Tag Archive: individual health insurance market

Observations and questions on exchange plan losses

Reading media accounts of health plan issuer complaints of losses on plans sold through state health benefit exchanges, one might think all individual plans are sold through the exchanges. That false perception has implications for gauging the success of the Patient Protection and Affordable Care Act’s individual market reforms since the exchanges are only one element of them. Other key components affect all individual (and small group) plans regardless of whether they are sold on the exchanges or outside of them such as modified community based rating barring medical underwriting of individuals and pooling all individuals and small employers into single state risk pools.

The tendency to view the individual market as one and the same with the exchanges appears driven at least in part by too little data on the off-exchange individual market as compared to exchange qualified health plans. Even though the number of off-exchange plans exceeds those sold on the exchanges in many states, “[th]e lack of transparency about this market will be a growing problem for consumers and regulators,” noted Joel Ario of Manatt Health Solutions and Katherine Hempstead of the Robert Wood Johnson Foundation at the winter meeting of the National Association of Insurance Commissioners (NAIC).

Another aspect of the complaints of exchange plan losses hasn’t been covered in any detail. While some health plan issuers say exchange plans are a money loser due to high medical utilization, they could also dislike having to meet additional compliance and plan administration requirements for exchange participation that makes them unattractive. Particularly if they don’t also offer Medicaid managed care plans serving a demographic more closely aligned with those who purchase coverage through the exchanges.

Finally, more examination and reporting are needed on what’s driving reported losses among plans sold on the exchanges. The frequently reported rationale is it’s because exchange plans enrolled people who are “sicker than expected.” Sicker with what, exactly? Are the losses being incurred by those eligible for cost sharing subsidies in silver plans given that most exchange plans purchased are higher deductible bronze and silver-rated plans? Are those enrollees not eligible for out of pocket cost sharing burning through the deductibles with high cost care such as outpatient surgeries and hospitalization?

 


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 exchange models managed competition in individual, small group health insurance markets

At the other end of the policy spectrum, the exchange serves as an “active purchaser” of health insurance on behalf of its clients, the individual consumers. In effect, the exchange seeks to move insurance from a let-the-buyer-beware retail market to a two-stage wholesale and retail market. The first (wholesale) stage uses supply chain management tools developed by corporate buyers of other services, while the second (retail) stage encourages consumers to select from a more narrow range of pre-contracted offerings.

Source: Whither Health Insurance Exchanges Under The Affordable Care Act? Active Purchasing Versus Passive Marketplaces

This article co authored by UC Berkeley School of Public Health economist James C. Robinson, the executive director of California’s health benefit exchange, Peter Lee, and exchange policy staffer Zachary Goldman effectively argues California exchange’s active purchaser role vis health plan issuers embodies the concept of managed competition in health insurance described in this January 1993 Health Affairs article by Alain C. Enthoven:

A sponsor (either an employer, a governmental entity, or a purchasing cooperative), acting on behalf of a large group of subscribers, structures and adjusts the market to overcome attempts by insurers to avoid price competition. The sponsor establishes rules of equity, selects participating plans, manages the enrollment process, creates price-elastic demand, and manages risk selection.

As the authors note, the Patient Protection and Affordable Care Act creates basic standards for health plans in terms of defining required covered services, actuarial value and annual out of pocket maximums. But to realize the full benefit of managed competition, they appear to assert that health benefit exchanges must function as demanding and exacting wholesale purchasers of health plans in order to achieve maximum comparable selection and value for their retail customers. By aggregating purchasing power for insurance buyers, the exchanges help balance out market power between buyers and health plan issuers in a market that due to high entry and operating costs tends to be oligopolistic.

 


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, Hill Physicians Medical Group and Dignity Health’s Hospitals and Medical Foundation Form Accountable Care Collaboration in Northern California

The agreement features a new payment model to reward Hill Physicians and Dignity Health for meeting quality, efficiency and patient satisfaction measures, including:

  • The percentage of Aetna members who get recommended preventive care and screenings;
  • Better management of patients with chronic conditions, such as diabetes and heart failure;
  • Reductions in avoidable hospital readmission rates; and
  • Reductions in emergency room visits.

via Aetna, Hill Physicians Medical Group and Dignity Health’s Hospitals and Medical Foundation Form Accountable Care Collaboration in Northern California – The Health Section.

 

This agreement affects Aetna’s group market; the insurer withdrew from California’s individual health insurance market as of 2014.

The move follows by two weeks the unveiling of an individual market Accountable Care Organization (ACO) formed by Anthem Blue Cross and 6,000 doctors and 14 hospitals across seven Southern California health systems.

 


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. 

N.Y. limits average health insurance increases to 5.7%

ALBANY – The state on Thursday approved an average 5.7 percent rate increase for health insurers in 2015, spurning their request for a 13 percent hike.

Insurers in July cited growing costs in their rate requests. But the state Department of Financial Services set the rate and said it would be an average of 5.7 percent for individual plans, saying it will save customers about $1 billion next year.

Overall, the agency contended that rates will remain 50 percent lower than they were prior to state’s health care exchange that started Jan. 1. Nearly 1 million New Yorkers enrolled in the health exchange. The next enrollment period starts Nov. 15 for coverage starting on Jan. 1.

For small-group insurance, insurers wanted a 13.9 percent increase. The state reduced it to 6.7 percent.

via N.Y. limits average health insurance increases to 5.7%.

This development could have implications for California which like New York operates a state-based health benefit exchange that actively negotiates premium rates with health plan issuers.

A measure on California’s General Election ballot in November, Prop. 45, would bring the Golden State in line with New York and a majority of states that require health plan issuers obtain prior regulatory approval before using rates.

Prop. 45 has raised concerns among opponents as well as the state’s health benefit exchange, Covered California, of potential disruption of the individual and small group health insurance market if plan issuers decide they can’t live with approved premium rates lower than those filed. That could possibly lead to plans being withdrawn from regions or all of the state as threatened by the New York state Health Plan Association in this story.

 


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. 

Looking at Costs and Risks, Many Skip Health Insurance – NYTimes.com

Looking at Costs and Risks, Many Skip Health Insurance – NYTimes.com.

The Patient Protection and Affordable Care Act’s reforms of the individual health insurance market — a mix of carrots and sticks aimed at restoring the market to functionality — may fall short for many who will remain medically uninsured for various reasons.

For self-employeds, The New York Times piece shows the calculation on whether to participate is sharply focused on the present state of their health and finances. It also identifies what might be termed “older invincibles” — middle aged people in good health who don’t believe they will have a major illness or injury that will make buying coverage worth the cost, which rises with age. For some, that even includes factoring in advance premium tax credit subsidies.

 


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. 

Double digit individual plan premium hikes seen for 2015

A senior executive of WellPoint predicts plan year 2015 premiums in the individual market could go up by double digits in some areas of the United States.

Larry Levitt, senior vice president at the Kaiser Family Foundation, predicts 2015 premiums could rise by 10 percent, based on a  5 to 6 percent medical services cost trend plus the effect of a reduction in payments to plan issuers under the Patient Protection and Affordable Care Act’s Premium Stabilization Programs to $6 billion in 2015.

via Will Premium Spikes Cause Another Round of Obamacare Bashing? – NationalJournal.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. 

Healthcare Town Hall » Insurers adjust to paradigm shift

Milliman’s Tom Snook

via Healthcare Town Hall » Insurers adjust to paradigm shift.

Milliman’s analysis suggests the key to keeping the individual market actuarially viable isn’t only about getting enough so-called young invincibles into individual market state risk pools. It’s also about bringing in older people in good health — and keeping them healthy.

 


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. 

Analysis: First year enrollment churn could be nearly half of QHP enrollees, quarter of Medicaid beneficiaries

In health insurance, “churn” refers to people moving between various forms of coverage as their life and economic circumstances change. Those in employer-sponsored plans who are dismissed or leave their jobs move into the individual market, COBRA, Medicaid or go uninsured. Those on Medicaid can earn off eligibility if their household income rises above their state’s cut off point. People move back to employer-sponsored coverage when they or their partners are employed by an entity that offers health coverage either on its own or as required starting next year in the case of large employers.

As well as these forms of coverage, the Patient Protection and Affordable Care Act adds a new category this year: those eligible for advance tax credit-subsidized coverage in the state health benefit exchange marketplace. Like Medicaid, eligibility for this form of coverage is means tested and can change as household income rises above 400 percent or falls below 138 percent of federal poverty.

An analysis of the nation’s largest state health benefit exchange marketplace, Covered California, finds churn over a 12 month period could amount to nearly half of those enrolled in subsidized qualified health plans (QHPs) and a quarter of those enrolled in Med-Cal, California’s Medicaid program. Click here for the report by the UC Berkeley Center for Labor Research and Education.

The churn among QHPs has implications for the exchange marketplace insofar as exchanges are financially reliant on health plan issuer participation fees assessed on QHP premiums starting in 2015 when federal establishment grant funding will no longer be available. In that vein, the report concludes Covered California (and by implication other state-based exchanges) must devote ongoing attention to enrollment throughout the year outside of open enrollment periods including outreach, web portal, in-person and call-center assistance.

 


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. 

Concerns over large group plan exchange option overblown

Concern is being raised that a Patient Protection and Affordable Care Act provision allowing large group plans (defined as those offered to employers of 101 or more beginning in 2017) to offer plans on state health benefit exchanges could disrupt the large group market. The basis of the concern is an ACA requirement at Public Health Service Act Section 2701(a)(5). The section would apply the ACA’s mandate on individual and small group plans, requiring they use modified community-based rating (rather than risk rating) to large group plans in those states that elect to allow large group plans to be sold via their health benefit exchange marketplace:

(5) SPECIAL RULE FOR LARGE GROUP MARKET.—As revised by section 10103(a). If a State permits health insurance issuers that offer coverage in the large group market in the State to offer such coverage through the State Exchange (as provided for under section 1312(f)(2)(B) of the Patient Protection and Affordable Care Act), the provisions of this subsection shall apply to all coverage offered in such market (other than self-insured group health plans offered in such market) in the State.

My impression is this concern is overblown. It’s both unlikely that states will be interested in bringing large group plans into their exchange marketplace or that large group plans would want to participate. The Affordable Care Act’s enhanced risk spreading mechanisms contained in market rules and the exchange marketplace needed in the individual and small group markets are less necessary for large group plans that already benefit from greater scale and spread of risk. In addition, a robust private exchange marketplace is springing up to offer large employers more opportunity to create even larger pools and greater spread of risk.

 


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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