Friday, September 13, 2013

HCR -- State Exchanges Update

The PPACA state exchanges are scheduled to be open for business October 1. From what I can tell they are all over the map with selection, prices and degrees of readiness. It's not easy to claw through the great clouds of ignorance, malice and unknowing being pumped out by opponents of Obamacare, but this part of the Affordable Care Act will take place with a respectable number of parts in place.

Before I get to the links, I need to remind the reader of a few realities.

  • Most people already have health insurance and that will not change when the exchanges become operable. Some individuals may choose to buy health care insurance through their state exchange but that will be an individual decision, not something they are being forced to do. 
  • As the features of ACA become better understood, many group insurance plans are being adjusted in ways that will save money for the companies sponsoring those plans.  For instance, some companies that have been insuring a spouse who might also be eligible for group health insurance because he or she is working for a different company, have decided that they will no longer cover that person and they will be expected to enroll in whatever plan they have been non-participating. 
  • Many people in retirement are learning that their retirement health care benefits, once thought to be a lifetime entitlement, are being adjusted or outsourced in ways they don't like. I am aware of at least one instance where the company had been paying the premium for a Medicare supplement plan and has notified the beneficiary that beginning Jan. 1 that will be the responsibility of the beneficiary. 
  • These and other changes are not mandated by Obamacare. They are business decisions made by the sponsoring companies, whose primary business model is to make a business profit in a competitive marketplace. 
  • Premiums for insurance bought through the exchanges cannot be predicted until the marketplace in each state finds a competitive "sweet spot."   Where there is little or no competition, the rate can be higher than it might be with a competitor in the mix. The telecommunications business makes a good comparison. Where monopolies dominate there is no downward pressure on consumer prices. The same supply and demand principle applies to insurance. 
 Here are four links to study.
HCR -- About Those Insurance Exchanges
I put this post together in April. It mentions, among other things, the "navigators" whose mission is to assist those without insurance find a plan appropriate to their needs and circumstances. Since then I have come across a couple of stories about opponents of the new law to torpedo the role of navigators by ratcheting up requirements for that position.

Here is a great video from Kentucky, the state that gave us high-profile Obamacare opponents like Mitch McConnell and Rand Paul.


Premium Rate Variation In Exchanges Is An Eye Opener
This link is all over the place but makes interesting reading. Here is the Conclusion:
What does all this rate variation portend for the future of the ACA? The news is likely good. The marketplace will present potential plan members with clear choices within metal levels. Plans with relatively high premiums may choose to reduce premiums, or risk being eliminated by market forces. Alternatively, these plans may find a successful niche offering premium products to a segment of the population. Both outcomes would indicate success in market-based competition. 
At a larger level, the availability of low-cost plans will help balance the exchange risk pools, potentially fueling a “health spiral” in which low rates attract young and healthy lives, which improves the risk pool and leads to better pricing in 2015, which further improves the risk pool and leads to even better rates in 2016 and beyond. 
The experience of the Medicare drug benefit is useful. As with the ACA, the drug program began with a dearth of experience in knowing who would enroll. As with the rates we are seeing, actuaries and health plan executives had to make the same tough choices and the same calculations on capturing market share. As with the ACA, first year premiums varied greatly.
Over time, competition reduced, but did not eliminate, premium variation. Today, large variations still exist. However, not surprisingly, beneficiaries are largely voting with their wallets and flocking to plans that offer low premiums. 
As with Part D, we can expect that plans with low premiums will attract the lion’s share of enrollment. Tax credits will accentuate this trend since they do not vary based on plan selection, meaning that consumers buying up or down will bear the full, marginal cost of any plan they select. If these plans can sustain these low premiums, they will maintain share over time. Competitors will be forced to reduce their premiums, exit the market, or pursue strategies that allow them to maintain profitability despite small market shares. 
The other part of the story is that any state, like California, that chooses to play an active role in negotiating premiums with plan sponsors will speed these market forces along by eliminating outlier rates up front. Whether this strategy will, in the end, result in lower rates than allowing the market to operate on its own is something we’ll have to wait to see. 
As the weeks go on, we’ll get more and more premium information from more states. In terms of rate variation, we can expect more of what we are already seeing.

► Will “the Bros” Buy Insurance in 2014? If Your Son (or Boyfriend) is Uninsured, Please Send Him This Post

Follow Maggie Mahar as she leads the skeptics through the weeds. 
As you may remember, the Exchanges will offer four tiers of insurance: Platinum, Gold, Silver and Bronze. Plans in all four tiers will offer free preventive care and comprehensive coverage that includes the 10 “essential benefits.” . The only significant difference is that at one end of the spectrum, Platinum premiums will be higher, while co-pays and deductibles will be lower. At the other end, Bronze plans will cost less, but co-pays and deductibles will be higher. 
In the Exchanges, young adults under 30 also will be able to purchase High-Deductible Health Plans (HDHPs). Often these catastrophic plans will be cheaper than Bronze plans. But subsidies cannot be used to buy them. Thus, HDHPs make sense only for relatively affluent young singles earning over $45,960 who won’t qualify for the tax credits.
The good news is that most young adults in that cohort already are covered–either by a parent’s plan or by their employer. (Thanks to Obamacare, beginning in September 2010, all insurance plans that offer dependent coverage have been required to insure 19-25 year olds at the same price.) Since then, nearly 8 million have signed up. This is one reason why, 91% of young adults 19-29 who earn $45,960 or more are now insured. 
Less affluent young adults are not as likely to be covered because their parents are less likely to work for employers who offer health benefits. This year, fully 27% of young adults earning between $17,235 to $28,725 remained uninsured, along with 16% of those earning $28,725 to $45,960. 
These are the young adults who will be shopping in the Exchanges, and there, they will qualify for the government subsidies that, at long last, will make coverage affordable. Meanwhile, as they join the insurance pool in the exchanges, these generally health young adults will help lower premiums for everyone buying their own insurance . 
The subsidies are designed to make a Silver Plan affordable, but young adults don’t have to use the tax credit to purchase a Silver plan. If they choose, they can apply it to cost of a Bronze plan, lowering premiums to a point that virtually every 19-34 year old should be able to manage the cost of health insurance.
Excuse me. Could we lower our premiums?
As states have been publishing rates, health insurance carriers have been asking permission to slash their premiums. Yes, really.

By Maggie Mahar
September 12, 2013
Forced to compete on price 
In the new, more transparent marketplaces companies will be forced to compete on price.
In the past, it was hard for consumers to compare prices for the products offered by different carriers. Policies were crowded with fine print; each plan offered different benefits and exceptions. It was difficult to make apples-to-apples comparisons. 
But under Obamacare, the policies sold in the exchanges will be standardized. All must cover the same 10 essential benefits, offer free preventive care, and cap how much anyone can be asked to pay out-of-pocket. In these ways, plans will be similar, making it much easier for exchange customers to compare prices. 
Granted, some plans will try to distinguish themselves so that they can charge more. They may include “extra” benefits such as acupuncture, or discounts at a gym. Others will offer access to a broad network of providers that includes prestigious hospitals and pricey specialists who balk at the idea of giving an insurer a discount in order to be included in its network. 
But roughly 50 percent will create “narrow networks.” They say that by targeting the most cost-effective providers, and negotiating lower reimbursements, they will be are able to slice premiums. 
I suspect this will prove to be a shrewd strategy. Polls show that the young customers carriers covet are three times as likely to be willing to give up their choice of doctor for a lower health insurance premium.
==>  More details and links at the source. Maggie leaves no stones unturned. 

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