Real Competition at the Health Connector?

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The Connector Board yesterday moved forward with plans to introduce “competition” into the bidding process for insurers selling to those buying coverage within Commonwealth Care (CommCare).

CommCare: more than 160,000 residents – individuals who earn less than $31,000 a year or families of four that earn less than $66,000 and have no access to insurance through an employer or through Medicaid – obtain fully or partially subsidized health care at a projected cost of $822 million to taxpayers this fiscal year. (adapted from SHNS, 2/10/11)

For some, myself included, a chuckle escapes whenever the word competition is raised as a novel cost saving method, and we shrug our shoulders wondering why this is new concept to the Connector. Simultaneously, we wait to get the full details because we know there will be strings and mandates to follow.

pushing down

But first things first. I welcome any talk of competition at the Connector, because they have been behind the eight ball on this front. Instead, the history of implementation of the health care law has focused on standardization and raising the cost of insurance by minimum coverage mandates.

My initial concerns with this “novel and innovative plan” is that the Connector is basing its bidding requirements on the analysis of one newer company to the market: CeltiCare. I share the concerns of some in the insurance industry that the level of “savings” found by the Connector at CeltiCare, may not be representative, given that they cover only 10% of those in CommCare, and the Connector primarily examined a “subsection of CeltiCare patients who are legal immigrants, a group that has historically not sought much health care, even when insured.”

Is this sufficient to set a bidding ceiling? That is what the Connector is planning on. I would think more homework should be required. Would we recommend this course of action for buying anything else?

I support efforts by the Connector to encourage insurers to negotiate “less expensive contracts with health care providers, incentivizing patients to choose less costly care, coordinating patient care more aggressively and reducing administrative costs.”(SHNS, 2/10/11) However, should it require strings such as mandating an undefined future participation in state government’s efforts to change the payment system? How extensive will the pilot program be and for how long? What if their current model is extremely cost effective, and allowed them to bid so low in the first place, why would you make them change it? Does the obligation go beyond a pilot? One must ask, will these strings result in the direct opposite policy outcome than intended– will it prevent some companies from putting in a bid?