Tag Archive: Affordable Care Act

Interest in private exchange marketplace heats up

The Patient Protection and Affordable Care Act’s creation of the state health benefit exchange marketplace is aimed at restoring functionality to the individual and small group markets. By the time the Affordable Care Act was enacted in early 2010, these segments were inescapably mired in an adverse selection death spiral. Premiums grew unaffordable and carriers lost the ability to spread risk as state risk pools shrank. The exchange marketplace seeks to remedy this by scaling up the size of the pool and providing a demand aggregation mechanism that with sufficient enrollment can achieve better spread of risk and, in turn, lower premium rates.

The Affordable Care Act does not initially offer the demand aggregation mechanism of the public exchange marketplace for large employers but gives states the option of opening their exchanges to large employers in 2017. However, large employers seeking relief from rising employee health care costs aren’t about to wait. Instead, they are looking at private exchanges being formed by benefit consulting firms serving large employers. Several large employers participating in a private exchange could potentially cover many thousands of people and bring them into the pool far faster than state exchanges that have to enroll individuals and small employers one at a time.  Private exchanges also make it easier for big employers to adopt defined contribution-based health benefits in which employees would select from a larger number of plans than might otherwise be offered by a single employer. Media coverage this week of burgeoning interest in the private exchange marketplace can be viewed here and here.

While large employers of relatively highly paid full time workers find the private exchange marketplace of interest to reduce the cost of covering their workforces, those with low wage, part time staff are looking to the state exchange marketplace. It provides a means for these employers to reduce their health care outgo by sending part time workers (defined in the ACA as having an average work week of less than 30 hours) to purchase individual plans sold on the state exchanges and subsidized by advance income tax credits. Two such employers – specialty grocer Trader Joe’s and Home Depot –indicated in recent days they would take this route.

 


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. 

Shifting employment landscape complicates ACA implementation

When the Patient Protection and Affordable Care Act was drafted, it contemplated preservation of employer-based health coverage that came about in the 1940s and which continues to serve as the primary form of coverage for working age Americans.  In preserving employer-based coverage, the Affordable Care Act assumes most people will continue to obtain their incomes – and their health coverage – via full time employment.

It also assumes small employers will for the most part want to provide health benefits to their employees provided they have access to quality, affordable plans, reinforced by the law’s reforms of small group markets and pooling their purchasing power via the health benefit exchange Small Business Health Options Program (SHOP).

However, there are multiple, large scale shifts altering employment in the United States and the health benefits that have historically come with it for more than six decades:

 


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. 

A proposal to foster federal-state cooperation in the ACA era

Alan Weil, executive director of the National Academy for State Health Policy, foresees growing tensions between states and the federal government in the implementation of the Affordable Care Act relative to the law’s expansion of Medicaid eligibility, the creation of state health benefit exchanges and new rules governing individual and small group health coverage that supersede traditional state authority over these market segments.

To ensure cooperative federal-state relations and to avoid a merry go round of numerous state requests for federal relief from ACA requirements amid fiscal frugality at both levels of government, Weil proposes the feds and the states share cost savings generated by ACA mandates. Under Weil’s optional shared savings program, the federal government would share with the states any savings compared federal cost projections for programs that have federal financial participation. Weil suggests the scope of the program include Medicaid, the Children’s Health Insurance Program, and the state exchange marketplace.

Weil’s proposal published today in the journal Health Affairs can be read here.

 


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. 

Exchanges await more info on Multi-State Plans, express doubt on their ability to foster competition

This recently issued paper on payer participation and competition in the health benefit exchange marketplace authored by the Urban Institute and the Georgetown University Health Policy Institute mentions Multi-State Plans that the Affordable Care Act mandates be rolled out over a four-year period in all state health insurance exchange marketplaces. At least two of these plans must be offered in each state exchange marketplace; one must be a nonprofit and one cannot offer abortion services. On May 30, the White House announced the federal Office of Personnel Management — which will charter the Multi-State Plans that must be licensed in each state — is reviewing applications for more than 200 Multi-State plan options.

Here’s what the paper’s authors write on Multi-State Plans:

State officials in the study states are still waiting for more information from OPM with regard to Multi-State Plans. In general, state officials seem resigned to the fact that the MSP will not necessarily mean more competition, since the MSPs are expected to be national insurers that already have a presence in the states. Informants reported that they have hard time envisioning how, for example, a national Blue Cross Blue Shield plan could come into a state without essentially replicating the Blue Cross Blue Shield products within the state, assuming the MSP would have to use the Blue Cross network and provider payment rates.

 


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. 

Multi-State plans likely to be initially offered on federally facilitated and partnership exchange marketplace in 2014

Section 1334 of the Affordable Care Act creates a federally chartered (via the Office of Personnel Management) Multi-State health plan that must be offered in 60 percent of the state health benefit exchange marketplace in 2014. Section 1334 requires each state exchange to offer at least two Multi-State plans (one must be a nonprofit) in their individual and small business exchanges. The policy intent for the plans is to bolster competition in state markets, particularly those with smaller populations and fewer payers.

Conveniently, the 60 percent figure overlaps nicely with the percentage of state exchanges the federal Department of Health and Human Services will operate either directly or in partnership with a state in 2014. Expect to see most if not close to all Multi-State plans rolled out next year to be in these federally administered exchange marketplaces. The federal state exchange marketplace would also be a more logical choice than state-based exchanges since Multi-State plans will be more easily able to integrate with the federal web portal than various web portal architectures developed by state-based exchanges. On May 30, the White House announced OPM is reviewing more than 200 proposed Multi-State 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. 

ACA’s individual, employer mandates aimed at frayed edges of U.S. private health coverage

Daniel Weintraub penned an opinion piece appearing in today’s Sacramento Bee that laments the likely continuation of employer-sponsored health coverage under the Affordable Care Act – notwithstanding the Obama administration’s decision this month to delay enforcement of penalties against employers of 50 or more who don’t offer their employees health coverage meeting minimum standards of quality and affordability.  Weintraub argues – and many across the political spectrum would agree with him – that employers shouldn’t be in the business of providing health coverage to their employees (and might not be, but for a 1940s quirk of history) and that it should be left to individuals and families to buy what’s best for their needs. In this vein, Weintraub favors a 2011 proposal to amend the ACA to allow employees of companies with 100 or fewer workers to take their employer’s health care contribution and buy coverage in the state health benefit exchange marketplace.

That sounds a lot like an existing provision at Section 10108 of the ACA that allows employers to provide “free choice vouchers” to their employees to buy coverage on the exchange marketplace.  Employers however would still have to offer their employees minimum essential coverage and could only offer the vouchers to employees whose share would be between 8 and 9.8 percent of their household income. Plus the employee’s household income could not exceed 400 percent of the federal poverty limit.

The debate over both the employer and individual mandate is heating up again, a little more than a year after the U.S. Supreme Court upheld the constitutionality of the latter in NFIB v. Sebelius.  Both mandates are aimed at the frayed edges of the pre-ACA health insurance market and don’t affect the majority of Americans covered through their employers or government programs such as Medicare and Medicaid. In the large group market, the employer mandate is directed at a small minority of large employers that pay low wages and provide little in the way of health benefits. At the other end of the market, the individual mandate hopes to help restore that market segment to actuarial and functional health. Both are governmental market interventions intended to trim these rough, problematic margins of the current system of private health coverage.  Whether they are ultimately successful won’t be known for several years.

 


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. 

Credit unions partner with COOP plan in two Midwestern states

In two Midwestern states with a tradition of consumer cooperatives, credit unions will help enroll members in an Iowa-based consumer operated and oriented (CO-OP) health plan, CoOportunity Health, that will offer plans on the states’ health benefit exchange marketplaces. According to the CreditUnionTimes, CoOportunity Health will offer coverage in Iowa, which will operate a state partnership exchange with the federal government, and Nebraska, which has opted for a federally operated exchange. Group Benefits Ltd. will serve as the preferred broker, according to the story.

This is a noteworthy development because it shows interstate cooperation and the innovative use of an established and trusted distribution channel to drive enrollment in the exchange marketplace. It could also serve as a template for health plans to market across state lines via “health care choice compacts” starting in January, 2016 as authorized by Section 1333(a) of the Affordable Care Act. (The ACA specifies implementing regulations be issued by July 1, 2013, but the rules have not yet been promulgated). It could also pave the way for state exchanges to combine into “regional or other interstate exchanges” subject to approval by the participating states and the federal Department of Health and Human Services under ACA Section 1311(f).

 


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 data hub IT readiness likely factor in delay of large employer health coverage offer mandate

Employer push back on the complexity of requirements for reporting information on employer sponsored health plans was cited by the Obama administration for this week’s announcement by the U.S. Treasury Department of a one year enforcement delay for the Affordable Care Act’s “shared responsibility” provision requiring employers of 50 or more workers to offer minimum, affordable health coverage to full time employees.

But there’s likely another and just as important factor. It’s the federal government’s IT integration project to create a “data services hub” that pulls together information from multiple federal agencies to help determine the eligibility of an applicant for health coverage in the state health benefit exchange marketplace.

The federal hub interfaces with state insurance assistance programs for the poor including Medicaid and the Childrens Health Insurance Program.  It also should include a dataset of employer-sponsored health coverage to help exchanges determine if an employed applicant for individual coverage is already offered qualifying employer-sponsored coverage and thus ineligible to purchase an exchange plan that comes with advance tax credit subsidies.

IT experts agree integrating all of these data sets as well as often outdated state program software platforms in order for state exchange eligibility workers to make a quick, “one touch” eligibility determinations is an IT integration challenge of enormous proportions that would normally take years to implement. However, in order for the system to be ready to go live when exchange enrollment opens October 1, all of these data sets would have to be integrated and operational in July for testing and debugging.  It’s now July and most likely that deadline isn’t going to be met.

The federal government’s announcement noted proposed rules are forthcoming this summer governing employer sponsored health plan reporting requirements. It hinted the regulations will allow for self certification (the key word is “voluntarily”) by employers of their sponsored employee health coverage for 2014, while at the same time giving IT integrators another year to prepare the federal data hub to include this data set in time for 2015:

Once these rules have been issued, the Administration will work with employers, insurers, and other reporting entities to strongly encourage them to voluntarily implement this information reporting in 2014, in preparation for the full application of the provisions in 2015.  Real-world testing of reporting systems in 2014 will contribute to a smoother transition to full implementation in 2015.

Update:  On 7/5/13, the federal Department of Health and Human Services published in the Federal Register an extensive final rulemaking that allows exchanges that do not have information on employer-sponsored coverage obtained from electronic data sources or the SHOP exchange to accept an individual applicant’s self attestation that their employer does not offer them minimum affordable coverage (subject to possible future reconciliation of advance tax credits) and authorizes exchanges to investigate inconsistencies for individual plans covering 2014.

The final rule also gives exchanges the option of relying on HHS to verify an employed applicant’s eligibility for advance tax credit and cost sharing subsidies in 2015 and later.  The relevant provisions are effective September 15, 2013 and codified at 45 CFR 155.320(d), Verification related to enrollment in an eligible employer-sponsored plan and eligibility for qualifying coverage in an eligible employer-sponsored plan.

 


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. 

Congressmen call on feds to look into exchange participation mandates in Vermont, DC

This item today from the California HealthCare Foundation’s California Healthline reports on the effort by some members of Congress to call out two small jurisdictions – Vermont and the District of Columbia – for mandating participation in their health benefit exchange marketplaces.  In so doing, the lawmakers have spotlighted a point of tension between the letter of the Affordable Care Act and its policy intent in requiring states to set up exchanges.  In asking the federal government to crack down on the two jurisdictions, they correctly note that the ACA does not compel participation in the exchange marketplaces for neither health plans nor individuals and small businesses.

On the other hand, the exchanges are intended to aggregate the market – particularly on the buyer side – in order to restore functionality to the distressed individual and small group health insurance market segments.  In small jurisdictions like Vermont and the District of Columbia, attracting the market into their exchanges is harder because there are fewer residents to draw from.  And with fewer residents, statistically speaking there are smaller numbers of individuals and small employers to potentially participate in the exchange marketplaces.  Which makes them less attractive to health plans since with fewer insureds, they can less easily spread the risk of high cost “covered lives.”  That in turn increases the risk of adverse selection, which can leave the individual and small group markets at least as dysfunctional and unaffordable as they were before the exchanges opened for business.

To some degree or another, smaller state exchanges are likely to face the challenge of attracting and retaining sufficient numbers of individuals and small employers – particularly the latter.  The problem is particularly acute in the least populous states, a point made in this previous blog post where I discuss ACA provisions that allow smaller states to create bigger risk pools to help ward off the specter of adverse selection.

 


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. 

ACA provides options for smaller states to create larger risk pools

Individual and small group health insurance markets will be the ultimate deciders of whether the Affordable Care Act’s market reforms and exchange marketplaces make coverage more affordable and valuable. Their experience over 2014 and 2015 will serve as a litmus test.

A major determinant of premium affordability will be a state’s ability to create large and diverse pools of individuals and small employers that enable payers to spread risk. Beginning in January, 2014, the ACA establishes two pools: one comprised of individuals and families and another made up of small employers. The size of those pools is naturally a function of a given state’s population and the heft of those pools has an impact on premiums. Large states like California have a natural advantage in creating sizable risk pools better able to spread out the cost of medical care. Accordingly, California has opted to leverage the market power of its population to actively negotiate with health plans over terms of coverage and rates for plans sold on its health exchange marketplace, Covered California. Smaller, less populated states, however, don’t have the law of large numbers on their side.

The Affordable Care Act appears to recognize this circumstance and has built in mechanisms that would enable smaller states to create larger, more robust risk pools:

  • Section 1312(c)(3) allows states to combine their individual and small employer markets into a single risk pool;
  • Section 1331(b)(3)(B) authorizes states to negotiate regional compacts with other states to cover low income individuals not eligible for Medicaid in “standardized health plans.”  (The federal Department of Health and Human Services (HHS) has held off issuing regulations for these plans until at least 2015);
  • Section 1333(a) provides a mechanism for health insurers and plans to pool risk and sell across state lines via “health care choice compacts” starting in January, 2016. Two or more states could enter into an agreement under which health plans could be offered in state individual markets, subject to regulation by the state in which the plan was written or issued, provided plans comply with the other states’ rules regarding market conduct, unfair trade practices, network adequacy, and consumer protection standards including standards relating to rating and handling of disputed claims.  (The statute requires HHS issue regulations governing health care choice compacts by July 1, 2013);
  • In addition to authorizing interstate plans, the ACA also appears to contemplate such plans being marketed in multiple state exchange marketplaces. Section 1311(f) allows state exchanges to combine into “regional or other interstate exchanges,” subject to approval by the participating states and HHS.

Given the large number of states where HHS will fully or partially operate exchanges, it’s possible the federal government will press the affected states to exercise some of these options to create larger purchasing pools in order to gain greater bargaining power with payers.

 


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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