Building a Competitive Insurance Marketplace in PA

A blog post from Christopher Lilienthal, originally published on Third and State.

So have you ever used Travelocity to book a flight? Or the Consumer Reports web site to research a new car?

Then you probably know the value of comparative shopping. I, for one, never book a flight before comparing just about every option and airline. What is the cheapest day of the week to fly, which airline offers nonstop flights, how long will I be in the air?

As Antoinette Kraus of the Pennsylvania Health Access Network (PHAN) wrote in an op-ed last week:

Sites like Travelocity have made air travel, car rentals and hotel bookings more convenient, competitive and affordable.

The same can’t be said for health insurance, but that’s about to change. The federal Affordable Care Act calls for the creation of competitive health-insurance marketplaces by 2014 to provide individuals and small businesses with a place to buy high-quality, affordable health coverage.

Pennsylvania’s Insurance Commissioner is holding hearings this month to gather public input on what the state’s new health insurance marketplace should look like. Hearings were held outside Pittsburgh and Philadelphia earlier this month, with the third and final hearing happening today near Harrisburg. Sharon Ward of the Pennsylvania Budget and Policy Center will be one of the testifiers at that hearing.

This is a fairly new debate at the state level. The Insurance Department hearings are intended as a first step on insurance marketplaces, or exchanges.

A lot of work lies ahead, but it is important that state policymakers incorporate some of the insurance marketplace principles outlined by PHAN, such as ensuring that an insurance marketplace is competitive and transparent, that it connects consumers with high quality health coverage that meets their needs and budgets, and that it protects consumers and serves as an industry watchdog.

At the end of the day, a competitive insurance marketplace will be good news for Pennsylvania consumers and small businesses who will be able to leverage their collective buying power and drive down costs.

Third and State This Week: Insurance Exchanges, Marcellus Drilling Impact Fee and Unemployment Bene

This week, we blogged about a state legislative hearing on structuring insurance exchanges, 11 things to hate about the state Senate drilling impact fee bill, the fine print on a compromise reached to continue federal extended unemployment benefits to 45,000 Pennsylvanians, and more.


  • On health care, Intern Emma Lowenberg has a nice summary of a Pennsylvania House Insurance Committee informational meeting this week that featured a presentation on how Massachusetts structured its state health insurance exchange and what Pennsylvania can learn from it as it moves toward creating its own.
  • On the Marcellus Shale, Sharon Ward blogs about the top 11 things to hate about the state Senate drilling impact fee bill.
  • On jobs and unemployment, Stephen Herzenberg takes a closer look at the compromise reached in the Pennsylvania Legislature last week that allowed 45,000 unemployed workers (and another 90,000 through the end of the year) to continue receiving extended federal unemployment benefits.
  • Finally, on poverty, Chris Lilienthal passes on an update from Community Legal Services in Philadelphia on a class action lawsuit that is proceeding on behalf of 359,000 low-income Pennsylvanians who are blind, disabled or elderly and saw a cut in early 2010 to a modest state benefit.

More blog posts next week. Keep us bookmarked and join the conversation!

Pennsylvania Lawmakers Get a Lesson on Massachusetts’ Health Insurance Exchange

A blog post from Emma Lowenberg, originally published on Third and State.

Members of the Pennsylvania House Insurance Committee heard from a national expert today on Massachusetts’ experience structuring a health insurance exchange.

States have until 2014 to create state-based health insurance exchanges that meet the criteria set forth in the Affordable Care Act. If they do not create a satisfactory exchange by then, the federal government will establish one for them.

While emphasizing that there is no “one size fits all” approach for states as they structure insurance exchanges, Dr. Jon Kingsdale said Pennsylvania can learn a thing or two from the Massachusetts experience.

Dr. Kingsdale, a veteran of the health insurance industry, was a key player in the establishment of Massachusetts’ health insurance exchange. Massachusetts established twin exchange programs in 2006 and 2009, and is now serving as a role model for other states.

At Thursday’s presentation, Dr. Kingsdale explained that the Massachusetts exchange includes an easy-to-navigate web site where shoppers can select their eligibility category (such as “family” or “young adult”) and then compare a range of plans from nine participating insurers. The site clearly lays out the prices, coverage and terms of each plan. Users can compare plans side by side in their own homes, eliminating the confusion of working directly with multiple insurance companies.

The exchange is limited to the individual and small group markets, according to Dr. Kingsdale. About 40% of the 100,000 people in the individual market get their insurance through the exchange. 75% of exchange customers are in the subsidized programs, which include both Medicaid and a subsidized program for non-Medicaid eligible adults. 25% of customers are self-pay customers, and 85% of those get their insurance through the exchange website. Dr. Kingsdale said the average time to shop and purchase insurance on-line for this group is about 30 minutes.

For individuals (especially the young, single and low-income), the exchange makes the complicated process of comparing and purchasing health insurance straightforward and easily accessible.

Since the implementation of health care reform in Massachusetts, the rate of uninsured Massachusetts residents has dropped from 10% to just 1.9% (the lowest rate in the nation), at a cost of $350 million, or about 1% of its $35 billion budget. Taxpayer filings indicate a 98.6% compliance rate with the individual mandate provision, and between 59% and 75% of voters approve of the exchange in recent polls.

The exchange was opened to individuals in 2007 and to small businesses in 2009. It has saved small businesses an average of $400 per employee in annual insurance costs.

Operation of the exchange is funded by a small assessment on program premiums. The cost is very small and not borne by the state government.

Essentially, Dr. Kingsdale said, establishing and operating a health insurance exchange can be a manageable process, provided it is begun early and planned carefully.

Each state, of course, has unique populations and needs that make creating a health insurance exchange an individual project. While there is no “one size fits all approach,” Dr. Kingsdale said the experience of Massachusetts’ simple, cost-efficient, and accessible health exchange can provide Pennsylvania with an excellent role model as we work to structure our own exchange..

To date, two bills have been introduced in the Legislature – House Bill 627 and Senate Bill 940 – to create an insurance exchange in Pennsylvania. Both bills are currently in committee.