Last June Kevin J. Counihan was appointed by Gov. Dannel valium online. Malloy to head generic adderall Health Insurance Exchange. Creating health exchanges in each state is an essential part of the federal governmentÂ’s Patient Protection & Affordable Care Act (Obamacare). Counihan comes to Connecticut from Massachusetts, where he was chief marketing officer for that stateÂ’s Health Insurance Connector Authority, the health-care exchange developed as part of the Bay StateÂ’s reform law. He has also been senior vice president of sales and marketing for Tufts Health Plan and a regional vice president for Cigna Corp. Counihan holds an undergraduate degree from the University of Michigan and an MBA from Northwestern UniversityÂ’s Kellogg School of Management.
How did you get from the private to the public sector?
[Massachusetts became] the first state in the country to adopt a mandated health-insurance plan requirement. Like auto insurance, or seat belt laws, helmet laws, it required all residents 18 and above to have health insurance. The [law] created an insurance exchange that served as the foundation for Obamacare and the Affordable Care Act.
When did you start at CHICA and what was the job?
In 2006 the executive director was named; I was recruited that summer. In these kinds of startups these jobs get very amorphous. My job was to do the marketing research, product design, create the metal tiers — gold, silver, bronze — to enroll members, to help create the Web enrollment portal, to work on the call center. It’s one of those jobs that you start out doing a little bit of everything.
What is a health exchange?
Essentially an online insurance store. It’s a means for individuals and small businesses to buy health insurance in an easier, simpler and more transparent way. The idea is to help garner more value for enrollees through more competition, and to help promote new entrances into markets. They’re a pro-competition, free-market means to buy health insurance. We have five major health plans in [Connecticut]; we’re going to have a sixth one coming in next year and maybe a seventh. In Massachusetts about four plans have about 96 percent of the market share.
What is the role health exchanges play? Is it just for competition, and if there was more competition would we still need it?
The exchange by law has to serve all features required by the law, but it’s an online marketplace. It’s intended to make it easier for people to shop for health insurance — make it simpler to buy, simpler to compare plans, simpler to make decisions, and in the case of federal law, make it easier for them to understand if they’re eligible for federal subsidies.
Have a lot of companies entered the exchange in Massachusetts?
They don’t at this point; they have roughly 1,000 to 2,000 small-business members in the exchange. The plan being offered is not particularly distinguished from other plans offered by the [private] health plans. Small-business programs offered through the federal program are going to be very similar to CBIA in Connecticut, meaning that it’s a defined-contribution model. An employer picks a benchmark plan — it could be ConnectiCare, HMO 35, Anthem and for example is contributing 80 percent of the cost in the silver tier. Then the employee can either accept that plan or they can take the money provided by the employer for the ConnectiCare plan and buy Anthem or Aetna or United or any other plan. In Massachusetts that’s not the plan offered for small business. For small business there are several different HMOs but they’re offered on a sole-source basis, which means the employer would take ConnectiCare or HMO 35 and the employees can either take it or leave it. It didn’t really differentiate itself, and I think that’s why there’s low membership.
What size companies may enter the exchange, and what size companies are affected by Obamacare?
The feds give states the option of defining the employee small-group size as either one to 50 [employees] or one to 150. Many states including Connecticut picked one to 50 initially, but in 2017 the law requires that that automatically gets extended to one to 100.
What percentage of people in Massachusetts have chosen to purchase insurance through the exchange?
It’s got about 225,000 to 230,000 enrollees. In a state of 6.5 million that’s three percent [of insured people] in the exchange. Massachusetts started with ten percent uninsured; it has decreased from ten percent to two percent [uninsured], but not all [newly insured] are going through the exchange. It’s really for individuals.
In order to be subsidized will you have to go through the exchange?
The subsidies are for individuals only, but small businesses can receive tax credits. But neither are available outside the exchange.
If a small business enters the exchange, do the employees have access to subsidy?
They could. The way it works is through the ‘affordability’ provision. If the amount of money paid by the employee for their share of the [health insurance] premium is more than 9.5 percent of their income, they have the ability to opt out of the employer plan and go directly to the exchange.
So a low-income employee can go into the exchange and get a subsidy?
Yes. But when that happens the employer pays a penalty of $2,000 per employee. There’s a penalty for employers offering plans that employees can’t afford or they’re not being paid enough in salary to afford coverage. If the employer for example is going to pay at least 50 percent of the cost of the coverage then the remaining percentage which is paid by the employee becomes part of the [formula to determine if the insurance is still] ‘unaffordable.’
So companies that employ low-income workers will have a pretty major burden with those penalties?
If you have firms with that type of salary level, those firms are often going to be eligible for tax credits to the employer to make the coverage more affordable. [The Obamacare legislation] tried to contemplate situations where employers who may not be offering coverage right now — beauty salons, nail salons, sandwich shops, etc. — might be able to get some significant tax credits, like 50 percent, in order to offer coverage. But you do need to be in the exchange for that.
Wouldn’t that make for a lot of companies moving into the exchange for subsidies and tax credits?
I don’t think so. I think there’s going to be a market for it, but it’s going to be a niche. I don’t think every employer wants to move to a defined-contribution model. I don’t think every employer wants to move to a CBIA type of product.
What are the income levels to qualify for a subsidy?
The subsidies are available up to 400 percent of the Federal Poverty Level (FPL). For a family of four right now that’s $92,000.
Is that the same subsidy as Mississippi, where the median income is much lower?
Yes. [The federal government doesn’t] regionally adjust things like Social Security, Medicare or Medicaid. They make national laws with national formulas. It certainly benefits some states more than others; that’s true of the tax credits for small business. You can argue it’s a weakness [of the legislation].
How is age banding and pricing handled?
What health carriers typically do is they have something called rating slopes, and that is that their rates don’t go up consistently. So they can go up very slowly, and then at [age] 40 they can go higher. The [new] law does away with slopes and moves rates up consistently by year [of age of insured person]. Instead of five-year age brackets it goes up by year. It’ll just continually go up.
But it is still an aged-based pricing plan?
There’s obviously a real relationship between age and illness: The older we get the more likely we are to incur medical costs. But there is an age compression ratio. Currently in Connecticut it is six to one — the highest that an older person can pay is six times what a younger person can pay [in insurance premiums]. So if a person at 20 years old is being charged $100, then the highest an older person can be charged is $600. The [Affordable Care Act] changes that to three to one, so it’s going to be cheaper for older people but more expensive for younger.
What are the bronze, silver and gold tiers you referred to?
These are actuarial values to help people determine the amount of coverage that a plan covers. A bronze plan would have a 60-percent actuarial value, which means the insurance company will pay for 60 percent of the costs on average and the individual 40 percent. The silver plan has a 70 percent actuarial value, so he insurance company pays 70 percent and the individual pays 30. Gold is 80-20 and platinum is 90-10.
This seems like poor people get this low-end plan anyway. How ‘progressive’ is that?
The poorest people are going to be in Medicaid. You have to have people at 138 percent and above of the FPL before this gold, silver, bronze stuff comes into play. In the exchange, anyone who’s interested in subsidies or shopping there will go into the exchange, then the system will determine if they’re eligible for Medicaid or the tax subsidies, or unsubsidized commercial insurance.
In the commercial marketplace, where do most plans fall in the bronze/silver/gold matrix?
Most individuals are in the bronze level. Most small businesses are in the bronze-to-silver [coverage range] and most large firms are in the silver-to-gold level.
There are a lot of non-profit health insurance companies. What advantage does an exchange have over these non-profits?
Exchanges are distribution arms, not insurance companies. It’s not about being for-profit or not-for-profit; [the exchange] is there to distribute product that meet the criteria established by the law and by the state. The [Obamacare-mandated] Essential Health Benefits have criteria in the law: patient hospitalization, pharmacy, prescription drugs, X-ray laboratory, mental health, drug abuse.
Who will determine the benefits that have to be covered in the exchange and in health plans generally?
Right now all states determine what’s in their Essential Benefits plan until 2016, when [the federal Department of] Health & Human Services takes it over. I’m more concerned about the impact it’s going to have on such things as [benefit] mandates. If the feds establish Essential Health Benefits, they’re going to include a certain amount of what every state may consider mandated coverage. Anything above what the feds require will have to be paid for by the state. This can be extremely expensive for states.
Massachusetts and Connecticut have had among the richest benefits and most advanced health-care infrastructure in the country. Is there a danger now that we’ll see a leveling out with poorer states?
The whole purpose of Essential Benefits is to level out — to make Mississippi more like Connecticut and Massachusetts. Many states with very rich mandates – Connecticut, New York, Massachusetts, California, Washington — may have to pay for them. That’s going to be a very different discussion at the legislative level.
Will the state cover ‘medical marijuana’?
The benefits in the exchange have to cover all state mandates. So anything — whether it’s in-vitro fertilization, autism and such — all have to be included as plans offered in the exchange. The states will be at their discretion if they want to cover above what the feds require. They [state governments] just have to pay for it. The changes in the law impact all insurance plans, not just the ones sold in the exchange.
So if Connecticut wanted to keep coverage for something like autism but it didn’t pass national muster, then all plans in the state will have to cover autism and the state of Connecticut will have to pay for it?
The federal government in 2016 will establish a minimum standard of coverage. Any state that wants to add richer coverage to that will not have that reimbursed by the feds in the subsidized payment. The states would have to add to the cost of that in the subsidy. Only for people who are being subsidized.
When does the exchange take effect?
Open enrollment [begins] in October for [coverage commencing] January 1, 2014. The open enrollment runs through March 31 . You can only enroll during a specific period of time. The first time will be a six-month period, and then going forward it will be three months from October 1 to December 31. So if you don’t get in you have to wait until next year. The reason for it is that if people are allowed to enroll at any time, then they’re also going to wait until they get sick to enroll. The penalty for the first year is $95 — not much of a penalty. The penalty in Massachusetts is now about $1,000. My experience is that until [the penalty] gets to that level it’s really not that meaningful.
How many people are uninsured in Connecticut?
[Currently] 9.6 percent are uninsured. I think we can reach the Massachusetts [98 percent coverage] number, but it’s going to take several years, as it did in Massachusetts. One of the challenges is that people expect too much of this thing. Some thought that with the exchange, costs were going to go down — things will be 20 percent cheaper, that our uninsured level will drop to two percent. None of those things are true.
Isn’t it typically true that more people buying any product usually drives the price up?
If you get more people going into some type of things the price could drop. But health insurance is different — health economics runs counter to normal economics, which is one of the reasons it’s so expensive. We’re expecting to get 120,000 to 150,000 people in the exchange. Medicaid will probably expand by about 75,000 to another 100,000. Between Medicaid and the exchange, we’ll see somewhere in the order of about 200,000 people newly insured — about two thirds of the [presently] uninsured. The laws reimburse at 100 percent the increase in Medicaid for the first few years. But after those first couple years, [cost of coverage] does revert back to the state on a detrimental basis.
What would you like business people to know?
The exchange is going to be up and running in October. We have a website: ct.gov/hix. It has a lot of information for small businesses to understand what their opportunities and obligations are. They should go to that website, speak to their [insurance] broker, speak to our staff and help them understand what’s in the law. You can go through a broker or you can buy direct, but it will cost the same either way.