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Posts Tagged ‘non-group coverage’

Growth in self employment points to need for non-group medical coverage

June 7th, 2017 No comments

Another reason insurers will likely return or work to remain in the individual market is that it’s part of the future of health care, says Counihan. With so many people now working for themselves in the “gig economy,” he says, selling insurance “is going to be more business-to-consumer than business-to-business.””This market could grow,” agrees Giesa. “And I don’t think [insurance companies] want to be left out completely from this market if there’s an opportunity to break even, or make a little money. “In the end, says Counihan, regardless of what he considers the Trump administration’s “disorganized neglect, I think this market is here to stay.”

Source: What Happens If The Individual Health Insurance Market Crashes? : Shots – Health News : NPR

Kevin Counihan served as head of the Department of Health Service’s insurance exchange program in the Obama administration. Kurt Giesa is an actuarial expert at the consulting firm Oliver Wyman.

While most working age Americans are covered by employer medical benefit plans that have dominated since the 1940s, there are indications this is changing and pointing to the need for a viable method of financing medical care outside of employer group coverage. The executive summary of a recent McKinsey Global Research survey reports 20 to 30 percent of the working-age population in the United States and the EU-15 countries are engaged in some form of non-employment vocation.

 


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. 

State health benefit exchanges not out of the woods yet

March 28th, 2017 Comments off

State health benefit exchanges dodged a legislative bullet last week that would have eliminated advance premium tax credit (APTC) subsidies to help low and moderate income households purchase non-group coverage. The nation’s largest exchange, Covered California, estimated the tabled budget reconciliation bill replacing the subsidies with an age-based tax credit beginning in 2020 would on average amount to only 60 percent of that provided under the APTC subsidies. That would have made coverage for less affordable for many households and potentially led to a dramatic drop in enrollment qualified health plans sold on the exchanges, shrinking the non-group risk pool and reducing spread of risk.

The exchanges now face a more immediate threat that could significantly disrupt plan year 2018 and potentially current year enrollees: the loss of cost sharing reduction (CSR) subsidies for silver level plans sold on the exchanges. The subsidies are available to households earning between 100 and 250 percent of federal poverty levels. By reducing out of pocket costs for eligible households, the subsidies effectively increase the actuarial value of silver plans that cover on average 70 percent of medical care costs.

A U.S. District court ruling issued last May found the Obama administration acted unconstitutionally in funding the subsidies without an explicit appropriation by Congress. The decision was put on hold pending appeal, where it sits pending possible action to resolve the underlying fiscal issue by the Trump administration and Congress. Without federal funding for the CSR subsidies, health plan issuers participating in the exchanges would incur billions in losses, according to an analysis prepared earlier this month by The Commonwealth Fund. There is no requested appropriation to cover the CSR subsidies in the Trump administration’s 2018 budget blueprint. As last week’s failed attempt to advance the budget reconciliation legislation illustrates, the Trump administration and Congress are unlikely to achieve a rapid agreement resolving the litigation as they struggle to form a majority party governing coalition.

 


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. 

Macroeconomics underlie debate over ACA successor

March 21st, 2017 Comments off

Set in the larger context, the current policy debate over a successor to the Patient Protection and Affordable Care Act is grounded in the long term macroeconomics of declining widely shared prosperity and how much federal and state government should chip in to finance the medical care of more lower income households. These are households:

  • Hard hit by the 2008 economic downturn that reduced middle class economic security as the nation seeks a new post-industrial, post-WWII prosperity economy.
  • Not covered by generous employee benefit plans that were commonplace in decades past while at the same time more working age Americans are self-employed and thus ineligible for employee benefit plans.
  • Currently eligible for subsidies for plans sold on state health benefit exchanges and potentially for Medicaid if they live in a state that adopted the Affordable Care Act’s liberalized Medicaid eligibility guidelines.

Members of these households at the low end of the income scale are often lack stable incomes and have members in poor health who utilize a lot of medical services, reinforced by negative social determinants of health. That has contributed to a multi-billion dollar black hole of Medicaid as the program enrollment expanded dramatically, owing to the Affordable Care Act’s expanded eligibility rules.

In a letter to state governors last week, the Trump administration last week explicitly acknowledged the underlying economic challenges contributing to burgeoning Medicaid enrollment. The administration cast Medicaid as complimenting programs to assist low-income adult beneficiaries “improve their economic standing and materially advance in an effort to rise out of poverty,” adding that “[T]he best way to improve the long term health of low income Americans is to empower them with skills and employment.” The letter encourages state Medicaid program proposals “that build on the human dignity that comes with training, employment and independence.”

Heavy medical utilization has also led commercial non-group plan issuers to set premiums so high that those households that purchase non-group coverage are being clobbered by high premiums that rival monthly housing costs. Adding to the sticker shock is the lingering memory of the more generous plans of the HMO salad days of the mid-1970s to the early 2000s as well as individual plans that came with relatively high deductibles in exchange for low premiums. That tradeoff that has since greatly diminished with both premiums and deductibles high, stoking righteous anger against the Affordable Care Act’s non-group market reforms as well as resentment of those who qualify for Medicaid or substantial subsidies for exchange plans.

Simmering beneath the strum und drang of payer side policy is a coming pricing crisis on the provider side. With payers and households feeling pinched and even bankrupted by the cost of medical care and with dollars to pay for it in shorter supply and potentially being more restricted in the current administration and Congress (as well as by employers looking to cut employee benefit costs), substantial pressure will build on providers to reduce what they charge for services. That pressure will take on one or both forms as either falling demand based on the economic principle of price elasticity that holds as prices increase, demand falls — with high out of pocket costs aiding that dynamic. Or government expanding beyond Medicare its role as price arbiter or becoming a monopsony. It would easy to rationalize the latter since under the current split system of payers and providers negotiating reimbursement rates, price signals don’t pass directly between the providers and consumers of medical care and affords individual consumers little in the way of meaningful bargaining power.

 


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. 

If commercial non-group market cannot achieve continuous, year round enrollment, it may not be able to continue in its current form

March 20th, 2017 2 comments

Central to the Trump administration’s approach to reforming the non-group commercial medical insurance sector is assuring its actuarial stability by incentivizing those who obtain individual coverage remain continuously enrolled. Continuous enrollment is critical to a viable insurance market because it enables health plan issuers to assume a predictable flow of premium dollars to cover the cost of medical care events and predict the likelihood and cost of those events over a given period. That policy goal is contained in the American Health Care Act, the budget reconciliation measure currently pending in Congress that would authorize health plan issuers to surcharge applicants who had a break in coverage, as well as the Department of Health and Human Service’s proposed Market Stabilization rulemaking.

The question however is whether a continuous enrollment incentive will achieve its goal and meaningfully contribute toward creating a more actuarially stable individual risk pool. Particularly given that the segment serves as a relatively small remainder market for people not covered by employer-sponsored group plans that continue to dominate among working age individuals and the government programs Medicare and Medicaid.

Enrollment in the non-group segment is inherently volatile. People shift out of the non-group market as they become eligible for one of these other forms of coverage. Many young invincibles – those age 30 and under – don’t see much need coverage in the first place. Simply paying a 30 percent premium surcharge for a year doesn’t really offer much incentive to enroll in coverage. If the young invincibles lack incentive to enroll, that also works against another critical component in the individual (or any) insurance market – risk spreading – because the pool could tilt toward older members.

If continuous enrollment ultimately proves to have little impact in terms of improving the individual risk pool – and there’s a good chance that will be the case – policymakers will need to consider the larger issue of whether the non-group market can continue to function as a voluntarily enrolled form of insurance (like life insurance, for example). Will involuntary, automatic enrollment be necessary in order for it to be a viable risk pool for those not under the big tents of employer-sponsored or government coverage? And how might that work? Might all adults age 18 to 65 be automatically enrolled and subject to payroll and self-employment taxes as the financing mechanism such as with Germany’s universal coverage system? How might automatic enrollment as a government program comport with the commercial model used for non-group medical coverage? Would commercial non-group market players be content to relinquish the enormous challenge of maintaining an actuarially viable risk pool and transfer their risk bearing function to the government and act solely as plan administrators? Or might it be structured like Medicare, where commercial plans can assume some degree of risk to offer more generous plans such as Medicare Advantage 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. 

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