Broker Questions Health Connector Offering
A couple of weeks ago the Massachusetts Healthcare Connector sent a letter to all companies in Massachusetts with fewer than 50 employees (the “small group” market). For those who received it and have questions about how the Connector, and its new entity “Business Express” fit into the overall health plan landscape, I would like to offer my view on the situation.
To pique employer’s interests and “sell” the new Business Express service, the Health Connector’s letter emphasized that it was a new health insurance product, and in “some cases you could save more than $300 per employee per year on administrative costs.” In reality, Business Express is not a new product, but a new channel to access health insurance plans that are already available directly from the carriers. Business Express competes directly with established third-party intermediaries such as Northeast Business Trust and Small Business Service Bureau. Most importantly, from what I have seen, Business Express is in fact more expensive than established intermediaries.
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As a health insurance broker, I have taken sample quotes from Business Express, and found that their rates are actually $10 more expensive per employee per month than the intermediary we use, Northeast Business Trust (NBT — a group which also consists of Health Services Administrators and Mass Business Association). While Business Express touts the flexibility of allowing employees to choose any connector plan, I believe that this is actually a disadvantage since too many options breeds confusion, and, since older workers will pay significantly more than younger coworkers.
The main reason why an employer might use an intermediary is that some carriers (such as Fallon, Harvard Pilgrim and Tufts) will not sell insurance directly to very small companies (less than five employees). For these employers, the intermediaries offer almost all of the plans that can be obtained directly from the carriers, as well as other plans such as dental and vision insurance. An exception is Blue Cross and Blue Shield of Massachusetts, which will work with any size company directly (Blue Cross and Blue Shield does not at this time participate in Business Express).
The Health Connector essentially works in the same way as an intermediary. They receive “base” or “manual” rates from the carriers, then add an administrative fee on top of that. Moreover, the Connector only has a handful of plans to choose from (employees do have the option to choose from multiple carriers), not the full spectrum of plans available from the carriers.
I am not sure why the Health Connector (a taxpayer-funded organization) is competing against well-established and good quality private companies such as NBT. The Connector was initially formed to oversee the implementation of the Massachusetts Health Care Access and Affordability Act. Since the Act was so technically challenging, and required a significant effort in enrolling the roughly 300,000 uninsured people (many of whom were unemployed), the Commonwealth Health Insurance Connector Authority was established. By any measure, the Connector has done a great job of enrolling the state’s uninsured. I also recommend the Connector regularly for employers to cover their part-time employees who are ineligible for the group health plan. However, with their latest venture, Business Express, the Health Connector is moving beyond the original scope and intention of Health Care Reform. Now, it appears to me that the Connector is focused on taking over the established small group health insurance market, but without offering improvement or cost savings to employers.
Hollister is the president of Clinton-based Hollister Insurance Brokerage. He can be reached at Matt@HollisterInsurance.com.
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