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Posts Tagged ‘individual health insurance market’

Administration, Congress would leave CSR subsidies in limbo in latest court filing

May 22nd, 2017 Comments off

President Donald Trump and House Republicans have decided not to blow up the Obamacare health insurance markets just yet. In a filing to a federal appeals court Monday, the Justice Department and lawyers representing House Republicans have requested another 90-day delay in the proceedings from a case challenging the legality of payments made to health insurers serving low-income customers. “The parties continue to discuss measures that would obviate the need for judicial determination of this appeal, including potential legislative action,” attorneys for both parties wrote to the appeals court.

Source: Trump Decides Not To Blow Up Obamacare — Yet | HuffPost

If the U.S. District Court of Appeals grants this request, the legal uncertainty over the reduced cost sharing subsidies for silver actuarial value (AV) plans sold in state health benefit exchanges would potentially continue for the rest of the summer. As the article notes, those subsidies could be cut off at any time by the Trump administration and an appeal in the case, House v. Price, dropped. That would leave intact a U.S. District Court ruling one year ago finding the subsidies cannot be allocated by the executive branch without congressional appropriation. Neither the Trump administration nor the current Congress are committed to keeping the exchange market functional and have little motivation to resolve the matter.

These circumstances will likely prompt plan issuers to increase plan year 2018 premium rates as a precaution as rate filings are due to state regulators in the next month since the Affordable Care Act would continue to require them to offer more generous coverage than standard 70 percent AV silver plans for households earning below 250 percent of federal poverty levels and purchasing though the exchanges. At least one plan issuer, Anthem, has indicated it would have to boost premiums by at least 20 percent to cover the potential loss of the CSR subsidies.

A second consecutive year of double digit premium increases could threaten the actuarial viability of the state non-group market risk pools since those eligible for little or no advance premium tax credit subsidies would likely flee the market. Particularly if the Trump administration doesn’t enforce the ACA’s individual mandate, making that option more appealing.

Some state regulators including California and most recently New Mexico have asked plan issuers to file two sets of premium rates, one assuming continuation of the subsidies and another without them.

 


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. 

Conservative tack on market-based reforms comes with high degree of political risk

February 28th, 2017 Comments off

Conservative economic ideology on reforming America’s health care system is that being a market — albeit an “unbelievably complex” one as President Donald Trump told governors gathered at the White House Monday — market-based reforms are the best and most appropriate remedy to achieve lower costs and better value care and outcomes. These goals are also central to the Patient Protection and Affordable Care Act. The law took a decidedly interventionist approach to making the health care market work on both the payer and provider sides, particularly with regard to individual medical plans. In an effort to save the market from collapse, the Affordable Care Act recast the marketplace rules based on a principle coined by healthcare economist Alain Enthoven called managed competition. Under managed competition, the rules of the game are designed to strengthen the sell and buy sides of the market and force sellers to play under market rules designed to reduce market manipulation and level the playing field. Creating state health benefit exchanges and subsidizing purchasers are intended to create a more robust market where plan issuers have to compete on value for a larger pool of buyers than might otherwise exist without the new rules. Those rules also required all plans to offer a core set of benefits to ensure a minimum level of value while leaving plans to offer five different levels of generosity, i.e. how much plan members must pay out of pocket before reaching statutory out of pocket maximums.

Central to market-based reforms is enhancing competition among sellers. The big question in the very complex, multi-siloed market of health care is to what extent competition is possible. Market competition isn’t a black or white, yes or no issue. Rather, competition is a matter of degree. Economists define a perfectly competitive market as one in which there are many sellers and buyers on relatively equal footing with real time access to information about the products or services offered and their price and value. Few if any markets are perfectly competitive. Using that standard, health care is far from a perfectly competitive market, especially so since most consumers don’t directly deal with their medical care providers as beneficiaries and members, respectively, of government and commercial medical plans that do so on their behalf. So far in fact that it is questionable that it can be reformed into a truly competitive market. Cost barriers to entry to new players are high, driving both payers and providers to consolidate, further eroding competition by reducing the number of sellers.

Because competition hasn’t effectively controlled the cost of health care, stakeholders are instead left to attempt to shift rising costs and blame for them to other stakeholders. Or reduce demand for health care by providing disincentives for utilization by forcing consumers to share more of the cost. Under the Affordable Care Act, that has taken the form of higher deductibles. Problem is those higher deductibles have not come with the customary tradeoff of significantly lower premiums. Premium rates have gone up along with the deductibles. That has led consumers and particularly those who purchase individual plans without subsidies to view their plans as “useless,” offering little or no value. That sentiment proved corrosive to the Affordable Care Act since they naturally felt ripped off. They were more than happy to vote for candidates in the November elections committed to scrapping a law they saw as giving them a lousy deal.

Today’s Los Angeles Times reports on political downside of shifting more costs onto consumers as a theoretical means of boosting competition to lower medical utilization and with it, demand stoking rising costs. Doing so runs the risk of irritating consumers even more, who will then take their anger out on their federal representatives in the upcoming midterm elections. Excerpts from The Times story:

Those are politically risky ideas, said Robert Blendon, an authority on public attitudes about healthcare at Harvard University. “Skin in the game has been never popular,” he said. “It may be an economist’s dream. But it’s never been something people say they want.”

“We believe in a patient-centered system, where individuals have the freedom to buy what they want and not what the government makes them buy,” (House Speaker) Ryan told reporters at the Capitol recently. “It’s really, really important to have choice and competition in healthcare because choice and competition lowers cost and increases quality.”

If Ryan were talking about another market like furniture or automobiles where consumers deal directly with sellers and make calm and rational purchasing decisions free of the anxiety that accompanies often painful, highly stressful medical issues, his vision of putting more power in the hands of buyers might be doable. That along with the reality that consumers are tied to government and commercial medical care plans that negotiate and set the terms and conditions of their medical care makes Ryan’s goal a very tall order.

 


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. 

Aetna CEO, analyst offer differing assessments on health of individual market

February 17th, 2017 Comments off

Bertolini drew a portrait of the health insurance landscape caught in a deteriorating cycle. With too many sick people and not enough healthy ones buying insurance, he argued, the premiums have to keep going up. The more the premiums increase, the fewer healthy people want to sign up for care. They opt to pay the penalty instead of buying insurance with a massive deductible. That causes the balance of sick and healthy people buying insurance to worsen, prompting more rate increases and causing people – and insurers – to drop out.He said that Aetna’s heaviest utilizers of health care – the top 1 percent to 5 percent – are driving half of the costs in the exchanges.”My anticipation would be that in ’18, we’ll see a lot of markets without any coverage at all,” Bertolini said.But health policy experts argue that, so far, there aren’t clear signs that Bertolini’s assessment is accurate.

Cynthia Cox, associate director of a program focused on health reform and private insurance at the Kaiser Family Foundation said that in a true death spiral, the people buying insurance on the exchanges should be a progressively sicker group of people each year. Although the people buying insurance have been sicker than insurers projected, Cox said there isn’t evidence that the pool of people is getting sicker.One sign of a death spiral would be fewer young adults, who tend to be healthier, signing up — something that Cox says hasn’t happened. Another protection against a death spiral is that roughly 85 percent of the people who buy insurance through the exchanges are insulated from premium increases by subsidies, she said.

Source: Aetna CEO says Obamacare in ‘death spiral,’ debates leaving health care exchanges | OregonLive.com

 


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. 

Immediate ACA repeal rhetoric mooted as Trump administration issues rulemaking to reinforce law’s individual market reforms

February 15th, 2017 Comments off

With only about six weeks left to enact any comprehensive replacement for the Patient Protection and Affordable Care Act, the Trump administration has sent a clear signal it won’t happen this year by introducing proposed rules today reinforcing the law’s individual insurance market reforms rather than a wholesale repeal of the omnibus statute. The Market Stabilization rulemaking is a confidence building measure aimed at calming nervous individual health plan issuers as they plan their market participation for 2018 amid worries over adverse selection.

The rulemaking comes just 10 days after President Trump said in a televised interview his administration’s comprehensive successor to the Affordable Care Act would take the rest of 2017 and likely into next year to finalize and move through Congress. That’s realistic considering the Affordable Care Act contains ten titles and runs more than 2,000 pages. It will take time to determine which to keep, which to amend and which to eliminate — and attract sufficient support from across the aisle for any overhaul.

The proposed rule would more closely conform individual coverage to employer-sponsored and Medicare coverage by establishing the plan year 2018 open enrollment period as November 1 to December 15, 2017. The rulemaking would require those seeking to enroll outside this period to provide documented evidence of life events such as a change in family status or loss of employer sponsored coverage. It also would make it easier for health plan issuers to collect lapsed premium payments upon renewal, liberalizes the actuarial value definitions of all but silver plans as well as network adequacy standards.

The proposed rule also indicates the federal government plans to revise the timeline for the certification of qualified health plans (QHPs) sold on state health benefit exchanges and rate review process for plan year 2018. “In light of the need for issuers to make modifications to their products and applications to accommodate the changes proposed in this rule, should they be finalized, we would issue separate guidance to update the QHP certification calendar and the rate review submission deadlines to give additional time for issuers to develop, and states to review, form and rate filings for the 2018 plan year that reflect these changes,” the Centers for Medicare & Medicaid Services (CMS) stated. Comment on the proposed rule is due March 7, 2017.

The issuance of the proposed rule renders moot campaign rhetoric leading up to the November 2016 elections to immediately repeal the Affordable Care Act and highlights the lack of a ready Republican plan to replace the law. The party’s opposition is less about genuine policy differences but more about ongoing hard feelings arising from the process (versus substance) of the Affordable Care Act’s enactment in early 2010 that essentially steamrolled then minority Republicans. With no clearly articulated GOP policy alternative, there cannot be a true policy debate.

Congress and the administration have incentive to back off the immediate repeal talk given the likelihood they’d face political blow back from payers and providers vexed by the enormous uncertainty of gutting the law without a clear replacement as well as constituents fearing their coverage might be disrupted. The political consequences of inchoate policy outweigh any immediate policymaking in Congress, particularly since unhappy voters could punish some members of Congress in the 2018 mid-term elections.

In addition to this proposed rule, expect Congress to make a rapid appropriation to stave off another issue threatening the stability of the individual market stemming from ongoing hard feelings over the law’s enactment its implementation by the Obama administration: House v. Burwell. An appropriation is necessary because a federal court ruled in that case funding for out of pocket cost sharing subsidies for low income households purchasing silver plans on state health benefit exchanges requires an appropriation by Congress and that the required appropriation is absent. The House of Representatives challenged the constitutionality of the Obama administration’s funding of the subsidies without an explicit appropriation by Congress. Implementation of the federal court ruling is on hold until at least this month as it’s not expected the Trump administration will pursue an appeal.

 


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. 

Honoring basic insurance principles proves challenging in state individual health insurance markets

February 12th, 2017 Comments off

A growing number of Minnesotans are tapping tax credits through the health law that discount premium costs on the policies. But eligibility for subsidies depends on income, and there’s growing evidence that those who don’t qualify for tax credits or have other affordability problems are fleeing the market. On Thursday, the Minnesota Council of Health Plans released numbers that show 80,000 fewer residents covered in the individual market now than a year ago, a decline of 30 percent. The current tally of 190,000 will likely drop further, insurers say.A shrinking market is a bigger problem for insurers than a drop in revenue. People with costly health problems tend to maintain even expensive coverage, knowing it’s a better deal than paying the full cost of health care. So, a shrinking market at a time of skyrocketing premiums leads insurers to conclude that healthy people are leaving the mix.

Source: Health insurers say they need insurance protection from big claims – StarTribune.com

The Patient Protection and Affordable Care Act aims to improve the spread of risk and honor the law of large numbers — bedrock principles that underpin all forms of insurance — by pooling most everyone not covered in the three main pillars of health coverage (Medicare, Medicaid, employer-sponsored coverage) into a single risk pool in each state. But even putting everyone in a given state into a single, statewide risk pool may not be enough in states with fewer residents as this account illustrates. When there are too few “covered lives” in the pool in insurance industry lingo, the risk spreading mechanism of insurance gets stressed and the pool threatened by adverse selection. That occurs when a relatively small number of people incur large claims costs as the case here in Minnesota.

Since the individual market is comprised of only a relatively small segment of the population nationwide given the dominance of the big three pillars of health coverage, honoring fundamental insurance axioms may only be possible in states with large populations such as California, New York, Texas and Pennsylvania.

 


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. 

Fate of individual market hangs in balance

January 11th, 2017 Comments off

An immutable truth of any market is sellers and buyers must be able to get together on mutually agreeable terms and conditions and do so on a sustainable basis. If that doesn’t occur, markets grow weak and eventually fail. Sellers withdraw and buyers don’t buy. That has certainly been happening in the individual medical insurance market. Some health plan issuers have pulled back their offerings in many states for the current plan year. Many consumers are reluctant buyers, accustomed for decades to all inclusive, low co-pay managed care plan model. They naturally see individual plans that come with both high premiums and high out of pocket costs as a poor value, expecting a greater inverse relationship between the two. Particularly if they don’t benefit from premium and cost sharing subsidies.

That’s not a prescription for long term buy side support. The Patient Protection and Affordable Care Act forces sellers and buyers of individual plans together by requiring sellers to sell regardless of an individual’s medical history and buyers to buy under pain of paying an income tax penalty for not having some form of continuous, credible coverage. But even those efforts to prop up the market appear less than certain to achieve a robust, well-functioning market. The big questions for the incoming administration and new Congress are:

  • Whether the individual medical insurance segment that covers a sizable and growing portion of the working age population can sustainably function as a market?
  • To what extent government policy should support the market and does the political will exist to do so?
  • If the market should be left intact, what must be done to make it actuarially viable over the long term and avoid its tendency toward 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 provisions to restore individual health insurance market may have missed target

December 27th, 2016 Comments off

One of the major reforms of the individual health insurance market segment put in place by the Patient Protection and Affordable Care Act is pooling people into statewide risk pools to achieve greater spread of risk. In addition, the law reinforces the fundamental insurance principle of risk spreading by creating incentives for people to get into the pool. Those include advance tax credit premium and reduced cost sharing subsidies for individual plans offered on state health benefit exchanges and tax penalties applied to everyone not covered under some minimum form of coverage for hospital and physician care. Also, requiring health plans to accept all applicants for coverage regardless of medical history.

The goal is to restore what was a struggling market segment circling the drain of runaway adverse selection prior to the reforms going into effect in 2014. Few might have thought such a sweeping overhaul of the market wouldn’t restore it to a healthy, viable segment of the health insurance market. But as the reforms are about to enter their fourth year, it’s unclear whether they will achieve the goal of improved spread of risk. Health plan issuers complain the risk pool is imbalanced with too few young people and too many older and higher utilizing folks. They’ve openly expressed concern that’s driving adverse selection – the very problem the reforms intended to remedy.

Other factors that jeopardize the sustained actuarial viability of the individual market:

  • Poor overall population health status and low health education levels (i.e. how to stay healthy, minimize need for medical care), generally increasing utilization and cost trend.
  • Inadequate market forces exerting downward pressure on medical costs. The Affordable Care Act includes provisions to shift to value-based medical provider reimbursement reform for Medicare, but not the individual or small group market segments.
  • A high level of churn as people’s life situations change, moving them into and out of the individual health insurance market.
 


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. 

Newly enacted legislation could help stabilize individual health insurance market

December 14th, 2016 Comments off

The 21st Century Cures Act, an omnibus health care measure signed into law this week by President Obama, contains a provision that could help stabilize the individual health insurance market segment. It does so by paving the way for employers of 49 or fewer employees that do not offer group coverage to subsidize employee purchases of individual plans starting January 1, 2017.

Section 18001 of the measure authorizes tax deductible Qualified Small Employer Health Reimbursement Arrangements (HRAs), allowing small employers to fund up to $4,950 annually for single employees and $10,000 for an individual plan covering an employee and their family members. The reimbursement must be offered to all full time, permanent employees age 25 and older with at least 90 days of service and may not be offset by employee salary reduction contributions.

Previously, guidance issued by the federal government disallowed employer subsidies of employee individual coverage. Since the subsidies are paid by employers, they trigger requirements governing employer group plans, the guidance stated, drawing a bright line between individual and employer group health benefits.

If a significant number of small employers — many of which are feeling pressure from rising small group health insurance premiums — subsidize employee purchases of individual coverage under this provision, it could help improve the spread of risk and age diversity of state individual risk pools. Individual health plan issuers are concerned over the quality of the individual risk pool and many have significantly increased premium rates for plan year 2017.

 


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. 

Political realignment calls into question future of individual health insurance market, could boost “public option”

December 7th, 2016 Comments off

Behind vows by the new Congress and incoming administration to revisit and potentially undo at least some of the Patient Protection and Affordable Care Act is the question of the future commercial viability of the individual health insurance market segment. The Affordable Care Act intended to restore the segment to functionality by effectively forcing sellers and buyers together with mandates to offer and purchase coverage, respectively, along with a mix of incentives and disincentives.

Health plan issuers aren’t confident the reforms have worked as intended, concerned over less than optimal spread of risk among healthy and less healthy individuals and gaming of enrollment rules that result in people not being continuously covered, playing havoc with their actuarial calculations. But despite their misgivings that led some to pull back their presence in the individual market for plan year 2017, health plan issuers are also concerned policymakers will leave the market even more unbalanced and uncertain than under the Affordable Care Act. That combined with a rapid rise in medical utilization could spark a crisis of confidence sending plan issuers scrambling for the exits, effectively throttling the individual market and sending it into a rapid, fatal death spiral.

That in turn will lead to an even bigger policy question at time when self-employment is growing faster than expected. Where will the self-employed get protection from large, unexpected medical expenses with no commercially viable individual market? One possibility is a government operated individual plan like that outgoing President Barack Obama initially opposed but earlier this year endorsed to increase choice and access to individual coverage in states with few individual plan offerings. Now the so-called public option may end up being the only option — if the new Congress and administration go along — for those not in government or employer sponsored coverage if the individual health insurance market cannot remain commercially viable without retaining the Affordable Care Act mandates on both the sell and buy sides.

 


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. 

Individual health insurance segment will continue to face existential crisis post-election

November 18th, 2016 Comments off

Source: Health Affairs Blog. http://healthaffairs.org/blog/2017/02/08/the-marketplace-premiums-increase-underwriting-cycle-or-death-spiral/

 

Regardless of what the incoming Trump administration and Congress opt to do with the Patient Protection and Affordable Care Act’s reforms of the individual health insurance market, the segment will continue to face an existential crisis. The individual market remains the problem stepchild of health coverage, playing an important but relatively minor role in a siloed scheme dominated by employer sponsored coverage for a solid majority of those under age 65 and the big government entitlement programs of Medicare and Medicaid for most of the rest. Not to mention the other integrated government run care systems for active duty military members and their dependents and military veterans.

Given its place in the overall scheme of things, individual health insurance is the remainder market of last resort for those not covered by the dominant private and public systems. It functions as a high turnover, temporary segment that’s inherently unstable. People move in and out of coverage due to changing life circumstances or obtaining eligibility for coverage under one of the dominant systems. Others possess a deeply ingrained “culture of coping” as some have termed it to get medical care where it’s the most easily accessible and affordable such as hospital emergency departments, community clinics and free care events. That coping culture includes avoiding paying for individual health insurance, a pattern in place decades before the Affordable Care Act’s individual market reforms went into effect in 2014. It’s not going to be changed quickly even as health plan issuers are required to accept all applicants without regard to medical history and the law provides subsidies for premiums and out of pocket expenses to low and moderate income households.

That instability makes it very challenging for the basic insurance principle of risk spreading since the risk being insured against is highly dynamic. Actuaries base their projections on relatively stable risk pools and flows of premium dollars into the pool. As long as “covered lives” are moving in and out of the individual market, that desired actuarial predictability will remain elusive, the Affordable Care Act’s carrots and sticks aimed at stabilizing the pool notwithstanding.

As policymakers reassess the Affordable Care Act health insurance market reforms in the post-election period, they might well reexamine an assumption of the law that small group coverage would be eclipsed by the reformed individual market. It was expected that by making individual market coverage more like small group coverage by establishing small group plans as benchmark plans, that along with the individual market reforms would drive more people into individual coverage.

It hasn’t quite worked out that way. Even though the Affordable Care Act does not mandate they do so, small employers are continuing to offer group coverage, albeit less generous than the recent past and more akin to major medical, catastrophic plans with high deductibles. If they are offered coverage under them, employees have little incentive to enroll in individual coverage since they would not qualify for subsidized coverage sold on state health benefit exchanges.

That circumstance reduces the potential size of the individual segment and in so doing, degrades the individual market risk pool. While the Obama administration’s health insurance reforms are based on keeping employer-sponsored health benefits as the bedrock of coverage for most pre-retirement Americans, they also were aimed at revitalizing the struggling individual market. Given that employer-sponsored coverage cuts against a robust individual health insurance space, it may not be possible to have both.

 


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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