Tag Archive: individual market

What Trumpcare will likely look like

Donald Trump is following the path of every president elected before him from at least the Truman administration forward, proclaiming a public policy goal of providing medical insurance to all Americans. “We’re going to have insurance for everybody,” the soon to be president told The Washington Post last week. “It will be in a much simplified form,” he said. “Much less expensive and much better” than what’s available under the Affordable Care Act.

How will Trump bring that about? Wryly playing off then-House Speaker Nancy Pelosi’s famous statement in early 2010 that opponents of the Affordable Care Act would have to first vote for it in order to see all of its provisions, Trump similarly wants to see his Health and Human Services Secretary nominee Tom Price confirmed by the Senate before he reveals his plan.

I’ll go out on a limb and make some predictions on the rough outlines. This prediction assumes Trump will forge his own policy in this area and not necessarily conform to longstanding Republican principles that were posted to his transition website but have since been taken down. Trump’s reform plan won’t be a wholesale repeal of the Affordable Care Act. It will at least initially keep much of the omnibus reform statute intact and concentrate on scrapping Titles I and II dealing with the individual market reforms and expanded Medicaid eligibility to single adults given these components of the law have dominated the Republican reform agenda.

The Trump administration’s plan will give up on trying to make the problematic and inherently unstable individual market as it’s currently structured work with a mix of incentives and disincentives like those of the Affordable Care Act. The Trump plan will likely largely replace the nongroup market with something ironically along the lines of what Affordable Care Act designer Ezekiel Emanuel suggested last week: automatic enrollment in a catastrophic plan. Trump’s plan could offer a level of basic coverage for all working age Americans, starting when the reach their 18th birthday and lasting until they go onto Medicare at age 65 or older. As per Emanuel’s concept, there would be an option to enroll in supplemental plans for those who need or desire more generous coverage, similar to Medicare advantage plans. Most of the funding would come from new payroll and self-employment taxes. These supplemental plans could conceivably comport with Trump’s statement that his plan would offer low deductibles.

This reform of the nongroup market would also pave the way for a gradual transition away from employer-sponsored group plans. Employers would fund the aforementioned supplemental plans as an employee benefit. Or not. Either way, the dominance of employer-sponsored all inclusive medical coverage – which also dates to the Truman administration – would begin to go into decline.

As Trump stated previously, his plan will end the Title II Medicaid reforms and turn Medicaid into a state block grant program. Health savings accounts contribution limits will be increased and contributions permitted to cover supplemental plan premiums and any uncovered medical or dental expenses.

Finally, look for Trump’s plan to focus strongly on prescription drug costs to bend the medical care cost curve, creating a bidding entity or even a federal monopsony that will effectively set the prices of medications for all government programs, including the new basic health plan. Trump indicated in a news conference last week he will play hardball with the pharmaceutical industry.

 


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. 

Democrats open to replacing Obamacare – POLITICO

Senate Democrats will never vote to repeal Obamacare. But once the deed is done, a surprising number of them say they’re open to helping Republicans replace it.“If it makes sense, I think there’ll be a lot of Democrats who would be for it,” said Sen. Claire McCaskill (D-Mo.).As Republicans aim to make good on their years-long vow to quash Obamacare and replace it with their own health care vision, they’ll have to do something Democrats were never able to: Bring members of the opposing party on board. Enacting any substantive alternative will take at least eight Democratic votes in the Senate.

Source: Democrats open to replacing Obamacare – POLITICO

This item points up the political reality that while one party — the GOP — can defund the Patient Protection and Affordable Care Act via budget resolution, it will take members of both parties to replace it in order to get the necessary 60 yes votes in the Senate to head off a long filibuster. That gives minority Democrats a large degree of influence over the law’s successor.

The pressure for a deal on that legislation during the first quarter of 2017 will be intense. Both parties will hear plenty from constituents concerned they will lose their health coverage. They will also hear from health plan issuers who fear a meltdown of the individual market segment and may demand a bailout to remain in the market. Health care providers and especially hospitals will also weigh in with urgency, concerned a loss of the individual market as well as more expansive Medicaid coverage in most states under the ACA will lead to a jump in uncompensated care.

 


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. 

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. 

When ACA individual market reforms fail and reprise de facto high risk pool

The Minnesota Department of Commerce struck a deal with five health plans in the state’s individual market to prevent a market collapse. In June, Blue Cross Blue Shield announced that it was leaving the individual market, with 103,000 individuals left to find a new plan when open enrollment starts on November 1. It was feared that other plans would quickly follow suit. Given that BCBS had a broad network and notably higher risk profile, the remaining plans were not eager to take on new enrollees in a guaranteed issue environment. The agreement reached included caps on health plan enrollment and significant rate increases between 50-66.8 percent. Only one of the five plans, BCBS’s narrow-network HMO plan, Blue Plus, agreed to offer plans without an enrollment cap.

Source: Capping Enrollment To Save Minnesota’s Individual Market

A key element of the Patient Protection and Affordable Care Act’s reforms of the individual health insurance market is the formation of statewide risk pools comprised of those not covered by government or employer-sponsored plans. But as the Minnesota Department of Commerce notes in this news release, just five percent of Minnesota residents or 250,000 people don’t fall into these categories and make up the entire universe of the individual market.

When Affordable Care Act rules that permit health plan issuers to slice and dice state individual risk pools into county-sized rating areas where they can choose — or not — to offer a plan or plans are factored in, that universe is narrowed down. That effectively reduces the spread of risk for health plan issuers offering coverage in those rating areas if there are few issuers offering plans within them. Ultimately, the number of those in the individual market becomes too small to achieve effective spread of risk, even with the law’s individual shared responsibility mandate to have some form of health coverage in force. Especially in smaller states like Minnesota, where it appears from this Health Affairs blog post that rather than spreading risk across a larger population, the individual market is functioning more like a high risk rather than true insurance pool. That’s why Minnesota regulators accommodated health plan issuer concerns by capping enrollment — a defining characteristic of a high risk pool.

That’s a perverse development given the Affordable Care Act’s reforms of the individual market were specifically intended to restore the individual market to healthy functioning and obsolete state high risk pools that offered tightly limited coverage to those whose health status fell short of health plan issuers’ medical underwriting standards that existed prior to the reforms taking effect in 2014.

 


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. 

The states with the biggest Obamacare struggles spent years undermining the law

As insurers exit Obamacare marketplaces across the country, critics of the Affordable Care Act have redoubled claims that the health law isn’t working. Yet these same critics, many of them Republican politicians in red states, took steps over the last several years to undermine the 2010 law and fuel the current turmoil in their insurance markets. Among other things, they blocked expansion of Medicaid coverage for the poor, erected barriers to enrollment and refused to move health plans into the Obamacare marketplaces, a key step to bringing in healthier consumers.

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There are many fewer options in states whose leaders have spent years working to sabotage the law.

Source: The states with the biggest Obamacare struggles spent years undermining the law

It is inaccurate to describe red states as “sabotaging” Obamacare. The ACA is a federal-state initiative that afforded a good degree of policy latitude to the states, with that freedom vis Medicaid expansion broadened by the USSC in NFIB v. Sebelius (2012).

The real issue is there is no policy consensus among the states re health care reform notwithstanding broad agreement that reform is essential. Also, the individual market poses enormous challenges re achieving spread of risk to ensure this market segment’s long term actuarial viability. Contributing to that challenge is a culture that does not value health promoting lifestyles and regards medical care and insurance as high cost consumer commodities.

 


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 study finds Medicaid expansion improves individual risk pool, reduces HIX plan premiums

The HHS analysis uses 2015 data on HealthCare.gov plans and enrollment to assess how Medicaid expansion affects Marketplace premiums. It controls for differences across states in demographic characteristics, pre-ACA uninsured rates, health care costs, and state policy decisions other than Medicaid expansion, finding a 7 percent difference in Marketplace premiums holding these factors fixed.

States that expanded Medicaid coverage under the ACA have Marketplace risk pools comprised largely of individuals with incomes above 138 percent FPL, while non-expansion states have Marketplace risk pools that include more individuals below 138 percent FPL. Because lower-income individuals on average have poorer health status than those with higher incomes, a state’s decision not to expand Medicaid affects the Marketplace risk pool and, ultimately, Marketplace premiums. Issuers have noted that Medicaid expansion is one way that states can strengthen their Marketplaces.

Source: Medicaid expansion lowers Marketplace premiums by 7 percent

The upshot of this analysis is the actuarial health of the statewide individual health insurance risk pools would be improved taking into account the correlation between socio-economic status and health status and removing households earning between 100 and 138 percent of federal poverty from the pool by making that cohort eligible for expanded Medicaid.

Given that some health plan issuers have withdrawn from state health benefit exchange marketplaces citing lower population health status — and higher risk — than anticipated, it would be interesting to see if there’s a correlation between states that opted not to expand Medicaid eligibility and states where plans have exited exchanges 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. 

Exchange subsidies, narrow managed care networks credited for stabilizing individual market

Before the majority of the individual market reforms of the Patient Protection and Affordable Care Act took effect in 2014, the individual health insurance market was mired in a death spiral of adverse selection and rapidly rising, unsustainable premiums. Now those reforms have brought stability to the market, with little risk of the market segment destabilizing, concludes a McKinsey & Company analysis. (h/t to Liz Osius of Manatt).

Key to achieving that stability are subsidies offered households with incomes not exceeding 400 percent of federal poverty levels and health plans’ use of managed care plans and narrow provider networks. The brief notes that an estimated 69 percent of households in the individual market qualify for premium and out of pocket cost sharing subsidies.

The individual market has little risk of entering a classic insurance ‘death spiral’ as long as the federal government continues to offer subsidies to those with incomes below 400% of the federal poverty level. Given the unique regulatory conditions of this market, the key determinants of its stability are not the traditional factors (risk and cost of care for this segment), but rather the ongoing subsidy payments.

McKinsey & Company’s review of plan issuer profitability correlated narrow networks with comparatively better loss experience and profitability compared to plans with wider networks as well as the ability of these plans to set lower premium rates. “The combination of the improving relative pricing of narrowed networks and their superior financial performance suggests that they may be emerging as one sustainable element of exchange plan design,” the McKinsey issue brief states.

Although the individual market has regained stability, profitability remained elusive in the first two years of the major reforms:

Our initial perspective, based on emerging financial results reported for 2015, is that aggregate losses in the individual market may have doubled from 2014, with post-tax margins between –9% to –11% (Exhibit 6). The larger losses are most likely the result of two primary factors: higher year-over-year medical loss ratios (MLRs) (around 4.5% to 5% margin reduction) and lower reinsurance payments (another 3.5% to 4% margin reduction).

 


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. 

Improving primary/urgent care consumer experience as a means of risk selection in individual market

The Patient Protection and Affordable Care Act’s reforms of the individual health insurance market are intended to create a large, risk diversified pool with the individual mandate and prohibition on health plan medical underwriting. A related goal is to enhance competition among health plan issuers based on value and price rather than risk selection – selecting for populations more likely to have lower medical utilization. In addition, the Affordable Care Act’s risk adjustment mechanism — whereby health plan issuers with plans having fewer members with high risk chronic health conditions transfer funds to those with higher numbers of members with such conditions – is designed to disincentive selecting members who tend toward lower medical utilization.

However, as this Money item suggests, market forces may be in play that could work against shifting the market away from risk selection as a means of competition. How? By creating a health plan bundled with a consumer friendly front end primary/urgent care clinic that targets Millennials and young families. These plans – Zoom and UnitedHealth’s Harken Health unit — compete by offering a superior primary and urgent care consumer experience. Along with convenience and transparency and more personalized care and healthy lifestyle support. Since their target demographic is less likely to be suffering from costly chronic health conditions or require hospitalization, the overall risk profile of their plan memberships will likely be superior to those of other health plan issuers.

 


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

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

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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