Will testing on exchange hit deadline?

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ANNAPOLIS — The president and chief executive officer of CareFirst, Inc. told state legislators Tuesday that his company remains concerned about testing for the new state health exchange and what he said are the artificially low costs of insurance that could ultimately decimate the small business group pool.

Chet Burrell told the Joint Oversight Committee of the Maryland Health Benefit Exchange that he believes “the lessons learned from the first experience were taken to heart.” But while he praised state officials for working hard to ensure a better rollout of the new exchange, he said there are reasons for concern as officials test how the site interfaces with insurers just two months before the start of open enrollment.

“I would characterize us as at the early stages of testing,” said Burrell, whose company insures the vast majority of those who signed up through the current site. “We don’t feel like the testing will be completed by the end of this month. We think it will go up to the end. We just don’t know what will come out of that testing.”

Currently, CareFirst is far and away the dominant provider on the exchange, covering about 95 percent of those who signed up last year for a plan.

State health exchange officials told legislators earlier in the meeting that the site continues to meet timelines for established benchmarks and will be ready for a phased-in rollout when open enrollment begins in mid-November.

State Information Technology Secretary Isabel FitzGerald expressed optimism regarding the testing of the new exchange site that is based on the Connecticut health benefit exchange.

“We are about 60 days out,” FitzGerald said. “It’s very exciting and very scary in a way.”

Part of that testing will involve slowly ramping up the number of simulated users simultaneously on the site from about 2,000 to 5,000 or more “to see at what point the site has issues,” FitzGerald said.

“I believe we have enough time for testing and be ready for launch,” FitzGerald said. “I also believe there will be some things we may have to tune in that first week, which is one of the reasons that first week will be so critical for us. Because while you can simulate users what you can’t predict is unpredictable actual human behavior.”

Legislators also were also told about concerns related to a recent decision to set insurance rates for the coming year.

CareFirst and five other companies combined will offer more than 60 plans through the new health exchange site. While some insurance providers requested reductions in rates, CareFirst requested a 30 percent increase. The Maryland Insurance Administration approved an increase of 16.2 percent last month.

Therese M. Goldsmith, the state insurance commissioner, said rate increases were rejected for a number of reasons including “unsupported or unreasonable assumptions.”

Burrell, the CareFirst executive, said his company is also concerned about a recent decision regarding requested rate increases and said state insurance regulators have approved rates that are too low.

Burrell said the larger rate increases were needed to cover expected costs from a poll of insured who will use more medical coverage. The denial last month raises the specter of sharper increases being needed as early as next year or in 2016 and 2017.

Under the approved rate plans, an individual covered under a plan through the exchange would pay about $345 per month before any applicable subsidies. An identical plan offered through the small business pool would cost nearly $150 a month more.

Those low rates for plans that are equivalent to plans offered to businesses of 5 to 25 employees could result in companies ending employer-offered plans and pushing their employees to individual plans through the exchange.

“What we are seeing is small employers are looking at the difference,” Burrell said.

Should the shift persist, Burrell said it could “atomize” the small business group insurance pool.

“I’m not predicting it,” Burrell said. “I am concerned about it and I’m trying to give voice to it.”

Burrell said his company has already seen people covered under small business plans leave that pool and effectively disappear out of the insurance market.

“We don’t know where they went,” Burrell said.