Tag Archive: qualified health plans

Consumer survey findings bode well for exchanges offering narrow network QHPs

A recent survey of consumer healthcare provider preferences by Harvard University and Booz & Company via the Harvard Business Review blog (Registration required) came up with some rather counterintuitive findings that bode well for the health benefit exchange marketplace. In order to keep premium rates low, some participating exchange qualified health plans (QHPs) have narrowed their networks of providers.

Consumers don’t necessarily prefer a wide selection of hospital networks. The survey found consumers preferred a small network with a high-quality system. “Consumers worried about receiving care for an unknown illness at some point in the future, find more comfort in knowing they will receive high quality care from a discrete set of facilities than in pondering a sea of options with little expertise in how to make sound decisions.” That makes sense considering that hospitalization isn’t typically a planned use of medical care and that most areas of the U.S. tend to be served by a small number of hospitals.

What’s noteworthy is the survey found the desire for a high-quality hospital system trumps having one’s primary care physician (PCP) in network, with respondents ranking an in-network PCP only half as important as having a good hospital system in network.  In a surprising finding, having one’s PCP in network represented less than five percent of the value consumers attribute to their health insurance. “While a dedicated patient/PCP relationship was once sacrosanct, today’s consumers are increasingly comfortable with getting primary care at retail clinics (e.g., CVS, Walgreens, Walmart, and Target) or using online and tele-health services that are quicker, more convenient, and often more cost-effective than a traditional office visit,” the HBR blog post notes. “Furthermore, as consumers become savvier in their decisions about benefits, even those who truly value their relationship with their PCP quickly recognize that picking up the occasional $150 co-pay to see a PCP who is no longer in-network is a relatively minor trade-off compared to the potential for a five-figure bill at an out-of-network hospital.”

Having upper-tier hospitals and health systems in network such as academic medical centers didn’t rank as a “must-have” among consumers.  “While reputation remains an important factor in consumers’ decisions, our research indicates that many safety-net and local hospitals are also well-regarded by consumers — and in particular by those who are currently uninsured. As such, lower-cost, high-value networks designed around these ‘lower-tier’ institutions could be attractive and desirable offerings for consumers.”


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

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. 

California appears headed toward bifurcated individual health insurance market in 2014

California’s individual health insurance marketplace is shaping as a bifurcated one for 2014 and beyond based on household income and whether coverage is purchased through the state’s health benefit exchange marketplace, Covered California, or outside of it.

California households earning 400 percent or less of federal poverty level will be eligible for advance tax credit subsidies that can be applied toward Covered California plan premiums.  While those with incomes above this level ($45,960 for singles; $92,200 for a family of four) can purchase unsubsidized coverage thorough state exchanges, health plans appear to be preparing to offer plans outside the exchange aimed at households earning above 400 percent of federal poverty.  Without directly referring to the Covered California plans, Charles Bacchi, executive VP of the California Association of Health Plans, said there may be more variation among these plan products than Covered California plans, which are based on standard benefit designs for each of the metal tier plan values (bronze, silver, gold and platinum).  Bacchi, who spoke on a panel of speakers at the annual State of Health Care Conference held earlier this week in Sacramento, added there may be “certain advantages” to plans purchased outside of Covered California but didn’t elaborate.

Bacchi’s comments came the same day Covered California Executive Director Peter V. Lee reported at the organization’s board meeting that plan issuers were invited to submit alternative benefit designs and those alternative plans differed significantly from the standard plan designs Covered California adopted in February, 2013.  Plan issuers and Covered California continue to negotiate to the terms of the contract that will govern qualified health plans sold in the Covered California marketplace for coverage effective in 2014.  The Covered California board has scheduled a special meeting in Sacramento for May 7 to discuss the contract.

A 2011 paper by The Commonwealth Fund warned of the possibility of higher cost individuals concentrating in the exchange market, noting that exchanges could face adverse selection if predominantly high-risk individuals and groups enroll in the exchange while younger, healthier people and groups purchase coverage in the individual or small-group markets outside of it:

This type of market-level adverse selection would primarily stem from the existence of different rules for health plans inside and outside of the exchange. If non-exchange plans are permitted greater flexibility around benefit design and rate setting, those plans could offer lower prices to attract lower-risk individuals.

While the Affordable Care Act consolidates individuals and small employers into a single state risk pool, thus barring plan issuers from segmenting their exchange population risk, adverse selection against the exchange marketplace could reduce plan issuers’ interest in exchange participation despite tax subsidies for individuals and potentially jeopardize the market’s long term viability.


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. 

PPACA likely to institutionalize “major medical” coverage for individuals, small business employees

The Kaiser Family Foundation has published an excellent primer on the actuarial foundation upon which “qualified health plans” must be based under Section 1301 et seq of the Patient Protection and Affordable Care Act (PPACA).  The plans will be sold through state health benefit exchanges starting Jan. 1, 2014.  The exchanges will serve as marketplaces aggregating purchasing power among the small group and individual markets — the most distressed health insurance market segments where coverage is far less accessible and affordable than large group and government insurance plans.

These plans that cover from 60 percent (bronze) to 90 percent (gold) of an individual’s projected medical costs show the era of health coverage with minimal cost sharing and out of pocket costs has come to an end for individuals and those employed by small businesses.  That new reality that emerged in recent years is now institutionalized as public policy in the PPACA.  That policy is reinforced by tax policy allowing individuals to establish tax deductible Health Savings Accounts, which have been in existence only since 2004.

The bronze plan’s 60 percent coverage level could be equated to “major medical” plans of decades past that covered as the name implies only major expenses such as hospitalizations but not routine doctor visits.  As medical treatment and pharmaceutical costs continue to push up health coverage rates leading up to 2014, it remains to be seen if the higher level silver, gold and platinum (90 percent of projected actuarial costs) will be affordable for individuals and small businesses even with their new purchasing power via the benefit exchanges.  Many could find their budgets can handle only the low end bronze plan, shifting the bulk of these market segments to a major medical level of coverage.


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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