association of Insurance Commissioners for use by specific states. Only this month did New York Gov. Andrew Cuomo propose a similar law, with the New York exchange possibly to include a Small Business Health Options Program, which would assist small employers in facilitating the enrollment of their employees in qualified health plans offered in the group market.
Connecticut, New York and other states have each received $1 million in funding to design their exchanges, with states also allowed to opt into a federal template created for states. Both Connecticut and New York rejected that option on a desire to craft their state exchanges to the specific designs of existing information technology systems governing Medicaid and other state programs.
The Connecticut Office of Policy and Management listed some of the myriad challenges with the system, including:
- whether to establish two separate exchanges for individuals and small businesses;
- whether to allow participating insurance plans to provide the federally defined essential;
- the relationship of the exchange to insurance agents; and
- how to ensure that the exchange is financially sustainable by 2015, as required by federal health reform.
States are also grappling with how to design a health insurance system to ensure that any subsidies are not so attractive that they pull in companies or individuals that might otherwise have obtained insurance in the regular market.
“We”™ve seen some problems with adverse selection in other systems that have been established and certainly we”™re learning about those,” said Jeanette DeJesus, who is leading Gov. Dannel P. Malloy”™s efforts to marry up state systems to align with federal health reform, in testimony this spring. “We have a $1 million grant, which requires us to go out into all parts of the state to talk to small-business owners, large-business owners, people in communities, and to ask them specifically what (they) believe the impact of this legislation will be. ”¦ And so the issue of adverse selection is one that will be taken up.”
The state last week held one of those sessions in Bridgeport.
“Obviously it”™s something we”™ve seen play out in the commercial market,” said Kevin Lembo, state comptroller, in separate testimony. “More than once where a product enters the field, it”™s put out as a loss leader by the company (and) looks like it might be adequately priced based on the projected population. ”¦ Part of the business plan and feasibility piece is making sure that based on the projected population that comes in, that we can create a product that is self-insured, sustaining and that premiums ”¦ make the whole thing go on its own without a need for outside capitalization beyond the startup.”
