Tag Archive: state health benefit exchanges

Citing Losses, UnitedHealth to Pull Back From Obamacare – The New York Times

The UnitedHealth Group, one of the nation’s largest health insurers, told investors on Tuesday that it continued to lose hundreds of millions of dollars selling individual policies under the federal health care law. The company said it planned to pull out of the majority of states where it offered coverage and would offer policies on the public exchanges in “only a handful of states” for 2017.UnitedHealth, which was a late and seemingly reluctant participant in the public exchanges, surprised investors last year when it announced its sizable losses, now estimated at more than a combined $1 billion for 2015 and 2016, because of its poor performance in the public exchanges. Policy analysts have been watching UnitedHealth closely as an indicator of whether the new individual market developed under the Affordable Care Act is sustainable.Addressing investors, Stephen J. Hemsley, the company’s chief executive, continued to offer a pessimistic view. “The smaller overall market size and shorter term, higher risk profile within this market segment continue to suggest we cannot broadly serve it on an effective and sustainable basis,” he said.

Source: Citing Losses, UnitedHealth to Pull Back From Obamacare – The New York Times

Health plan issuers were supportive of the Patient Protection and Affordable Care Act’s individual and small group market reforms including public health benefit exchanges when the law was being enacted six years ago. The thinking was the reforms would stabilize these troubled market segments and grow the individual segment in particular by aggregating and subsidizing purchasers via the exchanges. Apparently the numbers aren’t adding up for UnitedHealth per Hemsley’s complaint that the individual market is too small and churn too high.

This development comes at the same time UnitedHealth is revamping its approach to the individual and small group segments with its Harken Health subsidiary. According to media accounts, UnitedHealth will continue to offer Harken Health plans in some state health benefit exchanges from which it is withdrawing other individual plan offerings.

 


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. 

Report tempers outlook for HIX enrollment

The 10 best-performing states – which include several large states such as Florida, North Carolina, and California — have collectively signed up 59% of the potential market. While that might appear to leave room for substantial further growth, there are reasons to believe that enrollment has close to plateaued in those states. The potential market includes people who are buying their own coverage outside the marketplaces, many of whom do not qualify for subsidies. The experience so far is that the vast majority (82%) of marketplaces enrollees are receiving premium subsidies, while people who are ineligible for subsidies typically buy coverage on the outside market. In fact, we estimate that in the top-performing states the number of people who have selected a plan and qualified for a subsidy represents more than 90% of subsidy-eligible people. This is a very high take-up rate for a public program, suggesting there is very little potential for growth in these states. The only way enrollment could grow substantially is to attract people not eligible for subsidies who are already buying their own coverage directly.
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There are signs that marketplace coverage could continue to grow modestly in the years ahead. But, absent a substantial boost in outreach or changes to the subsidies to make insurance more affordable, substantial increases in marketplace enrollment are unlikely.

Source: Assessing ACA Marketplace Enrollment | The Henry J. Kaiser Family Foundation

 


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. 

“Waiting to get sick:” In depth research, more info needed

The biggest problem with the exchanges reflects a basic insurance rule: Insurers need healthy, premium-paying customers to balance claims they cover from the sick. Insurers have struggled in many markets because people who couldn’t get coverage previously due to a condition were among the first to sign up when the exchanges opened a few years ago. Healthy customers have been slower to enroll.Insurers say they’ve also been hurt by customers who appear to be waiting until they become sick to buy coverage. The companies blame liberal enforcement of the ACA’s special enrollment exceptions

Source: Insurer warnings cast doubt on ACA exchange future

This is a topic that cries out for in depth research and more information. The critical question that needs answering is how are those who apply for coverage outside of annual open enrollment able to time a serious illness or accident in order to plan when to buy coverage for it as this analysis prepared for America’s Health Insurance Plans and the Blue Cross Blue Shield Association suggests? While the analysis shows significantly higher medical utilization among those who enrolled in individual plans outside of open enrollment periods, it does not definitively demonstrate that these individuals waited until they needed medical care before enrolling. They could well simply be in poorer overall health compared to those enrolling in the open enrollment period and also have difficulty managing their household finances.

The urgency of the issue relative to the individual health insurance market reforms and the viability of the state exchanges as well as simple logic demand an answer. It makes no sense, for example, that an applicant for coverage could know in advance they were going to suffer a costly care event such as a heart attack or stroke, a bout of appendicitis or kidney stone and purchased coverage to take effect shortly before the event.

 


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. 

Head Of California Exchange Scolds UnitedHealth For Blaming Woes On Obamacare | California Healthline

Amid growing questions over the future of insurance exchanges, the head of California’s marketplace said the nation’s largest health insurer should take responsibility for nearly $1 billion in losses and stop blaming the federal health law.In a blistering critique, Covered California’s executive director, Peter Lee, said UnitedHealth Group Inc. made a series of blunders on rates and networks that led to a $475 million loss last year on individual policies across the country. The company estimates a similar exchange-related loss of $500 million for this year.

Source: Head Of California Exchange Scolds UnitedHealth For Blaming Woes On Obamacare | California Healthline

This story reflects the natural tension that exists in the state health benefit exchange marketplace. Health plan issuers are subject to competitive market forces as well as pressure from active purchaser exchanges like Covered California to keep premium rates down while offering provider networks that adequately serve the needs of plan members. But if they set premiums too low or create provider networks that are too large, plan issuers can suffer losses.

 


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 that opted not to set up exchanges have opportunity to go their own way in 2017

Nearly three dozen states opted not to operate their own health benefit exchanges serving the individual and small group markets starting in 2014. In these states, the federal government became the default exchange operator under a provision of the Patient Protection and Affordable Care Act that’s invoked if states decline to establish an exchange. Typically red states hostile to the health reform law, these states also aren’t keen on other provisions of the law such as the individual and employer mandates. An Affordable Care Act provision that takes effect next year allows them to apply to the federal government to dispense with these mandates and the individual and small business exchanges as well as other major ACA health insurance market reform elements.

Section 1332 of the law affords states broad latitude to create their own health insurance programs serving individuals and small employers for coverage beginning in 2017. Section 1332 waivers even provide states federal funding for them, paying states what they would otherwise receive in the form of advance tax credit premium assistance payments to state residents to subsidize premiums for coverage purchased through exchanges.

The freedom and the federal funding come with some important provisos. According to federal guidance issued in December 2015, states must provide coverage for a comparable number of their residents and on terms that are as comprehensive and affordable as would be the case without the waiver. Funding for the states also cannot increase the federal deficit. The waivers would be for renewable five year periods.

While health plan issuers would still be barred from medical underwriting, states could even do away with foundational insurance market reforms such as those defining small and large employer group markets and those that affect rating such as a single statewide risk pool, rating territories and limited annual enrollment periods.

For those states that defaulted to the federal government to operate their exchanges, the guidance makes clear that if they want a Section 1332 waiver to set up their own state programs, they will be making a clean break with any federal government involvement other than monitoring to ensure they comply with the major waiver provisos. They would not be permitted, for example, to continue using the federal eligibility and enrollment portal, healthcare.gov, or to receive some modified form of advance premium tax credits in support of their programs. Nor could they mix Section 1332 funding with any federal Medicaid funding received under a state Section 1115 Medicaid waiver, according to the 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. 

ACA’s welfare-based means testing adds program complexity, risk for error

According to a Government Accountability Office report released Thursday, some individuals received subsidies to help them purchase exchange coverage while they were also enrolled in Medicaid. According to Carolyn Yocom, a director of health care studies at GAO, the duplicate coverage could mean the federal government is “paying twice — subsidizing exchange coverage and reimbursing states for Medicaid spending — for individuals enrolled in both types of coverage.”The House is expected to hold a hearing on the issue on Friday (Pear, New York Times, 10/22).The report noted that an estimated seven million U.S. residents have changing incomes that likely qualify them for Medicaid at some times and for the ACA’s subsidies at others. According to the report, it is difficult for the federal government to differentiate between the eligibility groups (Howell, Washington Times, 10/22). Further, the report noted that CMS “does not have procedures to automatically terminate subsidized exchange coverage when individuals are determined eligible for Medicaid.”

Source: GAO Finds Federal Gov’t Paid for Duplicate Coverage Under ACA – California Healthline

While broadening health coverage for Americans under age 65 not covered by predominant employer-sponsored health coverage, the Patient Protection and Affordable Care Act is not exactly seamless in its approach, leading to the kinds of problems the GAO identified. Largely because of its complexity in using monthly household income — the traditional means test for state welfare eligibility — and siloed forms of coverage.

The first seam is at 100 percent of household federal poverty level (FPL) — the minimum income in order to be eligible to purchase subsidized coverage on state health benefit exchanges. Then come six income tranches that determine the amount of the subsidy, topping out at another seam — 400 percent of FPL — above which subsidies are no longer available. Overlaying these at the lower household income range is yet another seam in states that have opted to expand Medicaid — a household income of 138 percent of FPL. With many lower income households frequently moving back and forth across this seam, it’s easy to see how state health benefit exchanges would be hard pressed to keep track to ensure these households are in the correct program at all times.

 


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. 

Public health exchange enrollments may fall short of insurer needs | Business Insurance

The projected number of enrollees in health care plans purchased through public health insurance exchanges likely will not be sufficient to absorb the costs incurred by insurers providing those plans, Moody’s Investors Service Inc. said in a report released Monday.

The New York-based credit rating agency said lower-than-expected enrollment growth in the public exchanges established under the federal health care reform law would be “credit negative” for participating U.S. health insurers, particularly smaller insurers without sufficient diversification in their books of business.

“These entities have been relying on increased volume to absorb fixed operating costs and introduce some healthier and younger enrollees to improve the overall risk profile of the insured pool,” Stephen Zaharuk, senior vice president at Moody’s, wrote in the report.

Source: Public health exchange enrollments may fall short of insurer needs | Business Insurance

This is a sobering outlook for one of the Patient Protection and Affordable Care Act’s keystone insurance market reforms: state health benefit exchanges. The exchanges are intended to bring a significantly larger volume of individuals and small employers into health coverage by bringing health plans together in a single marketplace, offering coverage on a baseline set of coverage requirements. As well as advance tax credit subsidies to individuals and families to make premiums more affordable.

Consequently, health insurance industry analysts were initially quite bullish in the 2011-12 period, believing the exchanges would be a growth bonanza for health plan issuers. This recent Moody’s analysis however takes a far more bearish view, particularly for smaller, less diversified players.

 


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. 

Risk corridor element falls short as exchange QHP premium stabilization mechanism

Insurers can now expect to receive only 12.6% of 2014 risk corridor receivables in 2015, with the remainder to be potentially funded in future years. Last week’s announcement validates prior concerns regarding a 2014 risk corridor funding shortfall because of Cromnibus and higher-than-expected 2014 claim costs. This shortfall occurred despite two earlier injections of additional transitional reinsurance program recoveries into the Patient Protection and Affordable Care Act of 2010 (ACA) individual market.The shortfall will have a significant negative financial impact on insurers who find themselves in a risk corridor receivables position, not only for the 2014 benefit year but also possibly for 2015 and 2016. A 2014 funding shortfall puts the collectability of 2015 and 2016 payouts in increased jeopardy—2014 receivables that were not paid in 2015 will be first in line to receive payments in later years if funds are available.

Source: Headwinds cause 2014 risk corridor funding shortfall – Milliman Insight

Risk corridors — one of three elements of the Patient Protection and Affordable Care Act’s Premium Stabilization Programs designed to help ward off steep rate increases for plans sold on state health benefit exchanges — has proven problematic and is unlikely to significantly contribute to reducing rate volatility among exchange Qualified Health Plans (QHPs).

That’s the upshot of this Milliman analysis of the risk corridors component — a short lived financial mechanism that expires at the end of 2016. Risk corridors are designed to level claims experience among health plans offered on state health benefit exchanges. Plans that suffered greater than expected losses are partially compensated for them — and thus reducing their need to sharply boost premium rates — while those paying out less than expected transfer funds to plans with worse experience. While risk corridors have not yet expired and have another year of life, Milliman’s Scott Katterman offers a detailed post mortem of this troubled premium stabilization program component.

 


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 models managed competition in individual, small group health insurance markets

At the other end of the policy spectrum, the exchange serves as an “active purchaser” of health insurance on behalf of its clients, the individual consumers. In effect, the exchange seeks to move insurance from a let-the-buyer-beware retail market to a two-stage wholesale and retail market. The first (wholesale) stage uses supply chain management tools developed by corporate buyers of other services, while the second (retail) stage encourages consumers to select from a more narrow range of pre-contracted offerings.

Source: Whither Health Insurance Exchanges Under The Affordable Care Act? Active Purchasing Versus Passive Marketplaces

This article co authored by UC Berkeley School of Public Health economist James C. Robinson, the executive director of California’s health benefit exchange, Peter Lee, and exchange policy staffer Zachary Goldman effectively argues California exchange’s active purchaser role vis health plan issuers embodies the concept of managed competition in health insurance described in this January 1993 Health Affairs article by Alain C. Enthoven:

A sponsor (either an employer, a governmental entity, or a purchasing cooperative), acting on behalf of a large group of subscribers, structures and adjusts the market to overcome attempts by insurers to avoid price competition. The sponsor establishes rules of equity, selects participating plans, manages the enrollment process, creates price-elastic demand, and manages risk selection.

As the authors note, the Patient Protection and Affordable Care Act creates basic standards for health plans in terms of defining required covered services, actuarial value and annual out of pocket maximums. But to realize the full benefit of managed competition, they appear to assert that health benefit exchanges must function as demanding and exacting wholesale purchasers of health plans in order to achieve maximum comparable selection and value for their retail customers. By aggregating purchasing power for insurance buyers, the exchanges help balance out market power between buyers and health plan issuers in a market that due to high entry and operating costs tends to be oligopolistic.

 


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. 

Debate over future of ACA shifts to adequacy and affordability of coverage

Henry J. Aaron of the Brookings Institution has boiled down the future policy debate around the Patient Protection and Affordable Care Act. Now that the law is firmly in place – at least for the near term – and is meeting a primary policy goal of reducing the number of medically uninsured Americans, the next debate will be over the adequacy and affordability of coverage. Specifically, whether it’s too much, too little or just about right.

Conservatives, Aaron writes, prefer increasing the financial exposure of patients when they buy insurance and when they use care. By comparison, those of a more liberal bent prefer no insurance whatsoever to protect against financial exposure to medical bills but rather Canadian-style “single payer” where a government monopsony pays the nation’s collective health care bill.

Likely to fuel the debate are reports like this recent Kaiser Health News item. It reported that even with advance tax credit premium subsidies for coverage sold on state health benefit exchanges, premiums alone for some moderate income households approach nearly a tenth of their gross incomes and can really add up when out of pocket costs are included:

For instance, families of three earning $73,000 have to pay nearly $7,000 on premiums despite also receiving subsidies They still face deductibles, which this year averaged around $2,500 for the most common types of insurance plans, known as silver tiers. If a family required extensive medical care and reached the maximum they would be held responsible for—$13,200 this year—their total health care-related bills, including premiums, would exceed $20,000, or 28 percent of their gross incomes. “Even some of those who are eligible for financial assistance are still finding the coverage not to be affordable for them,” said Linda Blumberg, a senior fellow at the Urban Institute, Washington think tank.

All individual and small group plans that originated after the enactment of the ACA now basically operate as major medical plans of the pre-HMO days, minus the lifetime limits. They do so by virtue of calendar year maximum out of pocket limits: $6,600 for self-only coverage $13,200 for family coverage for 2015 plans (rising to $6,850 for self-only coverage $13,700 for family coverage for 2016). The annual premium is partly to cover catastrophic risk above these amounts. The amount of the premium paid by individuals and families depends on how much risk short of the calendar year OOP limits they want to assume. If they want less exposure to co-insurance, deductibles and co-pays, the premium is higher. If they’re willing to assume more, the premium is lower and lowest for “bronze” rated plans that cover 60 percent of expected annual medical utilization as well as pure catastrophic plans available to individuals under age 30 or households that would have to spend more than eight percent of their incomes to buy the lowest cost bronze plan offered in their area.

Herein is a primary element of the near term debate over the ACA: whether it provides affordable coverage regardless of whether households assume a high deductible and pay more out of pocket for non-catastrophic care or pay a higher premium in order to pay less out of pocket for these services. In a still fraught economy that has placed particular financial stress on moderate income households falling somewhat below and above the 400 percent of federal poverty cut off for advance tax credit subsidies for coverage sold on state health benefit exchanges – and those that have not or cannot easily afford to set aside money in health savings accounts to defray out of pocket costs — these costs and tradeoffs come into sharp focus.

 


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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