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Multi-state plans fall short of nationwide availability

November 2nd, 2016 2 comments

President Obama and Democratic presidential candidate Hillary Clinton have called for a publicly operated health plan to offer individual coverage. The intent is to bolster coverage options that have dwindled in some states as health plan issuers rethink their individual market participation as well as to bring to bear market pressure on participating plan issuers to hold down premium rates.

One existing provision of the Patient Protection and Affordable Care Act designed to do just that is at Section 1334 of law. It creates federally chartered health plans overseen by the Office of Personnel Management (OPM) and authorizes OPM to contract with health insurance issuers (or a group of health insurance issuers affiliated either by common ownership and control or by the common use of a nationally licensed service mark) to offer plans in multiple states.

Under Section 1334, such plans are to be available in all states starting in 2017. Turns out that isn’t going to happen. According to this page at the OPM website, just 22 state exchanges will have multi-state plans for sale next year. That contradicts Section 1334(e), which mandates OPM contract only with multistate plan issuers offering plans in all states in 2017.

OPM issued guidance earlier this year explaining why the requirement cannot be met:

While section 1334(e) of the ACA authorizes OPM to contract with issuers that offer nationwide expansion of coverage over a four-year schedule, the law does not preclude OPM from contracting with issuers that offer fewer than the scheduled number of states in any given year. The statute establishes general authority for OPM to contract for at least two plans in each state, but does not mandate firm parameters for attaining nationwide coverage. It remains the goal of the MSP Program to provide nationwide availability of MSP options by an issuer or group of issuers.

However, the experience of the first three years of the program has demonstrated that providing nationwide coverage for any issuer or group of issuers is difficult to achieve. Moreover, the statute does not give the Director of OPM authority to compel any issuer to provide nationwide coverage or to participate in the MSP Program. Therefore, OPM will exercise administrative discretion in deciding whether to contract with an issuer or group of issuers who would like to participate in the MSP Program but who cannot commit to offering coverage in all 51 jurisdictions by the fourth year of their participation in the program.

In sum, OPM is saying Section 1334(e)’s requirement notwithstanding, if health plan issuers don’t want to play in all states, it cannot force them to given the Affordable Care Act’s recognition of health insurance markets as voluntary. Also, the realities of the individual market in 2017 substantially reduced the likelihood of plan issuers offering multi-state plans nationwide as they reassess their participation in the state individual health insurance markets and the exchanges 2017 and 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. 

ACA’s Multi-State Plan provision could aid government’s case in King v. Burwell

November 23rd, 2014 Comments off

The issue before the U.S. Supreme Court in King v. Burwell is whether the U.S. Treasury Department properly interpreted the intent of the drafters of the Patient Protection and Affordable Care Act regarding the availability of tax credit subsidies for health plans sold on state health benefit exchanges. More specifically, whether Treasury is correct in determining the subsidies are available to qualified individuals regardless of whether an exchange is established by a state or if the federal government operates the exchange under a default provision of the Affordable Care Act if a state opts not to do so.

The high court could look to other parts of the statute for context as it discerns Congress’s intent regarding the availability of the subsidies. One element of the law that could support Treasury’s position is at Section 1334 of the Affordable Care Act. Section 1334 creates a federally-chartered Multi-State health plan (MSP) that must be offered in all state exchanges by 2017. The policy intent is to bolster competition and consumer choice, particularly in states with smaller populations and fewer plan issuers.

In the context of the question before the Supreme Court in King, the government might argue Congress could not have intended that the subsidies are available only for MSPs offered in states that chose to establish an exchange but not in those that did not. Especially given the objective of MSPs to make individual and small group health coverage more widely available. In a proposed rulemaking issued last week, the federal Office of Personnel Management (which charters MSPs) noted it “intends to ensure that MSP coverage is available as expansively and as soon as practicable.”

 


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

February 2nd, 2014 Comments off

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. 

Multi-State plans roll out in 30 states, including some large ones and those operating state-based exchanges

October 1st, 2013 Comments off

The federal Office of Personnel Management (OPM) this week announced a pact with the Blue Cross and Blue Shield Association to offer more than 150 Multi-State Plan (MSP) options in 30 States and the District of Columbia on the Health Insurance Marketplace for plan year 2014.

Section 1334 of the Affordable Care Act creates a federally chartered (via OPM) Multi-State health plan (MSP) that must be offered in 60 percent of the state health benefit exchange marketplace in 2014 and all state exchanges by 2017. Section 1334 requires each state exchange to offer at least two MSPs (one must be a nonprofit) in their individual and small business exchanges. The policy intent is to bolster competition and consumer choice, particularly in states with smaller populations and fewer payers. The Affordable Care Act deems MSPs qualified health plans, according them presumptive eligibility for listing on state exchange marketplaces.

I expected to see MSPs first introduced in federally facilitated and partnership exchanges for 2014 and particularly in less populated states having fewer health plan issuers. Turns out the federal government decided otherwise, opting to initially roll out MSPs in some large states such as Pennsylvania, New York, Illinois and Texas as well as on state-based exchange marketplaces such as California, Maryland, Washington and Nevada. A staggering three dozen MSP options will be offered in Alaska.

 


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. 

Exchanges await more info on Multi-State Plans, express doubt on their ability to foster competition

July 22nd, 2013 Comments off

This recently issued paper on payer participation and competition in the health benefit exchange marketplace authored by the Urban Institute and the Georgetown University Health Policy Institute mentions Multi-State Plans that the Affordable Care Act mandates be rolled out over a four-year period in all state health insurance exchange marketplaces. At least two of these plans must be offered in each state exchange marketplace; one must be a nonprofit and one cannot offer abortion services. On May 30, the White House announced the federal Office of Personnel Management — which will charter the Multi-State Plans that must be licensed in each state — is reviewing applications for more than 200 Multi-State plan options.

Here’s what the paper’s authors write on Multi-State Plans:

State officials in the study states are still waiting for more information from OPM with regard to Multi-State Plans. In general, state officials seem resigned to the fact that the MSP will not necessarily mean more competition, since the MSPs are expected to be national insurers that already have a presence in the states. Informants reported that they have hard time envisioning how, for example, a national Blue Cross Blue Shield plan could come into a state without essentially replicating the Blue Cross Blue Shield products within the state, assuming the MSP would have to use the Blue Cross network and provider payment rates.

 


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. 

Multi-State plans likely to be initially offered on federally facilitated and partnership exchange marketplace in 2014

July 15th, 2013 Comments off

Section 1334 of the Affordable Care Act creates a federally chartered (via the Office of Personnel Management) Multi-State health plan that must be offered in 60 percent of the state health benefit exchange marketplace in 2014. Section 1334 requires each state exchange to offer at least two Multi-State plans (one must be a nonprofit) in their individual and small business exchanges. The policy intent for the plans is to bolster competition in state markets, particularly those with smaller populations and fewer payers.

Conveniently, the 60 percent figure overlaps nicely with the percentage of state exchanges the federal Department of Health and Human Services will operate either directly or in partnership with a state in 2014. Expect to see most if not close to all Multi-State plans rolled out next year to be in these federally administered exchange marketplaces. The federal state exchange marketplace would also be a more logical choice than state-based exchanges since Multi-State plans will be more easily able to integrate with the federal web portal than various web portal architectures developed by state-based exchanges. On May 30, the White House announced OPM is reviewing more than 200 proposed Multi-State plan options.

 


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 forecasts “strong competition” in federally-facilitated state exchange marketplaces

May 30th, 2013 Comments off

A White House memo issued today reports the 19 states in which the federal Department of Health and Human Services will operate federally-facilitated health benefit exchange marketplaces will have “strong competition” among health plans when they open for enrollment in October.

Some data points from the memo:

  • A total of more than 120 health plan issuers have applied to offer qualified health plans in the HHS-run state exchange marketplaces.
  • Consumers will have multiple options in each actuarial value metal tier of coverage: catastrophic, bronze, silver, gold, and platinum.
  • On average, issuers plan to offer more than 15 qualified health plans per state, with some plans being offered in part rather than all of the state.
  • One out of every four insurance companies proposing to offer individual coverage has newly entered the market in HHS-run state exchange marketplaces.
  • About 65 percent of new issuer entrants to the individual market in the HHS-run state exchange marketplaces are in states where a single insurance company dominates the market.
  • The Office of Personnel Management is currently reviewing more than 200 proposed multi-state qualified health plan options.
 


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. 

Lack Of Competition Might Hamper Health Exchanges – Kaiser Health News

April 23rd, 2013 Comments off

Health economists predict that in states that already have robust competition among insurance companies—states such as Colorado, Minnesota and Oregon — the exchanges are likely to stimulate more. But according to Linda Blumberg of the Urban Institute, “There are still going to be states with virtual monopolies.” Currently Alabama, Hawaii, Michigan, Delaware, Alaska, North Dakota, South Carolina, Rhode Island, Wyoming and Nebraska all are dominated by a single insurance company. The advent of the exchanges is unlikely to change that, according to Blumberg.

via Lack Of Competition Might Hamper Health Exchanges – Kaiser Health News.

This story needs some additional context.  Section 1334 of the Patient Protection and Affordable Care Act establishes a shared federal-state regulatory regime requiring health benefit exchanges to offer at least two “multi-state plans” (one must be a nonprofit) in their individual and small business exchanges.  These plans would be established under federal charter through the Office of Personnel Management (OPM) and licensed in all states.  The idea behind multi-state plans is to bolster competition in state markets, particularly those with smaller populations and fewer payers, as well as to create a larger risk pool to help assure affordability of premiums and ward off 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. 

Market forces marshal as start of exchange marketplace draws nearer

March 23rd, 2013 Comments off

The rest of this year and next will reveal in greater detail how competing market forces under the Patient Protection and Affordable Care Act (PPACA) play out in the individual and small group market segments.  Health plans are making their opening gambit by warning in a Wall Street Journal story published this week that premiums will rise in response to new market rules that take effect in January 2014 requiring them to offer specified categories of benefits and use community-based rating instead of medical underwriting.

The PPACA’s managed competition scheme for these market segments will create countervailing downward pressure in addition to the reinsurance and risk adjustment mechanisms mentioned in the WSJ story to offset pressure for higher rates to account for taking on higher risk populations under community rating.  That scheme is based on concentrating much of the market in state health benefit exchanges that will aggregate the purchasing power of individuals and small businesses, spurred along in the individual segment with generous income tax subsidies for those with adjusted gross incomes at 400 percent and lower of the federal poverty level.  Small employers won’t get these subsidies (enhanced income tax credits will be available for very small, low wage employers) but would be able to pool their market power into one large purchasing entity, the exchanges’ Small Business Health Options Program (SHOP).

The test of that aggregated market power will begin over the next few months in about a half dozen states where the exchanges have opted to actively screen and select which plans can participate in their individual and SHOP marketplaces.  Of these, the most illustrative market is the nation’s largest health insurance market — California — where that state’s exchange, Covered California, has established standardized benefit designs and cost sharing levels for plans it will offer.  Covered California is utilizing a competitive bidding and negotiation process based on these standard designs that provides incentive to plans to moderate premiums.

Also part of the PPACA managed competition model and designed to boost competition to exert downward pressure on premiums are the large Multi-State Plans administered by the federal Office of Personnel Management.  Multi-State Plans will also be sold on the state exchange marketplaces, initially available in 60 percent of the states once introduced.  The PPACA mandates at least two Multi-State Plans be offered in each state exchange and be available in all state exchanges by 2017.  Plus the PPACA allows cooperative health plans owned and operated by consumers to compete in the exchange marketplaces with investor-owned commercial health 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. 

South Dakota legislation would restrict sale of multi-state health plans

January 30th, 2013 Comments off

South Dakota lawmakers advanced a bill that would restrict the marketing of multi-state health plans (MSPs) to the state’s health benefit exchange, barring their sale outside the exchange market.  Senate Bill 139 would also require MSPs be sold exclusively by state licensed insurance producers and mandates producers be paid commissions on a par with similar plans sold outside the exchange.

Section 1334 of the Patient Protection and Affordable Care Act requires at least two MSPs be offered in each state exchange.  The MSPs will be phased in over a four-year period starting when the exchanges begin operating in 2014, when MSPs must be in 60 percent of the states.

Regulated by both the federal government and the states, MSPs are intended to increase competition and consumer choice, particularly in less populous states such as South Dakota where there are fewer health plans available.  However, existing plan issuers and producers in these states likely fear MSPs will have a disruptive impact on the market and potentially crowd out smaller players by virtue of their interstate heft and superior economies of scale.

 


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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