Tag Archive: individual market

Assurant Health chooses costly exit of market over full sale – Modern Healthcare

Assurant Health offered health plans on 16 exchanges this year, the first and only ACA enrollment for the insurer. Similar to other insurers, Assurant Health looked to capitalize on the new, evolving individual marketplaces in which consumers are encouraged to shop for health plans as they would for other commodities.

. . .

The demise of Assurant Health signals hurdles for new entrants in the individual market, particularly when an insurer doesn’t have the same size or provider negotiation leverage as a larger carrier. “This is becoming more and more of a scale game,” Gunn said. “If you’re an undersized player like an Assurant, it’s going to be very difficult to make the math work.

Source: Assurant Health chooses costly exit of market over full sale – Modern Healthcare

 


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. 

Floor of small group market may be rising

The small group market may be undergoing a redefinition. Section 1304(b(2) of the Patient Protection and Affordable Care Act defines small employers as those having between 1 and 100 employees. (Through 2015, states have the option to set the upper limit at 50 employees.)

The marketplace could be raising the single employee floor on a de facto basis, according to this Bloomberg story reporting those working for small employers are increasingly purchasing individual coverage though state health benefit exchanges. The shift is accelerating among the smallest employers, Ana Gupte, an analyst at Leerink Partners LLC, told Bloomberg, adding it’s “happening faster than expected.”

The implication is the low end of the small group market – generally defined as organizations with fewer than 10-20 employees — is being cannibalized by the individual market, where the incentives for participation are far stronger. That would effectively change the practical definition of the small group market to a range of between 10 or 20 and 100 employees.

How this will affect state small group markets over the next few years remains to be seen. It could adversely impact the small employer side of the state exchanges — the Small Business Health Options Program (SHOP) – by significantly shrinking the pool of small employers that might potentially enroll. That could prompt all but the largest states to exercise their option under Affordable Care Act Section 1311(b)(2) to merge their individual and SHOP exchange functions. States also have the option starting in 2017 to offer large group plans on their exchanges as allowed under Section 1312(f)(2)(B)(i). But with the growth of private exchanges in the large group market, it’s doubtful the public state benefit exchanges would be appealing to large group plans.

 


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 seeks alternative options for online individual market

Covered California, California’s state-operated health benefit exchange marketplace, is seeking information on alternative options for its individual market web portal to determine potential benefits relative to increased enrollment, feasibility and costs.

The exchange issued a Request for Information (RFI) on March 18 seeking information relative to an “online consumer-facing retail agent” or a platform enabling independent agents to offer online quotes for individual coverage. Last month, Covered California delayed until fall 2014 the launch of the web portal for small group coverage sold through its Small Business Health Options Program (SHOP).

Responses to the RFI are due March 28.

 


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 government expands ACA transitional relief for individual, small group plans

The U.S. Department of Health and Human Services issued guidance today affording states and health plan issuers more time to optionally keep in place health plans not compliant with Patient Protection and Affordable Care Act requirements relating to minimum benefit levels, modified community based rating and guaranteed issue to all applicants without medical underwriting.

The Center for Consumer Information and Insurance Oversight’s extended transitional policy provides transitional relief from these requirements for plans issued through October 1, 2016 as well as the ACA’s requirement that health plan issuers use single statewide risk pools for the individual and small group markets, respectively.

The newly issued guidance follows on similar guidance issued to state insurance commissioners in November 2013 that gave states the option of relieving individual and small group plans from these ACA provisions through September 2015. That guidance was issued in response to a consumer uproar when health plans issued cancellation notices for non-ACA compliant health plans — many of them falling into a time gap between grandfathered plans that were in place when the ACA was enacted in March 2010 and January 1, 2014 when all individual and small group plans must be ACA compliant. President Obama complained the ACA grandfather clause proved “insufficient” in allowing for this gap.

Today’s guidance also extends guidance issued December 19, 2013 permitting individuals whose non-ACA compliant policies were cancelled to qualify for a hardship exemption from the requirement all individuals have health coverage. That exemption allows them to purchase catastrophic coverage and is being extended to October 1, 2016.

Under today’s guidance, states may choose to adopt both the November 2013 transitional policy and the extended transitional policy through October 1, 2016, or adopt one but not the other. States also have the option to apply the relief to both the individual and the small group markets or just one market. Additionally, states can opt to apply the transitional relief solely to large employers if they choose to define the small group market as being employers of 100 or fewer employees for policy years beginning on or after January 1, 2016 as authorized by the ACA.

 


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. 

Explaining Health Care Reform: Risk Adjustment, Reinsurance, and Risk Corridors | The Henry J. Kaiser Family Foundation

Explaining Health Care Reform: Risk Adjustment, Reinsurance, and Risk Corridors | The Henry J. Kaiser Family Foundation

The Kaiser Family Foundation produced this excellent primer on the Patient Protection and Affordable Care Act’s Premium Stabilization Programs. Working together, these mechanisms are intended to smooth the transition for health plan issuers subject to the Affordable Care Act’s new marketplace rules that took effect this year.

The individual market has temporary shock absorbers for plan years 2014-16 while both individual and small group plans benefit from an ongoing risk adjustment mechanism designed to level the risk burden among plan issuers to ensure they don’t take on more or less than their share of higher cost insureds.

 


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. 

States tell Obama: Let the market sort it out

The Patient Protection and Affordable Care Act intervenes massively in the individual and small group health insurance markets. Effective January 1, 2014, it establishes standards on what health plans must offer, who can buy them, when and where they can purchase coverage, and who is eligible for subsidies to defray monthly premiums.

With any market overhaul on the scale of the ACA’s, there is bound to be disruption of the existing marketplace and push back from those adversely affected. Among the first are those who have individual plans that don’t comply with the new ACA coverage standards issued after March 23, 2010 and are thus not grandfathered under the ACA’s grandfathering provision. They are being hit with a double whammy. Not only are these policies being shut down by the end of the year. People who have them are being informed they will have to replace them with richer plans that meet ACA standards – and those more robust plans will cost them more. Their displeasure prompted the Obama administration to accommodate their concerns by giving states the option to keep those plans well into 2015.

So far, a lot of the states including most recently, California, have instead decided they will carry on and let the market sort it out given so little remaining time for regulators, state-operated health exchanges and health plan issuers to make the needed adjustments during the year-end holiday period that would only confuse consumers. State insurance commissioners cited a lack of consensus on the issue in declining a White House meeting this week.

Moreover, some consumers will still have some options to keep their existing coverage if their plan issuer takes advantage of an ACA loophole that allows issuers to “early renew” coverage by December 31, 2013, thereby extending their coverage for as late as December 31, 2014. Still, not everyone with these plans will be happy as they too will likely come with higher premiums thanks to the relentless underlying trend of rising health care costs.

 


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 plan issuers could keep pre-ACA plans in place through September 2015 under Obama administration guidance

President Obama this week offered an administrative fix to quell the uproar over the imminent cancellation of health plans in the individual and small group markets that will not be compliant with coverage standards for plans effective after January 1, 2014 under the Patient Protection and Affordable Care Act.

According to a fact sheet posted at whitehouse.gov, it would allow insurers to renew their current policies for current enrollees without adopting the 2014 market rule changes. State health plan regulators would have the final say as to whether plan issuers can leave in place plans based on the pre-1/1/14 standards, which prescribe minimum essential benefits and plan actuarial value.

Plan issuers however already had the option to keep their 2013 plans in place though 2014 before this week’s presidential announcement, courtesy of what has been termed a “loophole” in existing federal regulations. I blogged about the loophole back in April. Plan issuers can use it to issue a one-year policy covering all of 2014 under the pre-1/1/14 rules as late as December 31 of this year and simply call it a 2013 plan, exempting it from Affordable Care Act standards.

With this week’s action, the administration gave plan issuers even more leeway to keep using pre-ACA plans. If the plans were in effect as of October 1, 2013, they could remain in effect through September 30, 2015 — and possibly even later — per this November 14, 2013 letter (.pdf) to state insurance regulators:

Under this transitional policy, health insurance coverage in the individual or small group market that is renewed for a policy year starting between January 1, 2014, and October 1, 2014, and associated group health plans of small businesses, will not be considered to be out of compliance with the market reforms specified below under the conditions specified below. We will consider the impact of this transitional policy in assessing whether to extend it beyond the specified timeframe.

 


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 individual, small group market reforms curb underwriting in hopes of restoring risk spreading function

Since the individual and small group market reforms of the Patient Protection and Affordable Care will become effective in less than two months, many Americans and especially those who buy their own health plans or who work for small enterprises are now becoming much more aware of them.

Many do not however understand what brought them about.

Insurance is based on two essential functions: risk spreading and underwriting. Insurers spread the risk of losses across a large number of people or enterprises. Underwriting is selecting those that will be offered coverage and on what terms.

The ACA reforms came about because in recent years health plans experienced increasing difficulty spreading the risk of claims for medical services. Without adequate spread of risk, insurance simply doesn’t work anymore than, for example, fire insurance if the insurance company insures 100 homes and several are on fire while many others are firetraps.

Since risk spreading was no longer working very well, plans relied more on selective underwriting to ensure they were covering individuals and small employers the least likely to incur high medical costs. But that presented a Catch 22. The more they tightened medical underwriting standards, the fewer individuals and small employers could qualify for or afford coverage. That generated fewer insureds to share medical costs for the plan though their premiums and membership fees. Plans were collapsing in on themselves in a process known as adverse selection.

The ACA hopes to restore these market segments by significantly paring back the role of underwriting in determining who gets coverage and under what price and conditions. Beginning January 1, 2014 health plans must accept all individuals who apply for coverage and cannot base premiums on the health status of a small enterprise’s employees. Underwriting factors are limited to age, residence, and family status and in states that permit it, tobacco use.

The idea is by limiting the use of underwriting, the risk spreading function can be restored to health by getting more individuals and small employers into the risk pool. To enhance the spread of risk, the ACA also puts all individuals and small employers into two separate, single statewide risk pools.

Whether these reforms will achieve adequate spread of risk and restore these market segments to healthy functioning won’t be known for at least several years since they represent a radical rejiggering of how these markets have operated for 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. 

Insurance Commissioner Worried About United’s Departure From Individual Market – California Healthline

United has a limited presence in the state’s individual market, according to Jones, with about 8,000 people currently insured in its subsidiary PacifiCare. And, he said, Aetna also casts a relatively small shadow in the individual market, with approximately 50,000 people insured in the state.

Dave Jones mentioned a little-known detail about a tax break for other insurers that might have placed United and Aetna at a competitive disadvantage.

According to Jones, a $100 million tax break enjoyed by two other insurers, Anthem and Blue Shield, gives them a competitive break and led to the withdrawal from the individual market by United and Aetna.

via Insurance Commissioner Worried About United’s Departure From Individual Market – California Healthline.

Jones is California’s elected insurance commissioner. While not specifically detailed in the story, the “tax break” refers to a difference between what a health plan issuer pays to sell an indemnity health insurance plan regulated by the California Department of Insurance (CDI) and a managed health care service plan regulated by the state’s Department of Managed Health Care (DMHC).  California’s Constitution subjects insurance policies to a 2.35 percent premium tax, while managed care plans are assessed a $2,000 base fee plus $0.0048 per enrollee under California Health & Safety Code Section 1356(c).

One year ago, CDI revealed Blue Shield of California would have only three individual insurance plans open for enrollment after it closed nearly two dozen existing plans effective July 2012.  At the time, CDI noted Blue Shield had filed applications with DMHC to nearly double its roster of managed care plans to 20.

Given the shift toward managed care plans dominated by California’s market share leaders Kaiser Permanente, Blue Shield and Anthem Blue Cross along with the move by the state’s exchange marketplace, Covered California, to require HMO-like standardized benefit designs for plans it sells, Aetna and United likely concluded they could not economically pick up a sufficient number of new policyholders via the exchange marketplace to justify remaining in the Golden State.

 


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. 

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