Tag Archive: health plan issuers

Action on ACA individual market reforms successor must come in Q1 2017 to avoid messy market meltdown

Heading into this year’s elections, the individual health insurance market segment developed signs of instability as health plan issuers were pulling back their market presence for 2017 and reassessing their plans for 2018 and beyond. The election that sent Donald Trump headed to the presidency and afforded his party the opportunity to implement their stated policy to quickly repeal the Patient Protection and Affordable Care Act piled uncertainty on top of uncertainty for health plan issuers.

It’s unclear how much of the Affordable Care Act the incoming Trump administration and Congress will gut. However, it is clear that first in their sights are the individual health insurance market reforms contained in Title I of the expansive law. With these reforms first in line for the chopping block, there is no luxury of time to contemplate a gradual transition for the individual market. Congress and the new administration will have to quickly come to a consensus in the first quarter of next year.

As has been widely reported, Congress and the Trump administration could defund the bulk of the reforms using a budget reconciliation bill requiring a simple majority vote, thereby avoiding a Democratic filibuster. But that would only create more market uncertainty, crashing the old Affordable Care Act market rules before new ones could be put in place. Even more comes from the House’s successful court challenge this year of the Obama administration’s funding of out of pocket cost sharing subsidies for many lower income households buying coverage on state health benefit exchanges. It would take effect very early in the Trump administration if the administration as expected opts not to pursue an appeal, prompting health plan issuers to bail from state health benefit exchanges in 2017 and leave millions without coverage. These circumstances underscore the fact that under the Affordable Care Act, health plan market participation is voluntary. If plan issuers can’t predict their finances with any degree of certainty, all bets are off.

Health plan issuers need to begin pulling together their individual market offerings for plan year 2018 early next year. It will be difficult if not impossible for them to do so with the market rules up in the air. Lacking any certainty in the first quarter of 2017, a transition to a new scheme won’t happen in 2018. New policy will have to be nailed down in that critical first quarter. With the Affordable Care Act individual market rules well established, it’s now impossible to quickly unscramble the Obamacare omelet and turn the calendar back to 2009.

 


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. 

Public health exchange enrollments may fall short of insurer needs | Business Insurance

The projected number of enrollees in health care plans purchased through public health insurance exchanges likely will not be sufficient to absorb the costs incurred by insurers providing those plans, Moody’s Investors Service Inc. said in a report released Monday.

The New York-based credit rating agency said lower-than-expected enrollment growth in the public exchanges established under the federal health care reform law would be “credit negative” for participating U.S. health insurers, particularly smaller insurers without sufficient diversification in their books of business.

“These entities have been relying on increased volume to absorb fixed operating costs and introduce some healthier and younger enrollees to improve the overall risk profile of the insured pool,” Stephen Zaharuk, senior vice president at Moody’s, wrote in the report.

Source: Public health exchange enrollments may fall short of insurer needs | Business Insurance

This is a sobering outlook for one of the Patient Protection and Affordable Care Act’s keystone insurance market reforms: state health benefit exchanges. The exchanges are intended to bring a significantly larger volume of individuals and small employers into health coverage by bringing health plans together in a single marketplace, offering coverage on a baseline set of coverage requirements. As well as advance tax credit subsidies to individuals and families to make premiums more affordable.

Consequently, health insurance industry analysts were initially quite bullish in the 2011-12 period, believing the exchanges would be a growth bonanza for health plan issuers. This recent Moody’s analysis however takes a far more bearish view, particularly for smaller, less diversified players.

 


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. 

Short, long term changes could bode well for small group market

The small employer group market will be changing over the short and long term. Both changes could bolster the market segment as well as the Small Employer Health Options Program (SHOP) within the state health benefit exchange marketplace, which is seen by some as facing competition from the individual plan exchange marketplace.

Over the immediate short term, small group plans will be able to be sold with higher deductible limits under legislation signed last week by President Barack Obama. Section 213 of H.R. 4302 repeals a provision of the Patient Protection and Affordable Care Act at Section 1302(c)(2) limiting small group plan deductibles to $2,000 for individuals and $4,000 for families. The repeal is effective April 1, 2014 and is available to all plan year 2014 small group plans. The deductible limits presented a challenge to health plan issuers wishing to offer small group plans with bronze metal tier actuarial value that on average pay 60 percent of covered medical services.

The Employers Council on Flexible Compensation (ECFC), which said it joined forces with several other organizations to successfully lobby for the repeal of the provision, said the repeal of the limit will allow small employers to continue to provide affordable medical insurance to their employees, including flexible compensation options such as FSAs, HRAs, and HSAs while enabling employees to set aside tax advantaged dollars to help pay for their health care out-of-pocket and deductible expenses. Click here for the ECFC’s news release.

Over the longer term, the small group market will in all states be uniformly defined as plans sold to employers with up to 100 employees beginning with plan year 2016. For plan years 2014 and 2015, Section 1304(b)(3) of the Affordable Care Act gives states the option to define their small group market as plans sold to employers of 50 or fewer employees.

 


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. 

For some areas, Affordable Care Act’s goal of enhanced competition proves elusive

The individual and small group insurance market reforms of the Patient Protection and Affordable Care Act are based on a principle known as managed competition. As the term implies, managed competition attempts to bolster market competition by imposing market rules governing what is sold in a given market segment and under what conditions. (The role of managed competition in health care was first described in the late 1970s by economist Alain Enthoven).

The Affordable Care Act’s brand of managed competition is designed to improve choice and value for individuals and small employers when it comes to buying health plans. For insurers, the reforms are also aimed at restoring functionality to these insurance market segments by enhancing the risk spreading function of insurance by mandating they lump together individuals and small employers, respectively, into single statewide risk pools.

The Affordable Care Act gives health plan issuers — including those of multi-state plans created under the law aimed at boosting plan competition and choice — the option to determine whether to offer plans in a given state rating region and at what price. It also doesn’t affect the number of health care providers in a given region, which can vary widely across the United States and particularly between urban and rural areas. Consequently, the Affordable Care Act’s goal to enhance competition and value in individual and small group health coverage can be difficult to achieve in some areas of the nation as Jordan Rau of Kaiser Health News reports. Click here for Rau’s piece published in The Washington Post.

 


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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