Memorandum

September 24, 2001
To: Insurance Pool Governing Board
From: Mary Neidig, Director
CC: Health Insurance Reform Advisory Committee

Subject: HIRAC Consultation with IPGB

Background

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 coverage.

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 benefit plan.

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.

Policy Criteria

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 Oregon market.

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 Commission.

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 market.

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, section 5(2)).

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:

1. 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
   
   
2. Developing some value on the Rx benefits in order to set the relative value of the overall package.

Covered Benefits

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.

Conclusion

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.