Politico (06/01/12) Jason Millman

If most of the Affordable Care Act is implemented in 2014, there is concern about the viability of the Massachusetts Health Connector, the state’s health insurance exchange. Connector board member Nancy Turnbull estimates that if the national law’s Medicaid expansion goes into effect, and the state takes up a new option to move some poor residents into a Medicaid-like program, the Connector will lose 70% of the people it currently covers. The big question is what happens to the Connector’s power to negotiate with insurers if more than two-thirds of its members are removed from the insurance pool in less than two years.

Observers say the Connector will have to build up the small-group market to make up for the shrinking individual market, but note that the Connector’s inability to attract small businesses despite several years of effort has been the biggest failure of the Massachusetts reform. Small firms have not had much to gain from buying into the Connector. Brokers have a good relationship with small businesses in the state and businesses have more options outside the exchange than in. Even a defined contribution program—in which a small business made a fixed, predictable payment toward a worker’s coverage—was shut down after just about a year. The state’s largest insurer, Blue Cross Blue Shield of Massachusetts, has started selling to small businesses in the exchange. The Connector is also counting on employer wellness incentives and small-business tax credits—available only through the exchange—to boost businesses’ interest.