The Merger of Maine’s Small Group and Individual Health Insurance Markets Reduces Premiums Near-Term While Standardizing Plan Design for Employers
The CMS announcement on Friday, July 15th of its official approval of the Mills Administration's request to extend the state’s reinsurance program over the combined Individual and Small Group markets provided the final statutory requirement for the establishment of the merging of these markets beginning 2023. This piece explores some of the opportunities and challenges for Small Group health insurance decision-makers and the brokers that support them.
Merged Markets Promise Lower Premiums for Small Groups
Over the past three years, premiums for Small Group health insurance have increased by 31%, according to the Maine Bureau of Insurance. At the same time, due in part to subsidies provided by the ACA, premiums for individual plans have declined. The rise in Small Group health insurance premiums has also coincided with the decline in Small Group enrollments as decision-makers have opted out of providing health insurance for their employees or have pursued alternatives such as level-funded plans which are based on the census and underlying health conditions specific to a given Small Group.
By folding community-rated Small Group health insurance coverage into the Maine Guaranteed Access Reinsurance Association (MGARA), which currently provides reinsurance for the individual health insurance market, the Made for Maine Health Coverage Act will now merge the two “risk pools,” thereby extending the benefit of the reinsurance program to the Small Group market as well. With the pooling of the two markets, the Bureau projects the average change in premiums from 2022 to 2023 will be offset by 6% for small employers in 2023 and by 3.9% in 2024. Small employers are defined as those with fewer than 50 full-time equivalent (FTE) employees.
With a highly competitive job market, this may be just the opportunity for small employers who have been on the fence about offering health insurance to gain a competitive edge by providing health insurance options to attract and retain valuable employees.
“Clear Choice” Plans for Small Groups
Effective in 2022, individual health insurance plans in Maine used one of several “Clear Choice” plan designs with the goal of reducing consumer confusion and to provide an easy way for consumers to compare the plans offered by competing health insurance carriers. Offered in Bronze, Silver, Gold, and Platinum, Clear Choice plan designs have the same deductibles, copays, and co-insurance for medical services regardless of which health insurance carrier provides the coverage, though there may be some differences in provider networks, tier one prescription drugs, and special wellness incentives. With the merger of the Small Group and Individual markets, Small Group will also be required to offer Clear Choice plans effective in 2023.
The good news here is that Small Group employers will be able to shop comparable plan designs among health insurance carriers. Additionally, Small Group coverage benefits may be enhanced, with some plans offering co-pays, but no deductibles for primary care, behavioral health, and urgent care visits. The potential downside of richer benefits is that the application of Clear Choice plans for Small Group may put upward pressure on premium prices, though an employer can always choose between plan levels to manage the costs versus benefits provided.
With Change Comes Potential Confusion
Small groups that have been offering their employees coverage may be surprised to learn that the plan they had in 2022 will no longer be offered in 2023. That is a direct result of the merger of the two markets and the requirement to offer Clear Choice plan designs to small groups, just as they are now offered to individuals. In addition to Clear Choice plans, carriers will be permitted to offer up to three alternative, non-Clear Choice Plans. So small groups may find a plan they like which is considered an alternative plan. It is important to note that the merged market allows small groups the choice of purchasing any plan including those designed for individuals that are on/off exchange, or those designed for small group, which are off-exchange only plans. Individuals have the same purchasing ability.
Resources for Small Groups and their Brokers
Community Health Options, a Maine-based, non-profit health insurer, is committed to the Small Group health insurance market and to providing an easy purchasing experience for small groups and their brokers to navigate the change. For example, Health Options’ top three small group plans have been deliberately mapped over to similar Clear Choice plans to minimize confusion over the changes. Benefits have been carefully evaluated to make sure that Clear Choice requirements are being met, while at the same time offering popular benefits like our chronic illness support program (CISP) acupuncture, and adult vision with certain plans that are in addition to the Clear Choice parameters.
Small group brokers may access Health Options’ broker portal, which provides a tool known as “decision pathway support” to prioritize important benefits and to suggest plans that meet those criteria. Health Options has partnered with Northeast Delta Dental (NEDD) and UNUM to offer “one-stop shopping” to include supplemental plans for adult dental, life, and disability insurance, improving the efficiency for small groups in benefit planning.
Additionally, the Health Options team has been reaching out to brokers and small group employers to educate them about the upcoming changes. They will be holding webinars this fall to help brokers and small group employers prepare for the 2023 enrollment period. Those interested are encouraged to contact Kristy Pendexter, Benefits Consultant, at kpendexter@healthoptions.org or by calling 207-423-8109.
Last month, Health Options began filing 2023 individual and small group plan rates. As part of this process, carriers are required to send individual subscribers a letter detailing upcoming rate changes.
