You asked for a comparison of health care reform initiatives in Massachusetts and Utah.

Massachusetts and Utah have each taken steps to make health care coverage more accessible and affordable for more people. Both have established an online “connector” through which people can compare health plan features and enroll in a benefit plan. Other than the creation of an online connector, the Massachusetts and Utah plans are quite different.

In April 2006, Massachusetts enacted comprehensive health care reform with the goal of providing near-universal coverage to Massachusetts' residents. The law requires residents who are age 18 or over to have health insurance coverage. It requires employers with more than 10 full-time equivalent workers to (1) pay “fair share” and “free-rider” surcharges if they do not offer employee health care coverage and (2) offer employees a pre-tax, payroll deduction plan (called a Section 125 plan) through which they may pay their health insurance premiums. It offers subsidized health insurance plans for adults earning up to 300% of the federal poverty level (FPL). It also creates the Commonwealth Health Insurance Connector, expands Medicaid to children in families earning up to 300% FPL, and merges the individual and small group insurance markets.

In March 2009, Utah enacted HB 188 to expand access to, and provide greater transparency in, the health insurance market. It (1) allows insurers to offer lower cost health insurance products that do not include certain state mandates; (2) creates the Utah NetCare Plan, a low cost health benefit plan as an alternative to current continuation and conversion products; and (3) establishes a defined contribution arrangement market available through an Internet portal for eligible employees to compare and select benefit plans. The portal, known as the Utah Health Insurance Exchange, is scheduled to begin offering plans to small employer groups in January 2010 and large employers in 2012. Participating employers must establish a way for employees to use pre-tax dollars to purchase plans available through the Exchange.

OLR Research Report 2006-R-0285 (enclosed) includes a full description of the Massachusetts reforms. Highlights are described here.

Massachusetts law requires all adults (i. e. , residents who are age 18 or over) to have health insurance. Those who do not comply are subject to financial penalties of up to 50% of the cost of a health insurance plan. Penalties are collected via income tax filings.

Employers with 11 or more employees must either provide health insurance coverage to their employees or pay a “fair share” contribution of up to $ 295 annually per employee. If an employer does not provide health insurance and employees use free (charity) care, the employer is also subject to a “free-rider” surcharge. The Massachusetts' Division of Health Care Finance determines the surcharge annually, but the law requires it be at least 10%, and up to 100% of, the state's cost for providing the free care. It is only collected after an employer's employees incur at least $ 50,000 worth of free care in any hospital fiscal year.

These employers must also offer a “Section 125” plan (so named for the federal tax code on which it is based) that allows an employee to pay for health insurance premiums through payroll deduction using pre-tax dollars.

The law created the Commonwealth Care Health Insurance Program, a government subsidized program for low-income adults (up to 300% FPL) who are not offered employer-sponsored insurance and do not qualify for Medicare, Medicaid, or other special insurance programs. Table 1 shows the plan a person is eligible for based on his or her income and the minimum monthly premium for the plan. The actual monthly premium a person must pay for coverage depends on his or her location and the insurer selected. Table 2 (prescription coverage) and Table 3 (all other benefits) summarize plan benefits and copayments (source: www. mahealthconnector. org).

Table 1: Commonwealth Care Plans and Premiums by Income Level (As of July 1, 2009)

Note: FPL amounts change each March 1. Dollar amounts shown are for 2009.

Table 2: Commonwealth Care Plan Benefits and Copayments – Prescription Drugs

Table 3: Commonwealth Care Plan Benefits and Copayments (Other than Prescription Drugs)

The law created the Commonwealth Health Insurance Connector, which offers a choice of unsubsidized private health plans to individuals, families, and employers with 50 or fewer employees. The connector's board selects the plans through a competitive bidding process. The plans must meet affordability and quality standards and offer a range of coverage options.

Commonwealth Choice, as the unsubsidized program is called, currently offers dozens of plan options from six carriers: Blue Cross Blue Shield of Massachusetts, Fallon Community Health Plan, Harvard Pilgrim Health Care, Health New England, Neighborhood Health Plan, and Tufts Health Plan. Massachusetts' residents can compare the plans and enroll online through the Connector at www. mahealthconnector. org.

Commonwealth Choice plans are broken into four tiers: gold, silver, bronze, and young adults. Gold plans feature low copayments and no deductible. Silver plans have moderate copayments and some have no deductible. Bronze plans are available for a lower premium and most have deductibles and copayments. The young adult plans (for those between the ages of 18 and 26) are offered at a low premium and most have deductibles, co-payments, limits on benefits, and are available with or without prescription drug coverage.

The Massachusetts reform plan expanded Medicaid (MassHealth) eligibility to children in families of up to 300% FPL and increased enrollment caps in existing Medicaid programs. It restored a variety of MassHealth benefits, including dental, vision, and prosthetic, which had been reduced in 2002. The law also allocated $ 90 million over three fiscal years to increase the rates paid to acute care hospitals and physicians participating in MassHealth.

Among other insurance market reforms enacted, the law merged the individual and small-group insurance markets. Based on a study mandated in legislation, such a merger would slightly increase health insurance premiums for small employers but significantly decrease premiums for individuals.

In early 2009, the Utah legislature enacted, and the governor signed, a series of bills intended to reform health insurance market in the state. The cornerstone bill, HB 188 (copy enclosed), amends the state's insurance and economic development laws and, according to the legislation, aims to expand access to the health insurance market, increase market flexibility, and provide greater transparency in the health insurance market. HB 188:

● allows insurers to offer lower cost health insurance products that do not include state coverage mandates enacted after January 1, 2009 as long as they also offer a plan that includes the mandates;

● requires an insurer in the individual or small employer group markets to offer a basic health care plan that (1) is a federally-qualified high deductible health plan, (2) has the lowest qualifying deductible under federal law, and (3) has an out-of-pocket maximum that does not exceed three times the annual deductible;

● establishes a defined contribution arrangement market available through an Internet portal, known as the Utah Health Insurance Exchange;

● creates the Utah NetCare Plan, a standard health benefit plan available as an alternative to current federal continuation (COBRA), state mini−COBRA, and individual conversion products;

● requires the Insurance Department to include in its annual market report a summary of the types of plans sold through the Exchange and market penetration of “mandate-lite” products; and

● requires health insurance brokers and producers to disclose their commissions and compensation to their customers before selling a health benefit plan.

The new law establishes a defined contribution arrangement market available through the online Utah Health Insurance Exchange. It specifies that the Exchange must, (1) as of January 1, 2010, be available to small employer groups and offer eligible employees a range of health

benefit plan choices and (2) as of January 1, 2012, be available to large employer groups and offer eligible employees an even wider range of health benefit plan choices.

Under the law, a “defined contribution arrangement” is an employer group health benefit plan that complies with the law's requirements and is sold through the Exchange. The plans offered through the Exchange are available to employers' eligible employees who individually select and enroll in a plan. Open enrollment must be held annually during the month of November. Plans are effective the next January 1 are have a one year benefit period. Employees may also join a plan during the benefit year as a result of a life status change, but must do so within 63 days of the circumstance.

Employers. An employer that chooses to participate in the Exchange cannot offer employees a major medical health benefit plan that is not a part of the defined contribution arrangement. The employer must establish a way for employees to use pre-tax dollars to purchase plans available through the Exchange, such as a (1) health reimbursement arrangement, which reimburses medical expenses but excludes reimbursements from gross income or (2) Section 125 plan. But an employer may offer supplemental or limited benefit policies (e. g. , dental or vision coverage) or federally qualified health savings accounts that coordinate with high deductible health plans.

The law establishes a board within the Insurance Department that must develop a risk adjustment mechanism to apportion risk among the insurers participating in the Exchange to protect insurers from adverse risk selection. To the extent the risk adjustment plan permits, a participating employer retains the right to determine the (1) criteria for employee eligibility, enrollment, and participation and (2) amount the employer will contribute toward premiums.

The law requires an employer, by each November 10, to:

1. offer each eligible employee a choice of the health benefit plans available through the Exchange;

2. notify each eligible employee of the employer's selected “default plan” and that he or she will automatically be enrolled in the default plan unless he or she, by November 25:

a. notifies the employer that he or she has selected a different health benefit plan available through the Exchange,

b. provides proof he or she is covered under another health benefit plan, or

c. specifically declines coverage; and

3. for an employee who has not taken such action by November 25, automatically enroll him or her in the default plan and initiate related payroll deductions for premium payments.

The employer must notify its employees that an employee's failure to act is considered an affirmative election for the employer to begin pre-tax payroll deductions for health benefit plan premiums.

Insurers. Insurers that participate in the defined contribution market must:

1. stay in the market for at least two years;

2. participate in the risk adjuster mechanism;

3. offer one health plan that:

a. is a federally-qualified high deductible health plan,

b. has the lowest qualifying deductible under federal law, and

c. has an out-of-pocket maximum that does not exceed three times the annual deductible; and

4. offer one health plan whose benefits have an actuarial value of at least 15% greater than the required high deductible health plan.

The law does not limit the number of plans an insurer may offer in the defined contribution market. But any plans an insurer offers in addition to the required plans must provide benefits that are actuarially richer than the required high deductible health plan.

Under the law, an insurer is prohibited from (1) establishing a minimum employer premium contribution level or (2) discontinuing or not renewing a policy for not maintaining a minimum employer contribution. However, an insurer may require that, as a condition of coverage, at least a certain percentage of eligible employees participate in a plan (i. e. , a minimum participation level). An insurer's minimum participation level cannot exceed 75% participation.

An insurer must provide the Exchange, for each plan the insurer makes available through it, the following:

1. plan design, benefits, and options;

2. state mandated benefits that are not covered;

3. provider networks;

4. available wellness programs and incentives;

5. prescription drug benefits, exclusions, or limitations; and

6. for the prior year, the percentage of:

a. claims the insurer paid within 30 days of receipt and

b. adverse benefit determinations overturned on appeal as a percentage of total claims paid.

Insurance Department. The law requires the Insurance Department to establish an insurer solvency rating methodology by administrative rule. For each insurer participating in the Exchange, the department must annually determine the insurer's solvency rating and post it on the Exchange website.

Office of Consumer Health Services. By law, the Office of Consumer Health Services, which is within the Office of Economic Development, in cooperation with the insurance, health, and workforce services departments, is responsible for creating an Internet portal that:

1. provides access to private and government health insurance websites and their electronic application forms and submission procedure;

2. facilitates a private sector method for collecting premium payments for a single policy from multiple payment sources; and

3. assists employers with establishing a free or low cost way for employees to pay health insurance premiums using pre-tax dollars.

The law expands these requirements. It requires the portal to also provide:

1. a comparison of health benefit plans for the individual, small employer group, and defined contribution arrangement markets;

2. a method for enrolling in a selected plan; and

3. information about, and links to enroll in, government assistance programs.

The law also requires the office to convene insurers, health care providers, and consumers to monitor, and report to the Health Reform Task Force and the Business and Labor Interim Committee on, the progress made regarding health care delivery and payment reform.

It requires the office to adopt administrative rules to:

1. establish uniform electronic standards for insurers using the portal,

2. facilitate receiving and paying health plan premium payments from multiple sources,

3. determine the information necessary for a consumer to adequately compare plans online,

4. assist the risk adjuster board (see below) and insurers participating in the defined contribution arrangement market with determining an employer's eligibility for the market.

The law also authorizes the office to establish a transaction fee for using the portal, such as processing applications or accepting multiple premium payment sources.

The law establishes the Utah Defined Contribution Risk Adjuster as a nonprofit entity within the Insurance Department. The entity is made up of nine appointed board members who must represent: insurers participating in the defined contribution arrangement market; an individual employee or employer participating in the market; the Office of Consumer Health Services; the Public Employee's Health Benefit

Program; and the Insurance Department. All board members, except the ones representing an employee or employer and the Office of Consumer Health Services, must have actuarial experience.

The board must develop and adopt a plan of operation that (1) establishes how to implement the defined contribution arrangement market and (2) is subject to the insurance commissioner's review and approval. If the board fails to submit a proposed plan of operation to the commissioner by January 1, 2010, the commissioner must adopt rules as necessary to implement the law.

The board may amend the plan as necessary to maintain the market's solvency, mitigate significant issues of risk selection, or improve administration. The plan must include:

1. parameters an employer may use to determine which employees are eligible for the market;

2. underwriting mechanisms and employer eligibility guidelines that are consistent with federal law and necessary to protect insurers from adverse selection in the market;

3. how premiums for an eligible person are set, including:

a. an initial rate based on participating insurers' standardized age bands and federally-permissive wellness program participation incentives and

b. a group risk factor to be applied to the initial rate;

4. how premiums are to be paid to the Exchange and the participating insurers; and

5. a mechanism for adjusting risk between insurers that:

a. identifies health care conditions subject to risk adjustment,

b. establishes an adjustment amount for each identified health care condition,

c. determines the extent to which an insurer has more or less plan participants with an indentified condition would be expected, and

d. computes all risk adjustments.

HB 188 also creates the Utah NetCare Plan as an alternative to current federal COBRA continuation, state mini-COBRA, and individual conversion products. In developing it, legislators aimed for a product that is about 33% below the average cost for such products, according to the Utah Association of Health Underwriters.

NetCare offers a choice of two deductible levels: low-deductible and high-deductible. Each plan must include healthy lifestyle and wellness incentives and the benefits, or at least their actuarial equivalent, shown in Table 4.

Table 4: Utah NetCare Plan Description

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