Hartford Business Journal

6 Hartford Business Journal • July 8, 2019 • www.HartfordBusiness.com By Matt Pilon mpilon@hartfordbusiness.com H arvard Pilgrim Health Care is exiting the Connecticut Business & Industry Association's insurance exchange, leaving the state's largest business lobby with just one health insurer on its once rich private menu of plan of- ferings for member employers. The pending separation represents the beginning of a major strategic pivot for CBIA's 24-year-old Health Connec- tions arm, which over the years has been a key revenue generator to its parent. CBIA's remaining carrier, Farming- ton-based ConnectiCare, will continue to offer traditional, fully insured health plans on the exchange, but will also introduce "level-funded" policies, which are an emerging self-insurance hybrid plan targeted at small employers. While ConnectiCare's new offering — branded "Fixed-Funding Solutions" — will be exclusive to CBIA members, it will compete with Aetna, Anthem, the Chamber Health Care Coalition and others that have already entered the level-funded or self-funded market for small groups (which generally means 50 employees or fewer). The shift also comes at a time of heightened competition among insur- ance companies fighting to retain and gain access to the midsize market- place, industry experts say. Roberta "Bert" Wachtelhausen, Con- nectiCare's senior vice president and chief sales and marketing officer, said her company is launching the new plan because small employers — frus- trated by high health premiums fueled by the Affordable Care Act (ACA) and state mandates — are increasingly willing to test out alternative coverage models to rein in healthcare costs. "There's been a shift as employers who just can't tolerate the cost are mov- ing to take on more risk to get out from under some of the [state and federal requirements]," Wachtelhausen said. The CBIA and ConnectiCare have been allied for approximately 20 years, so an exclusive arrangement seemed like a natural fit, she added. Employers who self-fund can avoid the ACA's rules about how groups are rated and priced, and its requirement to provide a menu of "essential benefits," which make coverage more costly. Self- funded plans are also not subject to the state's 1.5 percent premium tax and its ever-growing list of health benefits that fully insured plans must cover. The ACA has effectively homog- enized health insurance available to small businesses on the fully insured market, forcing insurers to sell similar plans and making it less necessary for employers to join and purchase cover- age through CBIA. Big companies have long self-insured their health benefits, but the concept in more recent years has begun to trickle down to smaller companies. Self-insurance or self-funding, ac- cording to Kaiser Health Foundation, is an insurance arrangement in which the employer assumes direct financial responsibility for the cost of claims. An insurer or administrator typically oversees such plans. Level-funding is a form of self- funding involving structured monthly payments to cover a claims reserve account and stop-loss insurance pre- miums. Self-insurance also often in- cludes a stop-loss policy, but the levels at which coverage kicks in are usually lower in level-funded plans. Unlike regular health insurance, self-funded and level-funded policies also typically send back some money each year to members that had lower- than-expected claims. Besides potential cost savings, there's also greater visibility into claims and where the money is being spent, which allows employers to be more flexible in their plan designs, said Kenneth Comeau, president of CBIA Service Corp., the subsidiary that houses Health Connections. For employers, risks of stop-loss- style plans include increased financial skin in the game and the potential for more complexity. For workers, there's a chance certain benefits required under regular health insurance will be excluded, though proponents of self- funded plans say the menu of services they cover are largely comparable. Comeau said CBIA and ConnectiCare will begin pushing level-funded plans starting with renewals this month. Early quotes show ConnectiCare's new plans could save CBIA members upwards of 25 percent off their fully funded healthcare costs, he said. "In this ever-changing health-benefits landscape, you look for ways to bring value and make a difference for busi- nesses out there," Comeau said. "We're really at one of those junctures." While CBIA has chosen to move for- ward solely with ConnectiCare, Harvard Pilgrim's regional vice president Jason Madrak said there are no hard feelings. He said the CBIA exchange was key to Harvard Pilgrim's entry into Connecti- cut's small group market back in 2014. "CBIA has honestly been a very good partner for us," Madrak said. Harvard Pilgrim will still have CBIA members through next year, as its contracts expire. Meantime, Harvard Pilgrim quietly introduced a level-funded offering of its own about 16 months ago, but Madrak said it was more of a defensive play in response to competitors doing the same. Harvard Pilgrim's main focus in Connecticut remains fully insured plans, he said. HBJ PHOTO | MATT PILON Exchange Change CBIA's health insurance marketplace loses insurer, pivots business model CBIA's shrinking health benefit member pool The CBIA's once mighty private benefits exchange has seen steadily falling membership, much of it tied to the Affordable Care Act, which has made it harder to distinguish small group insurance offerings. Source: U.S. Department of Labor, Form M-1 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 0 20,000 40,000 60,000 80,000 100,000 Total number of participants 70,129 67,788 74,174 90,662 84,137 78,478 74,458 74,458 69,605 56,461 44,408 54,588 51,792 45,430 19,616 19,616 25,984 25,984 CBIA Service Corp.'s Ken Comeau and ConnectiCare's Roberta "Bert" Wachtelhausen are leading the launch of a new healthcare offering for CBIA member businesses.

• Cover