Massachusetts should retool its health insurance overhaul, report says

"They are going to lose a lot of the revenue to keep the infrastructure going," she said.

Lischko said the Connector instead needs to focus more on improving services and products in its non-subsidized operations to attract more private-paying consumers to fill the void.

Lischko also takes the Connector to task for not aggressively pursuing wellness programs, which offer businesses and consumers incentives for taking part in exercise, nutrition, and smoking cessation activities, a strategy that aims to improve health while reducing overall spending.

Lischko said the Connector Authority has done a bad job in helping customers understand the true costs of health care and the financial consequences of their decisions.

"Let's have an honest discussion about what worked well with the Connector and what hasn’t, and lets get it out and talk about it," she said.

But Connector Authority board member Nancy Turnbull said authority staff have been working diligently to provide affordable options for small businesses. She noted that the board recently approved a premium discount for small businesses that purchase a wellness program.

"With all due respect, I don't agree with (Lischko)," said Turnbull, who is an associate dean at the Harvard School of Public Health and a former deputy commissioner in the state's Insurance Division.

"It's always easier to cast aspersion from the outside," Turnbull said.

"I think we have, through our website and other things we have done, made it much easier for small businesses and consumers to compare products and enroll in insurance and that was not a functionality on the market before that," Turnbull said.

"There are states all over the country that are looking at this," she said.

She also said that it was too early to know how much revenue the Connector Authority may or may not lose in 2014 when most provisions of the federal health law start.

Connector executive director Glen Shor said in a statement that the Pioneer Institute report failed to mention many of the authority's accomplishments.

"The author’s decision to never once mention that 98 percent of Massachusetts residents have insurance and that the Connector played a significant role in that is telling," he said.

"Small business owners who have enrolled through the Connector have testified to the ease with which they were able to compare plans online and the power of transparency," he added.

"Among the 400,000 newly insured in Massachusetts, nearly 215,000 are covered through the Connector and for some it has literally been a life saver," Shor said.