WIPP Healthcare Committee Meeting March 17, 2011

Terry Gardiner National Policy Director Small Business Majority

The Basics of Health Exchanges Health Insurance Exchange A marketplace where small businesses can shop for health insurance plans that best meet their budget and needs. An exchange can pool the buying power of small businesses and incentivize competition of insurers. 2011 WIPP All Rights Reserved www.wipp.org 1-888-488-WIPP

Existing Exchanges: Lessons Learned We studied and interviewed representatives from exchanges to understand the successes, failures and lessons learned Utah Exchange 2010 80 Employers Massachusetts Connector 2009 4,200 Employers HealthPass, NY 1999 4,000 Employers CBIA, CT 1995 6,000 Employers PacAdvantage, CA 1993-2006 10,000 Employers COSE, OH 1983 11,000 Employers Federal Employees (FEHBP) 1960 8 Million People

Small Business Health Coverage Choices Purchase health coverage through the exchange Purchase health coverage in the outside market Maintain a grandfathered health plan Do not offer health coverage Will the exchange offer value lower price; better coverage; better services?

An Exchange that Small Business Trusts with Value and Choice An independent exchange will create the greatest trust and support Active purchaser model can provide value for employers and employees Employee choice model is needed to differentiate from outside market and drive consumer choice and value

How Will Small Business Learn About the Exchange? Only half of employers belong to a business group Trusted Advisors their brokers, accountants, peers Communication business press, business groups, trade groups Navigators need to be trusted messengers

Meeting the Needs of Small Employers 5.9 million employers with fewer than 100 employees employ 43 M nationally o 80% (4.8 M) have fewer than 10 employees o 54% (2.6 M) of employers with fewer than 10 employees do not offer health coverage Most small businesses are very small and lack sophisticated HR departments o Average employer in Connecticut exchange has 8 employees

Single Point of Entry for Employers All necessary information for employer and employees to make decisions on coverage One application One premium payment & detailed accounting One source for enrollment changes

A True One-Stop SHOP Carrier A Carrier B Carrier C Carrier D Carrier E P P E E P E P E P E Broker/ Navigator (P) Group Premium Payment (I) Premium Invoice Facilitate Compensation Exchange I: One consolidated list bill P E (E) Plan Selection, Enrollment IRS Tax Credit Mechanism HealthPass 2011 11 Adopted from: Terry McCorvie, Workable Solutions, Inc. Employer

Full Array of Services Meeting Employer Needs Qualification and calculation of the small business tax credit; state programs Coverage of out-of-state employees Coordinating coverage of Medicare-eligible employees Provides additional HR services such as Cobra administration, Section 125 service, HSA/FSA/HRA

Exchange Must Streamline Health Benefits Services ROBUST ADMINISTRATIVE SERVICES In-House Member Services COBRA & State Continuation Admin. Premium Aggregation & Monthly Consolidated List Billing Section 125 for Pre-Tax Premium Contributions Eligibility Determinati on Enrollment & Subsequent Employer and Employee Education S i z e o f s m a l l b u s i n e s s c o r r e l a t e d w i t h H R c a p a b i l i t y HealthPass 2011 13

What Will be the Role of Brokers? Brokers have existing relationships and will have ongoing role with small business selling other products Initial launch to the new system has proven critical for both employers and brokers Exchanges will need to balance broker compensation and services with competitive cost to employers Brokers will be impacted by rates paid outside and inside the exchange Successful exchanges train and support brokers on ongoing basis

Brokers & Agents Are Vital Employer elects SHOP exchange Employee selects & enrolls in coverage Exchange administers & supports B r o k e r / a g e n t a s s i s t s, e d u c a t e s, & s e r v i c e s HealthPass 2011 15

Other Measures Help Small Business Defined contribution option NY, Utah & Montana Contributions by multiple employers for part-time workers Utah Free choice voucher Support of larger businesses

Exchange Implementation Timeline October 2010 HHS awards first round of planning and establishment grants to states 2011 2012 States authorize exchange through legislation January 2013 August 2013 January 2014 HHS determines if state is willing and able to open exchange by January, 2014 Exchange begins selling health insurance State exchange must be fully operational January 2015 2016 2017 Exchange must be self-sustaining Small group must be expanded to groups up to 100 EEs State may open exchange to large groups (>100 EEs) HealthPass 2011 17

Key Decisions Ahead for Small Business State or federal operated exchange? Exchange management state agency or independent? Active or passive purchaser role? Role of broker/agents What level of services will be provided to small business? Options for defined contribution; part time employees; employee choice of plans

Questions? Terry Gardiner National Policy Director Small Business Majority www.smallbusinessmajority.org

Get Involved! 1-888-488-WIPP www.wipp.org Questions? Contact WIPP Staff Small Business Policy Analyst: Matt Boyle mboyle@wipp.org (415) 434-4314 Membership Coordinator: Hannah Starkel hstarkel@wipp.org (415) 434-4314 2011 WIPP All Rights Reserved www.wipp.org 1-888-488-WIPP WIPP, Inc. does not guarantee the accuracy, completeness, or timeliness of the information provided in this Healthcare Committee presentation. WIPP, Inc. is not responsible for and expressly disclaim all liability for damages of any kind or nature, whether direct or indirect, including but not limited to, consequential, compensatory, actual or incidental, arising out of the use, reference or reliance on information provided in the Healthcare Committee courses.