September 24, 2001
To: Insurance Pool Governing Board
From: Mary Neidig, Director
CC: Health Insurance Reform Advisory Committee
Subject: HIRAC Consultation with IPGB
Section 5 (2) of HB 2519 requires HIRAC to consult with IPGB
on the development of a basic benchmark health benefit plan or
plans, or approved equivalent, for subsidized employer-sponsored
In July, the Director of DCBS appointed a three-member HIRAC
subcommittee to attend IPGB deliberations on the development of
the basic benchmark health benefit plan. The members provided
technical input from the health insurance carrier perspective,
attending IPGB meetings throughout August and into September.
In August, HIRAC was re-appointed and convened. IPGB staff briefed
the full HIRAC on their progress to date with the benchmark health
On September 13, HIRAC held a work session to summarize their
counsel to IPGB regarding the benchmark plan. In general, HIRAC
was comfortable with the approach taken by IPGB. What follows
is a summary of the substantive comments.
IPGB, in crafting the basic benefit benchmark plan(s), chose
to adopt the model of "casting the widest net"
when setting both benefit and cost-sharing levels. Meaning, to
insure that the greatest number of employer health benefit plans
meet the benchmark, the benefit and cost-sharing levels were designed
to represent small group plans most commonly purchased in the
HIRAC members generally agreed with this approach. Most members
echoed the Board's belief that "casting the widest net"
is important in the benchmarking and waiver application process
in taking into account the differences found in health benefit
plans across the state.
Some HIRAC members expressed concern that the "widest net"
approach would create a plan that does not mirror the benefit
level or cost share under consideration by the Health Services
Cost Sharing Levels
In general, HIRAC members agreed the cost sharing levels outlined
in the benchmark plan reflect what is currently found in the market.
Some members did express concern that setting fixed cost sharing
levels will not allow the benchmark to track changes in the private
market. For instance, if healthcare costs continue to rise employers
may select plans with higher cost sharing levels. Such plans would
not meet the Board's benchmark. It remained unclear to members
how the benchmark would be allowed to adjust to changes in the
HIRAC members indicated the Board specify cost sharing for Rx
coverage to more accurately be "comparable to coverage common
in the small employer health insurance market" (per HB 2519,
HIRAC members discussed several ways to further specify the cost
sharing of the prescription drug covered benefit while at the
same time maintaining simplicity and avoiding actuarial or administrative
complications. These options include:
- Internal limits that are not more restrictive than:
- An annual maximum benefit of $xxxx or more.
- An annual out-of-pocket maximum of $xxxx or less; or
- Developing some value on the Rx benefits in order to set the
relative value of the overall package.
The benchmark plan developed by IPGB includes 21 covered benefit
categories. In general, HIRAC members agreed the list of benefits
reflected what is found in the private market. At least one member
expressed a concern that the benefit levels were out of reach
for some very small employers. Also, it was noted that the diabetes
education mandate passed in the 2001 legislative session was not
included in the list of covered benefits.
In general, HIRAC expressed support for the benchmark plan developed
by the Board.
There were opposite minority opinions expressed regarding the
benchmark. One viewed the plan to be too rich in benefits for
many employers to access and the other stated the plan did not
go far enough in scope of benefits.
Members repeatedly stated they hoped the Board would develop
a benchmark that maintains simplicity and ease for employers and
employees to navigate their way into the subsidy program. As framed,
the benchmark maintains this goal.
With the exception of the comments on the Rx covered benefit
cost sharing and the minority concerns, HIRAC is comfortable with
the Board's benchmark plan.
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