Reprinted from INSIDE HEALTH INSURANCE EXCHANGES, a hard-hitting newsletter with news and strategic insights on the development and operation of federal, state and private exchanges.
April 18, 2013 Volume 3 Issue 6
The health reform law envisions at least two multi-state plans (MSP) offering coverage options through each state insurance exchange. But with carriers already scrambling to build and price exchange-ready products in time for October’s open-enrollment start, applying to be an MSP is being pushed to the back burner. However, some labor unions are looking into whether they might be able to play a role in the MSPs, which could give them a way to get federal premium subsidies into the hands of their low-income members.
Multi-state issuers must offer coverage options in at least 60% of states during the first year of the program, and expand to every state and the District of Columbia by the fourth year. One MSP must be a not-for-profit. Both Cigna Corp. and Aetna Inc. have said they will not participate as MSPs, at least not for the 2014 plan year. UnitedHealth Group is said to be considering it.
“The challenge for us is the statute, which requires [the MSP] to participate in all 50 states after two years. That does present a challenge,” says Aetna spokesperson Matt Wiggin.
The MSP program will be overseen by the Office of Personnel Management (OPM), which operates the Federal Employees Health Benefits Program (FEHBP). That program provides coverage to 8 million active and retired federal employees and their families.
While the Government Employees Health Association, Inc. participates nationally through the FEHBP, and has a long relationship with OPM, it has decided not to pursue the MSP option for 2014. “Although that’s something we may look at again in the future, the opportunity isn’t right for us at this time,” says spokesperson Karen Schuler.
In response to a query from HEX, OPM declined to name any carriers or groups that have applied to operate an MSP. It intends to review the applications and enter into contract negotiations with qualified issuers this summer. HHS released its 154-page MSP regulation last month.
Some union groups, led by the International Brotherhood of Teamsters, want to play a role in exchanges — but that could be a difficult road. The statute states that an MSP must be offered by a “health insurance issuer.”
David Ermer, managing partner at the Ermer Law Group in Washington, D.C., confirms there has been talk about a labor union offering an MSP, and suggests that a union might be allowed to partner with an established carrier, similar to UnitedHealth Group’s affiliation with AARP to offer Medigap benefits. “I suppose they could rip a page out of the AARP playbook and work with a carrier,” he says.
The Teamsters have been in discussions with Union Labor Life Insurance Co. (Ullico, Inc.), a labor-owned insurance and investment company licensed in all 50 states. While the company is no longer in the health insurance business, it could reconsider it if an opportunity unfolds with OPM, says Randy DeFrehn, executive director of the National Coordinating Committee for Multiemployer Plans (NCCMP). If Ullico served as a contracting agency through OPM, unions and their members might get access to the same federal premium subsidies that are available to others who receive coverage through the exchanges, he explains.
NCCMP — an independent nonprofit advocacy group for trust funds and labor industry groups and their associations — had lobbied HHS and Treasury to deem multiemployer plans (i.e., Taft-Hartley plans) as qualified health plans (QHPs) so that their low-income members could qualify for federal tax credits (HEX 11/11, p. 1). “The multi-state option is something we have been working on for some time,” DeFrehn tells HEX.
Blues Could Do it, But Will They?
Perhaps no group is better positioned to operate an MSP than the Blues. The Blue Cross and Blue Shield Association’s Federal Employee Program has been a part of the FEHBP since its inception in 1960, and covers about 5.2 million lives through the program. Moreover, a Blues plan has been selected as the “benchmark” option by a majority of states.
But while participation offers scale, rates are negotiated by OPM, which makes it a “near zero-margin” business, according to Joseph Marinucci, a director in the insurance ratings group at the ratings firm Standard & Poor’s. And because MSPs would be a risk business, participating carriers would need substantial risk-based capital. The nation’s Blues plans collectively have a sizable footprint in the individual and small-group markets already, and will be cautious about their participation in exchanges. Moreover, local Blues plans will be selling qualified health plans (QHPs) through their state’s exchange, and won’t want to compete against a national Blues option, Ermer says.
The MSP option — a consolation for Democratic lawmakers who pushed for a public insurance option — was championed by former Maine Sen. Olympia Snowe (R), whose home state is dominated by WellPoint, Inc. affiliate Anthem Health Plans of Maine, Inc. Snowe’s intention was to bring more competition to her state and to others, explains Trish Riley, an adjunct professor in health policy at the University of Southern Maine.
“The states where a multi-state plan is going to have the most impact are the states dominated by one Blues plan like Maine, Alabama and Mississippi. It really leaves you scratching your head about who the [MSP] is going to be,” says Riley. She previously was director of former Maine Gov. John Baldacci’s (D) office of Health Policy and Finance, and is credited with helping develop Dirigo Health, a subsidized insurance program launched in 2005 to cover Maine’s uninsured population.
For the Blues plans and other carriers, MSPs might make more sense for 2015, once exchanges are a known quantity. And it’s possible the start date could be delayed. Last month, HHS indicated it would likely delay certain features of the federal Small Business Health Options Program (SHOP) exchange, and said a federal portal for brokers and agents wouldn’t be operational until 2015.
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