2014 premiums for California exchange plans lower than forecast
May 24, 2013
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At first glance, premium increases among health plan issuers set to participate in California’s health benefit exchange individual marketplace in 2014 are not coming in nearly as high as forecast in an actuarial study issued in March. The Milliman study commissioned by the exchange, Covered California, projected that market changes due to Patient Protection and Affordable Care Act requirements would increase 2014 premiums by 14 percent on average. Consumers buying richer coverage due to the Affordable Care Act’s essential health benefits requirement would add 4.8 percent and higher average actuarial value for existing covered services another 11.5 percent.
Instead of a total increase of more than 30 percent based on these numbers, average 2014 premium rates for one of the large participating plan issuers, Blue Shield of California, will rise 13 percent for plan year 2014. While still in the double digits, it’s not that much above the underlying annual nine percent rate increase “trend” driven by increases in provider reimbursement, increases in utilization due to new procedures and technology and higher prescription utilization and costs per the Milliman projection.
Several factors are likely keeping rate increases lower than expected in California, whose exchange marketplace is being closed watched as a harbinger of where individual health insurance rates may be headed next year in other state exchange markets.
- Rates are for 2014 only under the one year term of the contract between Covered California and participating plan issuers. That gives the 13 plan issuers initially participating in the marketplace time to determine if their rates are adequate and to assess initial enrollment numbers.
- Covered California is one of a handful of state exchanges using an “active purchaser” model in which it negotiates terms and conditions for participation in its exchange marketplace, the largest in the nation with potentially more than 2 million enrollees in individual plans in 2014.
- Increased plan issuer confidence in the Affordable Care Act’s reinsurance and risk adjustment provisions design to mitigate high claims costs from sicker individuals using more costly medical services.
- Last but not least, politics. Had rates for exchange plans come in as high as actuarially predicted, taxpayers would have had to absorb a larger amount of the premium increases for those earning 400 percent or less or federal poverty guidelines in the form of premium subsidies. Those earning more than 400 percent of poverty would have experienced substantial “rate shock” since they are ineligible for the subsidies — advance personal income tax credits to offset premiums for coverage purchased through state exchanges — creating pressure for more regulatory reforms. A measure that will appear on the November 2014 ballot — after the 2014 rates will have been in effect for more than 10 months — will ask California voters if health insurance rates should be subject to regulator approval.
Need in depth analysis and communications assistance with health care reform and the coming exchange marketplace? Pilot Healthcare Strategies can help. Email me at fpilot@pilothealthstrategies.com or call 530-295-1473.
Covered California announces participating health plan issuers, premium rates
May 23, 2013
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California’s health benefit exchange marketplace, Covered California, today unveiled the health plan issuers that will participate in the marketplace for plan year 2014:
- Alameda Alliance for Health
- L.A. Care Health Plan
- Anthem Blue Cross of California
- Molina Healthcare
- Blue Shield of California
- Sharp HealthCare
- Chinese Community Health Plan
- Valley Health Plan
- Contra Costa Health Services
- Ventura County Health Care Plan
- Health Net
- Western Health Advantage
- Kaiser Permanente
For the Covered California news release, click here.
The 13 plan issuers — less than the 32 plans that had initially expressed interest in participating — represent a broad mix of statewide for profit and nonprofit entities as well as plans serving distinct metro areas of the state or solely public sector employees in a given region such as Valley Health Plan operating in Santa Clara County. Three — Kaiser Permanente, Anthem Blue Cross of California and Blue Shield of California — together account for 87 percent of the 1.6 million Golden State residents covered by individual plans in 2011, according to the California HealthCare Foundation. None of the plan issuers are Consumer Operated and Oriented Plan (CO-OP) plans under Section 1332 of the Patient Protection and Affordable Care Act. The plans will contract with Covered California only through December 31, 2014 and not for a three-year term as originally planned.
Rates for selected plans:
Need in depth analysis and communications assistance with health care reform and the coming exchange marketplace? Pilot Healthcare Strategies can help. Email me at fpilot@pilothealthstrategies.com or call 530-295-1473.
Iowa would fully subsidize newly eligible Medicaid beneficiaries for exchange plans
May 22, 2013
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According to the story at the KCRG-TV9 website, under the Iowa Health and Wellness Plan devised by state policymakers, Iowans eligible for expanded Medicaid coverage under the Patient Protection and Affordable Care Act with incomes between 101 percent and 138 percent of federal poverty levels would purchase private coverage sold on Iowa’s health benefit exchange. Iowa is one of several states that have opted to run its exchange in partnership with the federal government.
For this population, there would be a caveat attached to their premium subsidies. They would have to undergo yearly health screenings and follow a doctor-directed wellness regimen. Beneficiaries that comply would have their premiums fully subsidized under the Medicaid expansion. Those who do not would have to pay a share of their future premium costs as contemplated under the Affordable Care Act’s advance tax credit subsidies based on household income. The novel plan would require a waiver from the federal government’s Center for Medicare and Medicaid Services (CMS).
Need in depth analysis and communications assistance with health care reform and the coming exchange marketplace? Pilot Healthcare Strategies can help. Email me at fpilot@pilothealthstrategies.com or call 530-295-1473.
New Mexico joins Utah with split state-federal exchange
May 20, 2013
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New Mexico is following Utah in having the federal government operate the individual side of its health benefit exchange marketplace while opting to run its own Small Business Health Options Program (SHOP).
The Associated Press reports state officials made the decision because there isn’t sufficient time to build the eligibility and enrollment system to serve the individual market segment for plan year 2014; the federal government will do so initially. New Mexico was one of the last states to decide whether to operate a state-based exchange marketplace.
Need in depth analysis and communications assistance with health care reform and the coming exchange marketplace? Pilot Healthcare Strategies can help. Email me at fpilot@pilothealthstrategies.com or call 530-295-1473.
Wall Street Journal article details how employers could continue offering “tin” coverage next year
May 20, 2013
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Today’s Wall Street Journal via Yahoo News reports large employers of 50 or more employees may opt to offer mini-med or “tin” metal value health plans to workers since the Patient Protection and Affordable Care Act mandates only individual and small group plans provide coverage for hospitalization and nine other categories of essential health benefits. Moreover, the WSJ article notes, some large employers with large numbers of low wage workers may risk paying a $3,000 penalty for each employee who opts out of this coverage and instead buys richer, subsidized coverage through a state health benefit exchange that includes all essential benefits.
Limited plans may not appeal to all workers, and while employers would avoid the broader $2,000-per-worker penalty for all employees not offered coverage, they could still face a $3,000 individual fee for any employee who opts out and gets a subsidized policy on the exchanges.
But the approach could appeal to companies with a lot of low-wage workers such as retailers and restaurant operators, who are willing to bet that those fees would add up slowly because even with subsidies, many workers won’t want to pay the cost of the richer exchange coverage.
Small employers of fewer than 50 employees could also continue offering low value “tin” plans for nearly all of 2014 if payers exploit a previously reported loophole enables payers to continue offering individual and small group plans that fall short of providing essential health benefits and actuarial “bronze” metal tier value of at least 60 percent.
The low-benefit plans are just one strategy companies are exploring. Major insurers, including UnitedHealth Group Inc., Aetna Inc. and Humana Inc., are offering small companies a chance to renew yearlong contracts toward the end of 2013. Early renewals of plans, particularly for small employers with healthy workforces, could yield significant savings because plans typically don’t need to comply with some health law provisions that could raise costs until their first renewal after Jan. 1, 2014.
Need in depth analysis and communications assistance with health care reform and the coming exchange marketplace? Pilot Healthcare Strategies can help. Email me at fpilot@pilothealthstrategies.com or call 530-295-1473.
Nevada assisters forewarned: no advising on choice of plan
May 17, 2013
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Health insurance agents and brokers nationwide worry that federally funded Assisters and exchange funded Navigators that help individuals and families sign up for health coverage offered through state exchange marketplaces will duplicate their own role. A top Nevada insurance regulator sought to put those fears to rest at an educational symposium this week hosted by the Northern Nevada chapter of the National Association of Health Underwriters (NAHU).
While state-certified assister personnel can assist people enroll in coverage sold on the state’s exchange marketplace, Nevada Health Link, they will not be permitted to help individuals and families select which plan is best for them.
Doing so is within scope of a producer license, noted Todd Rich, chief deputy commissioner of the Nevada Division of Insurance, who warned that regulators would “pull the ticket” of certified assister personnel found to be doing so. (Nevada has opted to have its Division of Insurance certify and oversee assister personnel). A primary enforcement method to ensure assisters operate within those boundaries: mystery shoppers.
Need in depth analysis and communications assistance with health care reform and the coming exchange marketplace? Pilot Healthcare Strategies can help. Email me at fpilot@pilothealthstrategies.com or call 530-295-1473.
Health insurer worried that loophole could lead to adverse selection against exchange
May 17, 2013
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A Blue Shield of California executive is urging California lawmakers in an op-ed article in today’s Sacramento Bee to close a loophole sanctioned by federal regulations that could front load the exchange marketplace with high cost individuals and families. That could leave plans participating in California’s exchange marketplace, Covered California, carrying an inequitable cost burden in the first year of its operation, asserts Janet Widmann, the health insurer’s executive vice president of markets. It would do so by allowing plans to elect to continue to operate into 2014 under current rules that allow plans to medically underwrite applicants and reject those with potentially costly medical conditions. Unless the loophole is closed, Widmann warns, all health plan issuers would be tempted to exploit it since they could still medically underwrite and select applicants for plans sold off the exchange marketplace so as to not initially end up with a disproportionate share of high cost insureds. Widmann explains:
Since these loophole policies will enroll only those who are healthy enough to obtain coverage under the current discriminatory system, policies that meet the requirements of the new law will be left to cover a disproportionate number of less healthy people. As a result, premiums for coverage offered through the insurance exchange will be significantly higher. Even insurers that have supported reform and want to see the exchange succeed will be pressured to sell the loophole policies to avoid losing healthy customers to competitors.
Plans sold in the Covered California marketplace would be unable to exploit the loophole under policy adopted by Covered California last week requiring qualified health plans with which it contracts to terminate plans they currently offer that are not compliant with the Affordable Care Act as of December 31, 2013. The “level playing field” provision is at section 3.04(b) of the Covered California QHP Model Contract:
(b) Contractor agrees that, to the extent not already required to do so by law, effective no later than December 31, 2013, it shall terminate or arrange for the termination of all of its non-grandfathered individual health insurance plan contracts or policies which are not compliant with the applicable provisions of the Affordable Care Act. Contractor agrees to promote ways to offer, market and sell or otherwise transition its current members into plans or policies which meet the applicable Affordable Care Act requirements. This obligation applies to all non-grandfathered individual insurance products in force or for sale by Contractor whether or not the individuals covered by such products are eligible for subsidies in the Exchange. All terminations made pursuant to this section shall be in accord with cancellation and nonrenewal provisions and notice requirements in California Health and Safety Code Section 1365, California Insurance Code Sections 10273.4, 10273.6 and 10713, and relevant state regulations and guidance.
Last week, California enacted two bills, ABX1-2 and SBX1-2, establishing 2014 market rules for the individual and small group markets and conforming state law to Affordable Care Act provisions. The measures did not include a provision that would close the loophole. Widmann suggests legislation mandating all non-grandfathered health plans (those not in effect when the Affordable Care Act was enacted in March 2010) play under the 2014 market rules barring medical underwriting of applicants. That would require new special session or urgency legislation that would take effect before the end of 2013.
Need in depth analysis and communications assistance with health care reform and the coming exchange marketplace? Pilot Healthcare Strategies can help. Email me at fpilot@pilothealthstrategies.com or call 530-295-1473.
California could opt to offer Medicaid “bridge plans” on exchange rather than expand Medicaid eligibility
May 11, 2013
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Despite the assumption that California would opt to expand Medicaid eligibility to households with incomes between 100 and 133 percent of federal poverty guidelines as permitted under the Patient Protection and Affordable Care Act, the policy question remains open in the Golden State. A number of sticking points remain as detailed in this story in today’s Los Angeles Times. Chief among them is Gov. Jerry Brown’s expectation that since counties would benefit from the expansion through a reduced burden of caring for indigents not currently eligible for Medi-Cal as it’s called in California, they should help Sacramento shoulder the state’s future federal Medicaid cost share.
According to The Times, the Brown administration is also concerned that allowing people to enroll in Medi-Cal online could encourage fraud. California is rushing to ready an online enrollment system, the California Eligibility, Enrollment and Retention System (CALHEERS), to implement the Affordable Care Act’s mandate that individuals and families be offered enrollment for both government insurance programs like Medi-Cal and private coverage offered through its health benefit exchange thorough a single, streamlined application process. The unresolved policy question of whether to expand Medi-Cal eligibility poses significant potential to complicate an already complex process to prepare the online system and to provide enrollees what state officials expect to be a customer-friendly “no wrong door” experience. Problems integrating the state’s legacy Medi-Cal eligibility computer software with CALHEERs have already delayed plans to have it functional by the October 1 pre-enrollment date for 2014 coverage until January 1, 2014.
While the Brown administration’s concerns over expanding eligibility for Medi-Cal have stalled legislation that would do so, the administration is sponsoring pending legislation, SBX1-3, that would authorize commercial Medicaid managed care “bridge plans” per federal guidance issued in December, 2012 for those earning up to 200 percent of federal poverty. The plans would be available through the state’s exchange marketplace, Covered California.
Since the Affordable Care Act deems households with incomes of at least 100 percent of federal poverty eligible to buy coverage through the exchange marketplace, the bridge plan option provides policymakers an alternative to expanding Medi-Cal eligibility to 133 percent of federal poverty. Some states that have declined to expand Medicaid eligibility including Tennessee, Arkansas and Oklahoma are negotiating with the federal Center for Medicare and Medicaid Services to obtain waivers to allow their Medicaid eligibles to purchase commercial coverage on their exchanges. Absent a near term political agreement to expand Medi-Cal eligibility, California could soon be among them.
If the trend continues, it could lead to a bifurcated Medicaid system: basic, legacy Medicaid for those households with incomes below 100 percent of federal poverty guidelines and a “super Medicaid” system of federally subsidized coverage for households with incomes above the poverty line that wouldn’t otherwise qualify for Medicaid. It would also have fiscal implications for the states electing to “expand” Medicaid eligibility via Medicaid bridge plans sold on their health benefit exchange marketplaces since it would reduce their future federal Medicaid cost share burden, shifting subsidization fully to the federal government in the form of advance income tax credits.
Need in depth analysis and communications assistance with health care reform and the coming exchange marketplace? Pilot Healthcare Strategies can help. Email me at fpilot@pilothealthstrategies.com or call 530-295-1473.
Federal government issues updated guidance on employee health benefit exchange marketplace notice requirement
May 9, 2013
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In January, the U.S. Department of Labor (DOL) issued guidance delaying when employers must notify employees about their state’s health benefit exchange marketplace and advance premium tax credits available through exchanges to help employees purchase individual coverage. The notice requirement, codified at Section 218b of the federal Fair Labor Standards Act of 1938, was to have been effective March 1, 2013, but DOL had not timely issued regulations making specific the notice requirements.
DOL issued updated guidance May 8 that requires employers to provide the notice to existing employees before October 1, 2013 and to newly hired employees at the time of hiring beginning October 1, 2013. For 2014, the DOL stated it will consider notice provided at the time of hiring if the notice is provided within 14 days of an employee’s start date. DOL’s guidance states the notice “must be provided in writing in a manner calculated to be understood by the average employee,” and may be delivered electronically or by first-class mail.
The employee notice requirements, according to the latest guidance:
- Inform the employee of the existence of the Marketplace (referred to in the statute as the Exchange) including a description of the services provided by the Marketplace, and the manner in which the employee may contact the Marketplace to request assistance;
- If the employer plan’s share of the total allowed costs of benefits provided under the plan is less than 60 percent of such costs, that the employee may be eligible for a premium tax credit under section 36B of the Internal Revenue Code (the Code) if the employee purchases a qualified health plan through the Marketplace; and
- If the employee purchases a qualified health plan through the Marketplace, the employee may lose the employer contribution (if any) to any health benefits plan offered by the employer and that all or a portion of such contribution may be excludable from income for Federal income tax purposes.
To aid employers in complying with the notice requirement, DOL developed two model notices:
- Model Notice for employers that offer a health plan to some or all employees
- Model Notice for employers that do not offer a health plan.
“The Department is issuing this temporary guidance and model notice in advance of the expected timeframe announced in the guidance because, since the issuance of the (January) guidance, the Department has received several requests from employers for a model notice on an earlier timeframe so that they may be able to inform their employees now about the upcoming coverage options through the (Exchange) Marketplace.”
Need in depth analysis and communications assistance with health care reform and the coming exchange marketplace? Pilot Healthcare Strategies can help. Email me at fpilot@pilothealthstrategies.com or call 530-295-1473.