Mercer finishes report to Exchange Board

Mercer’s analysis predicts that exercising the Basic Health Plan Option would save CT between $145 and $30 per member per month. The Basic Health Option was created in the Affordable Care Act; Mercer estimates that 74,000 people in CT would be eligible. The option allows states to enroll residents just above Medicaid eligibility levels to 200% of the federal poverty level (now $21,780/year for an individual, $45,700 for a family of four) into a state-sponsored plan similar to Medicaid in 2014. The feds will reimburse the state 95% of the cost of subsidies those consumers would have received in the insurance exchange. Up to this report, there has been some disagreement on the potential savings/costs of CT choosing the option. Advocates are concerned that without the Basic Health Plan, low-income consumers, some now in Medicaid, would be forced into lower-value, unaffordable options in the exchange. As incomes fluctuate more at lower incomes, choosing the Basic Health Option will improve continuity of care for more people in CT.

Mercer also estimates that 40,000 people will join the small business exchange and 185,000 will join as individuals. This is substantially lower than a CT estimate by RAND for the Council of State Governments using a different model. Mercer estimates that only 5% of small businesses not eligible for subsidies will purchase coverage in the exchange and that many will drop coverage entirely, leaving their workers in the individual market. Board members noted that employers in MA did not drop coverage during their health reforms five years ago. Mercer acknowledged that these are estimates and a great deal depends on effective outreach and public education campaigns. Again, Board members are focused on low numbers of small businesses in MA’s exchange and asking “how can we avoid mistakes made in MA.” They are missing the larger point -- since their reforms and creation of their exchange, the percent of MA small businesses offering health benefits is up, while it dropped significantly in CT during those same years.

Mercer also found little impact of incorporating CT’s high risk pools into the exchange. They estimate that merging the small group and individual markets would lower individual premiums by 2% but raise small groups’ by 4%. Again this is different than what MA experienced – individual premiums averaged 33% less after reform. Mercer also found that the individual mandate penalty makes very little difference in the number of uninsured, even if the penalty was tripled from current law. (Is this where advocates say – I told you so?)