health plans

S&P Report Another Indicator of ACA Nearing Tipping Point?

I doubt I’m going out on a limb by saying that the “kid in the candy store” perspective that insurance companies may have had about the Affordable Care Act has all but vanished.   A new Standard & Poor’s report released this week supports that the “candy store” notion is now no more than illusion and provides further indications that ObamaCare is sputtering and may well be reaching a Tipping Point.

Quietly Lurking: 2017 Obamacare Waiver Could Open the Door for States to Do Their Own Thing

We’re keeping an eye on it; and, apparently so are many of the states. The healthcare reform law includes a waiver that, starting in 2017, would let states take federal dollars now invested in the implementation of the Affordable Care Act and redirect them and redesign their own health care systems.

Some elements of the law could not be repealed, such as the requirement that insurance companies provide coverage regardless of pre-existing health problems. But they could replace the law’s unpopular mandate that requires virtually everyone in the country to have health insurance, provided the alternative worked reasonably well.

Inside Baseball: Observations on Obamacare, Enrollments and the Exchange

National healthcare consultant and columnist Bob Laszewski makes some interesting observations in his most recent column at Health Care Policy and Marketplace Review.  After making the rounds with insurance carrier executives, actuaries and others involved with the Obamacare rollout, here are some of the things Laszewski reports:

On Enrollment Numbers. About half the enrollments in the exchange are made up of folks that already had insurance and about half were previously uninsured. Other conventional polls indicate that the ratio is closer to two-thirds previously insured and one-third previously without insurance.

On Demographics and Risk. The average age of those enrolling is still high (not enough from the 18 -34 demographic). Actuaries indicate that the overall numbers  may present an even bigger issue: Is enrollment via the exchanges large enough to get the right mix of healthy and sick people to balance the risk?

On Enrollment Attrition. About 15% – 20% of those counted as enrolled have not paid even first month premium. Something to watch over the course of the rest of the year is how many new enrollees will simply allow their policies to lapse. If that happens, with open enrollment closed until next year those numbers are not likely to be replaced.

On Consumer Satisfaction. Carriers report hearing a lot of dissatisfaction from consumers about their new health plans especially when compared to what they had before.

On 2015 Rate Increases. While there will be some variation within and across states, generally, rate increases for 2015 are expected to be just under 10% on exchange plans. A number of factors contribute to this projection: Lack of claims data to analyze.  Rate increases greater that 10% are subject to regulatory review. And, Obamacare reinsurance protects carriers from underwriting losses until 2016.

Our bottom line. Waaaayyyyy more questions than answers. The answers aren’t likely to come for quite some time (years). Carriers don’t think Obamacare will be repealed but rather will evolve and are going forward in that fashion. No one has a handle on Obamacare costs at this point and won’t until enrollments stabilize, more claims data is available for analysis and the $20 billion federal reinsurance backstop for insurance carriers expires in 2016 or when as Laszewski states “the training wheels come off.”

Keep Your Doctor? Your Preferred Hospital? Do Your Homework Before Selecting A Plan.

With healthcare reform and the Affordable Care Act almost in full bloom, more potentially game-changing unintended consequences are starting to emerge.  One such consequence stems from the introduction of “narrow networks.” Initially intended for healthcare.gov or Exchange based products, most carriers have utilized the narrow networks to round out the low end of their 2014 individual and employer sponsored group plan offerings.

Employers changing plans in 2014 will have to pay closer attention to network selection. Or, potentially pay the price when you or your employees learn that preferred, familiar, closest and, in some cases, the best doctors and hospitals may not be in your plan’s network.

Until now, network size has not been a huge determinant in selecting carriers and plans. Most of the major insurance companies in the group market provided access to a vast selection of doctors and hospitals, especially those providers with the best reputations. With the advent of the Affordable Care Act and its impact on rate structures, benefits, and plan designs, carriers have less discretion on plan designs and rate setting. As a result, they are turning to these “skinnied” down networks as a primary means to manage costs, differentiate, and vary premium across their respective plan offerings.

In order to gauge the impact, I checked the online directories of two of the major group health plans in one large county in the Tampa Bay market where I reside. While decidedly informal and unscientific in nature, it nevertheless highlights the contrast.

I compared a few key categories of each respective carrier’s heretofore “staple” network (still offered; higher rates than the narrow network plans) against the new skinnier network offering (newly offered; lower rates than staple network plans). In both cases the “staple” networks contained a significantly greater number of providers, were described as open access, and did not require referrals. The new skinnier networks offered fewer participating providers, required designation of a Primary Care Provider (“PCP”), and required PCP referrals to obtain other services.

In comparing several categories of specialists, the narrow networks were on average comprised of about 50% fewer specialist physicians than the traditional networks.  However, the biggest difference between the customary networks and the newer narrower networks came when comparing participating PCPs and hospitals.  Here’s the breakdown:

Carrier 1

Carrier 2

OA Network

Narrow Referral-Driven  Network

OA Network

Narrow Referral-Driven  Network

Primary Care

1280

227

1300+

325

Hospital Primary and Secondary

12

3 (includes 1 major)

18

10 (includes 1 major)

We’ll be monitoring further developments, reporting more on this issue in future posts as well as discussing practical alternative strategies to this growing cost vs. access issue (eg. direct contracting, plan customization, buying a lower cost plan and supplementing, etc.).

In the meantime, what can you do?

When it comes to changing to new plans, look before you leap.  Or, at least plan on doing some homework.

To read more about this topic go to these recent articles in the Washington Post, Insurers Restricting Choice of Hospitals and Doctors to Keep Costs Down,” and at Health Care Policy and Marketplace Review, If You Like Your Doctor You Will Be Able to Keep Your Doctor. Period.”

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