Monthly Archive: May 2013

Washington exchange garners strong plan interest for individual market, but limited for SHOP

The Washington Health Benefit Exchange reports nine health plan issuers have filed with that state’s Office of the Insurance Commissioner (OIC) to offer 57 Qualified Health Plans (QHPs) totaling 229 plan options for individuals and families through Washington Healthplanfinder, the state’s new online health insurance marketplace.

Plan issuers however demonstrated less interest in participating in the exchange’s Small Business Health Options Program (SHOP).  SHOP plans will be offered in only some of the state’s counties beginning Oct. 1, 2013.  In a news release, the exchange cited limited carrier participation that did not allow the Exchange to offer SHOP coverage options statewide.  Kaiser Foundation Health Plan of the Northwest will offer SHOP coverage in a limited number of counties to be determined, according to the exchange.

“Like our individual market, the SHOP was prepared to be operationally ready on Oct. 1,” said Washington Healthplanfinder CEO Richard Onizuka. “Ultimately, insurers informed us their inability to participate was a resource issue,” Onizuka explained, adding that additional issuers have expressed interest in participating in the SHOP market starting October 2014.

 


Need a speaker or webinar presenter on the Affordable Care Act and the outlook for health care reform? Contact Pilot Healthcare Strategies Principal Fred Pilot by email fpilot@pilothealthstrategies.com or call 530-295-1473. 

Federal government forecasts “strong competition” in federally-facilitated state exchange marketplaces

A White House memo issued today reports the 19 states in which the federal Department of Health and Human Services will operate federally-facilitated health benefit exchange marketplaces will have “strong competition” among health plans when they open for enrollment in October.

Some data points from the memo:

  • A total of more than 120 health plan issuers have applied to offer qualified health plans in the HHS-run state exchange marketplaces.
  • Consumers will have multiple options in each actuarial value metal tier of coverage: catastrophic, bronze, silver, gold, and platinum.
  • On average, issuers plan to offer more than 15 qualified health plans per state, with some plans being offered in part rather than all of the state.
  • One out of every four insurance companies proposing to offer individual coverage has newly entered the market in HHS-run state exchange marketplaces.
  • About 65 percent of new issuer entrants to the individual market in the HHS-run state exchange marketplaces are in states where a single insurance company dominates the market.
  • The Office of Personnel Management is currently reviewing more than 200 proposed multi-state qualified health plan options.
 


Need a speaker or webinar presenter on the Affordable Care Act and the outlook for health care reform? Contact Pilot Healthcare Strategies Principal Fred Pilot by email fpilot@pilothealthstrategies.com or call 530-295-1473. 

California bill mandating standard benefit designs for plans sold outside exchange marketplace conflicts with existing state law

Earlier this year, California’s health benefit exchange marketplace, Covered California, exercised an option under its enabling legislation to standardize benefit designs for health plans sold on the exchange, consistent with its active purchaser role.

Pending legislation, SB 639, would require individual market plans sold off the exchange marketplace to also employ standard benefit designs. SB 639 would do so by adding new law mandating standardized product designs for all individual plans at each of the metal tier actuarial value rating levels.  It does so with language barring the sale of any product at each of the metal tier levels “unless it is a standardized product” consistent with current law (Health & Safety Code Section 1366.6 and Insurance Code Section 10112.3).

But therein lay a conflict.  These statutes require plan issuers not participating in the exchange “offer at least one standardized product that has been designated by the Exchange in each of the four levels of coverage,” provided the Exchange exercises its authority to require standardized benefit designs. At least one obviously does not encompass all plans offered outside the exchange marketplace.  (Emphasis added)

SB 639 awaits a vote by the full California Senate.  Meanwhile, a Senate floor analysis of the bill shows opposition from health plans and their trade associations.  America’s Health Insurance Plans (AHIP) complains that “the standardization of health products is not only unnecessary but also impedes the ability of carriers to provide benefit packages aimed at meeting the preferences and needs of consumers,” and that benefit design flexibility “is an important element to assuring affordability and high-quality care.”

Update 5/30/13: The bill was approved by the California Senate on a 28-11 vote on May 29 and now goes to the Assembly.

 


Need a speaker or webinar presenter on the Affordable Care Act and the outlook for health care reform? Contact Pilot Healthcare Strategies Principal Fred Pilot by email fpilot@pilothealthstrategies.com or call 530-295-1473. 

To pool or not to pool

That is the question some small businesses are confronting, with those with healthy employees considering opting out of the insurance pool and paying workers’ medical costs themselves. Today’s Wall Street Journal has the story. 

As the story notes, self insurance can be a high risk proposition for companies of fewer than 100 workers since they don’t benefit from risk spreading as do larger (and insured) businesses.  That’s why it has traditionally been employed solely by larger businesses.  However, as small employers sought relief from rising insurance premiums over the past decade, some turned to self insurance.

From the perspective of policymakers, the timing of the trend is highly inconvenient given the rollout of Patient Protection and Affordable Care Act reforms in 2014 that require insurers to treat all small employers in a given state as a single risk pool, prohibiting them from risk rating a small enterprise based on the health status of its work force.  Policymakers worry that if too many small employers self insure their medical risk, it will hamstring the Small Business Health Options Program (SHOP), the small employer exchange marketplace, and foster adverse selection against the small group market as a whole if small employers with older, less healthy workers concentrate in it.

California legislation intended to make self-insurance among small employers a less attractive option by limiting their ability to insure medical claims that reach relatively low dollar amounts – known as stop loss coverage – continues to advance this year after a similar measure stalled in 2012.  SB 161 is supported by the Department of Insurance and some large insurers and opposed by business and producer groups.

 


Need a speaker or webinar presenter on the Affordable Care Act and the outlook for health care reform? Contact Pilot Healthcare Strategies Principal Fred Pilot by email fpilot@pilothealthstrategies.com or call 530-295-1473. 

BLS data shed light on Affordable Care Act definition of full time employment

Many are perplexed as to why the Patient Protection and Affordable Care Act defines full time equivalent workers as those working at least 30 hours a week given the standard 40 hour work week established by the Fair Labor Standards Act of 1938. U.S. Bureau of Labor Statistics data on average weekly hours worked by retail employees — a sizable proportion of workers — provides some insight.  The data show the average work week for retail trade workers holding steady at just over 31 hours dating back to early 2006, well before the enactment of the Affordable Care Act.

 


Need a speaker or webinar presenter on the Affordable Care Act and the outlook for health care reform? Contact Pilot Healthcare Strategies Principal Fred Pilot by email fpilot@pilothealthstrategies.com or call 530-295-1473. 

California multi-employer plan exchange measure stalls

California legislation that would have required that state’s health benefit exchange “facilitate the purchase of qualified health plans through the exchange by multi-employer plans” established under federal Employee Retirement Income Security Act of 1974 will not move forward this year.

AB 710 (Pan) was held in the Assembly Appropriations Committee May 24.  A committee analysis stated the bill would incur “unknown costs but likely to exceed $150,000 because of numerous uncertainties, including changes needed by the Exchange to accommodate the different structure of a multi-employer plan and potential impacts on the risk mix in the Exchange.”

A separate analysis prepared by the Assembly Health Committee notes multi-employer plans can contain both fully insured and self-insured options for members and small plans; plans for lower wage workers are more likely to be fully insured.  “These plans will be especially at risk from competition if excluded from an Exchange,” the analysis notes.

The uncertainly facing multi-employer plan stakeholders in the post-Patient Protection and Affordable Care Act environment is the subject of this Associated Press story issued the same day AB 710 stalled in California.

 


Need a speaker or webinar presenter on the Affordable Care Act and the outlook for health care reform? Contact Pilot Healthcare Strategies Principal Fred Pilot by email fpilot@pilothealthstrategies.com or call 530-295-1473. 

2014 premiums for California exchange plans lower than forecast

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 closely 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 an estimated 2 million enrollees signing up for individual plans in 2014.  That provides the exchange with a degree of bargaining power with participating plan issuers, who in turn responded by narrowing their provider networks in order to hold down costs.
  • Increased plan issuer confidence in the Affordable Care Act’s reinsurance and risk adjustment provisions designed 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 prior regulator approval.
 


Need a speaker or webinar presenter on the Affordable Care Act and the outlook for health care reform? Contact Pilot Healthcare Strategies Principal Fred Pilot by email fpilot@pilothealthstrategies.com or call 530-295-1473. 

Covered California announces participating health plan issuers, premium rates

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 a speaker or webinar presenter on the Affordable Care Act and the outlook for health care reform? Contact Pilot Healthcare Strategies Principal Fred Pilot by email fpilot@pilothealthstrategies.com or call 530-295-1473. 

Iowa would fully subsidize newly eligible Medicaid beneficiaries for exchange plans

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 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 a speaker or webinar presenter on the Affordable Care Act and the outlook for health care reform? Contact Pilot Healthcare Strategies Principal Fred Pilot by email fpilot@pilothealthstrategies.com or call 530-295-1473. 

New Mexico joins Utah with split state-federal exchange

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 a speaker or webinar presenter on the Affordable Care Act and the outlook for health care reform? Contact Pilot Healthcare Strategies Principal Fred Pilot by email fpilot@pilothealthstrategies.com or call 530-295-1473. 

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