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How Will a TN Insurance Exhcange Impact Employers?

Get the answer by reading the full document (or the Executive Summary), “Best Alternatives to a Federal Insurance Exchange in Tennessee”, just issued by the State of Tennessee Insurance Exchange Planning Initiative (the Initiative).

The report provides a comprehensive analysis of the governance, structure, processes of an insurance exchange and suggests how Tennessee may want to address the issues to ensure a stable and competitive market in the state.

The Small Business Health Options Program (“SHOP”) is the exchange that is applicable for employers. Major issues that impact employers include:

Eligible employers: Federal regulations allow employers with less than 101 employees to participate in the SHOP. However, states are allowed to restrict participation to employers with less than 51 employees until January 1, 2016 when the exchange is open to employers with less than 101 employees. All employers can participate in the exchange beginning 2017. The Initiative is recommending that Tennessee only allow employers with less than 51 employees to participate in the SHOP. There are an estimated 225,000 employees that would be eligible to participate in the SHOP through their employers that meet this size requirement.

Benefit design: The SHOP exchange in Tennessee would allow unlimited benefit design variation. This contrasts with the individual exchange in which the state may limit the number of available benefit design in order to not overwhelm individuals with too many choices and decisions.

Insurance agents: Only agents accredited by the state will be able to participate in the exchange and small groups purchasing through the SHOP will be required to work through an accredited agent or broker for the first two years of the SHOP. Agents can freely negotiate commissions with issuers and transaction, consulting and assistance fees with small groups.

Plan choice: Employers can select a single qualified health plan from the SHOP to offer their employees (employer choice) OR the employer can allow their employees to select from several or all of the plans in the SHOP (employee choice). However:

  • The SHOP would not require insurers to participate in the employee choice option
  • Insurers are allowed to have different premiums for the same benefit design/product for employer choice and employee choice approaches
  • Employers would be allowed to contribute defined amounts to the premium vs. paying a proportion (percentage) of the premium in the employee choice model.

Wellness: Benefit designs within the exchange can provide incentives for enrollees to be more actively involved in their health and wellness by allowing incentives for completion of health questionnaires and biometric screening; maintaining  normal BMI, cholesterol, blood pressure and blood sugar levels.

Geographic Rating Areas: There are likely to be 12-15 different geographic rating areas in the state, reflecting patterns of health care utilization and cost. Such an approach would help ensure that low-cost geographic areas are not subsidizing the high-cost areas.

Exchange sustainability: Users of the exchange would pay for the operating costs of the exchange through some type of administrative fee in order to minimize any tax burden on state taxpayers. Employers would be paying these fees either directly through assessed fees or indirectly through fees added to premiums or administrative costs passed on through qualified health plans.

Initiative staff is currently traveling the state to present the major components of the white paper and getting feedback and input before the report is finalized and submitted to Governor Haslam.

MBGH is a co-sponsor of The Memphis “listening session” scheduled for November 17, 2011 from 6:00 pm to 8:00 pm at the Fogelman Executive Center at the University of Memphis. Register here for the meeting.

In addition to listening sessions, comments can be submitted by email at insurance.exchange@tn.gov.

Posted by Cristie Travis at 7:19 PM

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