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Hopes have been high for the Commonwealth Connector as an “exchange” through which individuals could purchase health insurance on a pre-tax basis, carriers could offer more affordable products, and consumer choices would be expanded. Although more individuals now purchase on a pre-tax basis and have more affordable options than were previously available to non-group subscribers, opportunities for more choice exist.

A few recent product and pricing decisions by the Connector have narrowed rather than created options. Instead of allowing individuals to make coverage choices, the Connector has mandated that all policies must include drug coverage. Instead of encouraging product diversity, the Connector has required that alternatives to their Bronze offerings must be tiered or select network products rather than low-cost HSA plans. Most recently, the Connector asked carriers simply to cap their rates.

While these policies may be understandable in isolation, taken together they narrow options and make it more difficult to meet affordability expectations, like the 5% cap on premium increases set by the Connector for July 2008.

With limited ability to innovate in a market where medical cost trends are running at roughly twice the rate of premium increase sought by the Connector, the affordability challenge will be greater in the future.

After a start-up phase most new programs entertain modest course corrections. Building on its track record of careful deliberation, necessary adjustments, and balanced policies, the Connector might ask whether the possibilities inherent in the “exchange” model have been exhausted.

Bruce Bullen, Chief Operating Officer
Harvard Pilgrim Health Care

This program aired on March 18, 2008. The audio for this program is not available.