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Debate over future of ACA shifts to adequacy and affordability of coverage

July 30th, 2015 Comments off

Henry J. Aaron of the Brookings Institution has boiled down the future policy debate around the Patient Protection and Affordable Care Act. Now that the law is firmly in place – at least for the near term – and is meeting a primary policy goal of reducing the number of medically uninsured Americans, the next debate will be over the adequacy and affordability of coverage. Specifically, whether it’s too much, too little or just about right.

Conservatives, Aaron writes, prefer increasing the financial exposure of patients when they buy insurance and when they use care. By comparison, those of a more liberal bent prefer no insurance whatsoever to protect against financial exposure to medical bills but rather Canadian-style “single payer” where a government monopsony pays the nation’s collective health care bill.

Likely to fuel the debate are reports like this recent Kaiser Health News item. It reported that even with advance tax credit premium subsidies for coverage sold on state health benefit exchanges, premiums alone for some moderate income households approach nearly a tenth of their gross incomes and can really add up when out of pocket costs are included:

For instance, families of three earning $73,000 have to pay nearly $7,000 on premiums despite also receiving subsidies They still face deductibles, which this year averaged around $2,500 for the most common types of insurance plans, known as silver tiers. If a family required extensive medical care and reached the maximum they would be held responsible for—$13,200 this year—their total health care-related bills, including premiums, would exceed $20,000, or 28 percent of their gross incomes. “Even some of those who are eligible for financial assistance are still finding the coverage not to be affordable for them,” said Linda Blumberg, a senior fellow at the Urban Institute, Washington think tank.

All individual and small group plans that originated after the enactment of the ACA now basically operate as major medical plans of the pre-HMO days, minus the lifetime limits. They do so by virtue of calendar year maximum out of pocket limits: $6,600 for self-only coverage $13,200 for family coverage for 2015 plans (rising to $6,850 for self-only coverage $13,700 for family coverage for 2016). The annual premium is partly to cover catastrophic risk above these amounts. The amount of the premium paid by individuals and families depends on how much risk short of the calendar year OOP limits they want to assume. If they want less exposure to co-insurance, deductibles and co-pays, the premium is higher. If they’re willing to assume more, the premium is lower and lowest for “bronze” rated plans that cover 60 percent of expected annual medical utilization as well as pure catastrophic plans available to individuals under age 30 or households that would have to spend more than eight percent of their incomes to buy the lowest cost bronze plan offered in their area.

Herein is a primary element of the near term debate over the ACA: whether it provides affordable coverage regardless of whether households assume a high deductible and pay more out of pocket for non-catastrophic care or pay a higher premium in order to pay less out of pocket for these services. In a still fraught economy that has placed particular financial stress on moderate income households falling somewhat below and above the 400 percent of federal poverty cut off for advance tax credit subsidies for coverage sold on state health benefit exchanges – and those that have not or cannot easily afford to set aside money in health savings accounts to defray out of pocket costs — these costs and tradeoffs come into sharp focus.

 


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. 

Medicaid drove NY State of Health exchange enrollment to double in 2015 – Business – The Buffalo News

July 30th, 2015 Comments off

Enrollment in New York’s health insurance exchange more than doubled between 2014 and 2015, across the state and in Western New York, driven by soaring enrollment in Medicaid, the state Health Department reported Wednesday.

About 2.1 million New Yorkers were enrolled in coverage through the NY State of Health marketplace at the end of February, a sharp increase from the 961,000 enrolled at the end of the 2014 period, with 80 percent of them enrolled in Medicaid or Child Health Plus, according to the department’s first detailed breakdown of exchange enrollment through the end of the 2015 sign-up period. In the eight counties of Western New York, enrollment more than doubled from 55,844 to 117,330 between last year and this year.

Source: Medicaid drove NY State of Health exchange enrollment to double in 2015 – Business – The Buffalo News

This item comes as state health benefit exchange officials convene with their federal government partners this week in McLean, Virginia to discuss meeting the challenge of keeping the exchanges financially self sustaining. As I discussed in a recent post, states like New York that established their own exchanges and expanded Medicaid eligibility criteria are finding Medicaid enrollment far outpacing that of commercial qualified health plans (QHPs) offered on the exchanges. That’s a big financial sustainability issue for the exchanges since they obtain no ongoing income for Medicaid eligibility and enrollment processing but are required to perform that function under the Affordable Care Act’s “no wrong door” provision mandating a single integrated application process for both QHPs and Medicaid.

Now that the federal Department of Health and Human Services has issued a proposed rulemaking that would subject Medicaid managed care plans to regulatory requirements like those for commercial QHPs, I expect allowing health benefit exchanges to assess fees on Medicaid managed care plans will be one of the financial sustainability ideas discussed at the McLean meeting.

 


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. 

Obamacare rates to rise 4% in California for 2016 – LA Times

July 27th, 2015 Comments off

Defying dire predictions about health insurance rate shock across the country, California’s Obamacare exchange negotiated a 4% average rate increase for the second year in a row.The modest increase for 2016, announced Monday, may be welcome news for many of the 1.3 million Californians who buy individual policies through the state marketplace, known as Covered California.California’s rates are a key barometer of how the Affordable Care Act is working nationwide, and the state’s performance is sure to be hotly debated among supporters and foes of the healthcare law, including the current crop of presidential candidates.

Source: Obamacare rates to rise 4% in California for 2016 – LA Times

What’s notable about this figure is it is lower than the closely watched barometer of CalPERS health plan cost trends for large group health plans that have traditionally had less rate volatility and lower increases than individual plans such as those sold through Covered California.

By comparison to the four percent increase for 2016 Covered California plans, HMO plans for California state and local government employees and their dependents are set to increase on average by 7.2 percent next year and 10.8 percent for PPO plans.

However in Northern California, Covered California plans will on average track the CalPERS statewide average. According to Covered California, premiums in that half of the state will rise by an average of seven percent for plan year 2016.

 


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. 

Health Insurance Companies Seek Big Rate Increases for 2016 – The New York Times

July 4th, 2015 Comments off

WASHINGTON — Health insurance companies around the country are seeking rate increases of 20 percent to 40 percent or more, saying their new customers under the Affordable Care Act turned out to be sicker than expected. Federal officials say they are determined to see that the requests are scaled back.Blue Cross and Blue Shield plans — market leaders in many states — are seeking rate increases that average 23 percent in Illinois, 25 percent in North Carolina, 31 percent in Oklahoma, 36 percent in Tennessee and 54 percent in Minnesota, according to documents posted online by the federal government and state insurance commissioners and interviews with insurance executives.

Source: Health Insurance Companies Seek Big Rate Increases for 2016 – The New York Times

Large annual premium rate increases at this double digit level prompted the enactment of the Patient Protection and Affordable Care Act in 2010 when it became clear the individual health insurance market segment had entered an unsustainable death spiral. Sharp premium hikes ensued because adverse selection trashed the insurers’ risk pools, making them actuarially unsustainable. The Affordable Care Act attempts to restore the pooling function by putting everyone into statewide risk pools and eliminating medical underwriting to bring more people into the pool.

What’s striking here is the Affordable Care Act anticipated those who lacked medical insurance before the law’s major individual health insurance market reforms took effect in 2014 might have poorer health status and use more medical services. Hence, it contains premium stabilization provisions designed to prevent the kinds of steep rate increases spotlighted in by The Times. That raises questions as to the effectiveness of these provisions.

 


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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