Tag Archive: state exchange marketplace

Analysis: First year enrollment churn could be nearly half of QHP enrollees, quarter of Medicaid beneficiaries

In health insurance, “churn” refers to people moving between various forms of coverage as their life and economic circumstances change. Those in employer-sponsored plans who are dismissed or leave their jobs move into the individual market, COBRA, Medicaid or go uninsured. Those on Medicaid can earn off eligibility if their household income rises above their state’s cut off point. People move back to employer-sponsored coverage when they or their partners are employed by an entity that offers health coverage either on its own or as required starting next year in the case of large employers.

As well as these forms of coverage, the Patient Protection and Affordable Care Act adds a new category this year: those eligible for advance tax credit-subsidized coverage in the state health benefit exchange marketplace. Like Medicaid, eligibility for this form of coverage is means tested and can change as household income rises above 400 percent or falls below 138 percent of federal poverty.

An analysis of the nation’s largest state health benefit exchange marketplace, Covered California, finds churn over a 12 month period could amount to nearly half of those enrolled in subsidized qualified health plans (QHPs) and a quarter of those enrolled in Med-Cal, California’s Medicaid program. Click here for the report by the UC Berkeley Center for Labor Research and Education.

The churn among QHPs has implications for the exchange marketplace insofar as exchanges are financially reliant on health plan issuer participation fees assessed on QHP premiums starting in 2015 when federal establishment grant funding will no longer be available. In that vein, the report concludes Covered California (and by implication other state-based exchanges) must devote ongoing attention to enrollment throughout the year outside of open enrollment periods including outreach, web portal, in-person and call-center assistance.


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. 

Affordability concerns over unsubsidized premiums in individual market

As this blog as previously noted, the Patient Protection and Affordable Care Act’s reform of the individual health insurance market has the potential to generate middle class political blowback among what I’ve dubbed the “401 percenters.” These are households earning more than 400 percent of the federal poverty level — too much to qualify for advance tax credit subsidies to defray premiums for plans offered in the state benefit exchange marketplace. For individuals, that’s an annual income higher than $45,960 and $62,040 for couples.

Two newspaper stories published this month spotlight the 401 percenters with surveys pointing to premium affordability problems, particularly among those in their 50s and 60s. A New York Times analysis found premiums for this age group reaching as high as 20 percent of household income. Even younger people may find coverage unaffordable. For a hypothetical 40-year-old couple, a USA Today analysis found in half of the counties in 34 states where the federal government operates the exchange, the lowest cost bronze plan falls short of the Affordable Care Act’s definition of affordable coverage. Affordable coverage is defined as premiums not exceeding eight percent of income. For older individuals, it’s more problematic. The USA Today analysis found more than one third of the counties don’t offer an affordable plan for any of the four tiers of coverage — bronze, silver, gold or platinum — for those 50 or older and ineligible for subsidies in the exchange marketplace. Affordability is critical to the success of the risk pooling mechanism since affordable premiums bring more covered lives into the pool. Conversely when premiums are unaffordable, the size of the pool is limited, sharply increasing the likelihood of adverse selection taking hold.

The Affordable Care Act allows those whose premiums would place them within the law’s definition of unaffordable coverage to apply for a certificate of exemption from the state exchanges on the basis that payment of such premiums would constitute a financial hardship. In addition to exempting these individuals from the Affordable Care Act’s requirement that all individuals have some form of medical coverage or pay a penalty, the certification entitles them to purchase lower cost “catastrophic” coverage on or off the exchange marketplace. The income of each member of the household must meet the eight percent affordability threshold.

While catastrophic plans offer lower premiums, the tradeoff is high annual deductibles: $6,250 for individuals and $12,500 for families. At least three primary care visits are covered, however. For some households, a higher cost bronze plan that’s Health Savings Account (HSA) compatible may be a better value. Like catastrophic plans, they also come with high deductibles. Deductibles can be paid with pre-tax HSA dollars (but not the premiums). For the self-employed, HSA-compatible bronze plan premiums may be tax deductible. Those in the “401 percenter” cohort would be well advised to consult with their tax advisors for definitive guidance.


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. 

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. 

401 percenters face sticker shock of higher premiums without subsidization

Earlier this year, I blogged about a potential backlash against the individual market reforms of the Patient Protection and Affordable Care Act emanating from what I dubbed the 401 percent – those who earn too much to qualify for advance tax credit subsidies for plans purchased through the state health insurance exchange marketplace. Subsidies are offered in six sliding scale tranches ranging from households earning 100 percent of the federal poverty level to 400 percent. Those with incomes above 400 percent must bear the full cost of the premium.

Now that some plan issuers are issuing plan year 2014 premium rates for comprehensive coverage that per the ACA must now include 10 categories of “essential health benefits,” some of the 401 percenters in California are experiencing predicted sticker shock. Today’s Los Angeles Times has the story. Here’s the money quote:

Although recent criticism of the healthcare law has focused on website glitches and early enrollment snags, experts say sharp price increases for individual policies have the greatest potential to erode public support for President Obama‘s signature legislation. “This is when the actual sticker shock comes into play for people,” said Gerald Kominski, director of the UCLA Center for Health Policy Research. “There are winners and losers under the Affordable Care Act.”

There is a saving grace in this for self employeds who earn too much to qualify for a subsidized exchange plan. They can take a federal income tax deduction for premiums paid.


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. 

Streamlined enrollment in state health subsidy programs hobbled by federal exchange web portal problems

One of the goals of the Patient Protection and Affordable Care Act (ACA) is to integrate eligibility and enrollment for applicants for both commercial health plans sold in the state health benefit exchange marketplace as well as state subsidy programs for poor and low income households including Medicaid and the Children’s Health Insurance Program (CHIP). The idea is to reduce the ranks of the medically uninsured by making it easier for people to get covered with a single, streamlined application process referred to as “no wrong door.” Applicants are more likely to sign up for coverage if they don’t have to contact multiple entities to get it.

The requirement is set forth in Section 1413 of the ACA. Section 1413(c)(1) requires each state to “develop for all applicable State health subsidy programs a secure, electronic interface allowing an exchange of data (including information contained in the application forms described in subsection (b)) that allows a determination of eligibility for all such programs based on a single application.”

In the three dozen states where the federal government is operating the state exchange marketplace, online eligibility and enrollment is being handled by the federal web portal. Problem is according to today’s Washington Post, the portal isn’t yet able to integrate with the state subsidy programs:

But in a phone call Tuesday with the nation’s state Medicaid directors, Marilyn Tavenner, director of the Centers for Medicare and Medicaid Services (CMS), the agency overseeing the exchange, said that this part was still not working and did not predict when it would be ready, said Matt Salo, executive director of the National Association of Medicaid Directors. In the meantime, the Web site simply tells low-income Americans whether they appear to be eligible and then advises them to contact their state’s Medicaid agencies, where they must start applications from scratch.

The Post story details the implications of this glitch:

The Web site’s Medicaid problems matter because, under the health-care law, about half of the 32 million Americans who stand to gain insurance are expected to be covered through the state-federal health program for the poor and the disabled. The Web site is designed to tell people, depending on their income, whether they are likely to qualify for Medicaid or new federal tax credits to help them pay for private insurance. The site steers consumers in one direction or another after they enter information, including their family size and income. That part works.

Here’s the snag: If the Web site determines that a consumer probably qualifies for Medicaid, it cannot communicate with a state Medicaid program for quick enrollment. Instead, the site gives the person a message to contact the state’s Medicaid program. Then the person has to “start all over again,” said Salo of the Medicaid directors association. He added that the malfunction is “a frustration…It can turn [consumers] off and make them angry about how government works.”

Likely complicating enrollment for those eligible for state subsidy programs is a crazy quilt patchwork of Medicaid eligibility standards, dependent upon whether the state has opted to expand Medicaid eligibility as authorized by the ACA as well as varying income eligibility levels in states that have opted out of the Medicaid expansion as detailed in Table 1 of this recent Kaiser Family Foundation report (.pdf)


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 mandates, exchange marketplace could be temporary, 3-year phenom under state waiver provision

Partisan disagreement over the Affordable Care Act’s individual and employer mandates and state health benefit exchange marketplace has jammed the gears of the federal government machinery, leading to a partial government shutdown that began this week. All the strum und drang over these ACA provisions, however, could end up being over a temporary circumstance lasting only three years in at least some states.

Beginning in 2017, ACA Section 1332 titled Waiver for State Innovation allows states to petition the U.S. Department of Health and Human Services for — as the title suggests — a waiver allowing them to opt out of these requirements. The waiver also extends to premium tax credit subsidies and cost sharing reductions for plans sold on the exchange marketplace.

That means states that don’t like the ACA’s approach to restoring their individual and small group markets to functioning can devise their own programs after three years of complying with federal mandates.

The Section 1332 waiver comes with some provisos. States opting out of the ACA rules would have to demonstrate their programs would ensure individual and small group plans would offer coverage at least on a par with plans providing the 10 essential benefits prescribed by the ACA. State programs would also have to ensure residents and small employers have access to coverage with affordable premiums and protections against “excessive” out-of-pocket costs (such as annual maximums) like those for ACA plans and cover a comparable number of residents as ACA plans.

Section 1332 also provides federal funding to aid states opting out of the ACA rules to set up their own programs. States receiving a Section 1332 waiver would be eligible for “pass through” funding operating like an annual block grant. The funding would cumulatively represent what state residents would otherwise be eligible to receive under ACA rules for premium tax credits, cost-sharing reductions and small business credits if they are ineligible for them under the state programs.


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. 

Interest in private exchange marketplace heats up

The Patient Protection and Affordable Care Act’s creation of the state health benefit exchange marketplace is aimed at restoring functionality to the individual and small group markets. By the time the Affordable Care Act was enacted in early 2010, these segments were inescapably mired in an adverse selection death spiral. Premiums grew unaffordable and carriers lost the ability to spread risk as state risk pools shrank. The exchange marketplace seeks to remedy this by scaling up the size of the pool and providing a demand aggregation mechanism that with sufficient enrollment can achieve better spread of risk and, in turn, lower premium rates.

The Affordable Care Act does not initially offer the demand aggregation mechanism of the public exchange marketplace for large employers but gives states the option of opening their exchanges to large employers in 2017. However, large employers seeking relief from rising employee health care costs aren’t about to wait. Instead, they are looking at private exchanges being formed by benefit consulting firms serving large employers. Several large employers participating in a private exchange could potentially cover many thousands of people and bring them into the pool far faster than state exchanges that have to enroll individuals and small employers one at a time.  Private exchanges also make it easier for big employers to adopt defined contribution-based health benefits in which employees would select from a larger number of plans than might otherwise be offered by a single employer. Media coverage this week of burgeoning interest in the private exchange marketplace can be viewed here and here.

While large employers of relatively highly paid full time workers find the private exchange marketplace of interest to reduce the cost of covering their workforces, those with low wage, part time staff are looking to the state exchange marketplace. It provides a means for these employers to reduce their health care outgo by sending part time workers (defined in the ACA as having an average work week of less than 30 hours) to purchase individual plans sold on the state exchanges and subsidized by advance income tax credits. Two such employers – specialty grocer Trader Joe’s and Home Depot –indicated in recent days they would take this route.


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. 

A proposal to foster federal-state cooperation in the ACA era

Alan Weil, executive director of the National Academy for State Health Policy, foresees growing tensions between states and the federal government in the implementation of the Affordable Care Act relative to the law’s expansion of Medicaid eligibility, the creation of state health benefit exchanges and new rules governing individual and small group health coverage that supersede traditional state authority over these market segments.

To ensure cooperative federal-state relations and to avoid a merry go round of numerous state requests for federal relief from ACA requirements amid fiscal frugality at both levels of government, Weil proposes the feds and the states share cost savings generated by ACA mandates. Under Weil’s optional shared savings program, the federal government would share with the states any savings compared federal cost projections for programs that have federal financial participation. Weil suggests the scope of the program include Medicaid, the Children’s Health Insurance Program, and the state exchange marketplace.

Weil’s proposal published today in the journal Health Affairs can be read here.


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. 

Review of 6 states foresees chaotic, competitive exchange marketplace in 2014

A study of six states’ implementation of their health benefit exchange marketplaces concludes that while most observers believe the first year of the exchange marketplace will be “somewhat chaotic” as health plan issuers attempt to determine the correct balance between risk assumption and attractive pricing, there will be significant participation and competition among plans.  It will be a new market, a revamped risk pool and untested regulations certain to dominate the thoughts and strategy of health plan executives over the next 2-3 years.

The pricing of plans is a matter of great uncertainty. Carriers face many new requirements, including essential health benefits, actuarial value tiers, guaranteed issue, and rating rules, as well as uncertainty about characteristics of enrollees. Many plans indicate that they will set premiums cautiously to avoid losses. Those who price too cautiously could achieve protection against the costs associated with bad risks but have few enrollees. Others recognize the need to price more aggressively in order to gain market share. Most believe that the first year will be somewhat chaotic. When there is a better understanding of the health characteristics of enrollees and the ability of risk corridors and risk adjustment to protect plans against risk, pricing will become substantially more aggressive.

The six state exchange marketplaces reviewed as part of Robert Wood Johnson Foundation’s State Health Reform Assistance Network were Colorado, Maryland, New York, Oregon, Rhode Island, and Virginia).  Click on the title to read the full study, Cross-Cutting Issues: Insurer Participation and Competition in Health Insurance Exchanges: Early Indications from Selected States.


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

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. 

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