Kansas State University


Issues in Health Reform

Month: December 2015

What Does Open Enrollment 2016 look like? Part 2

There are other factors beside premium changes at work this year impacting available consumer choices. A major one is the changing composition of insurance companies still offering products in the Marketplaces. Nationally, many of the nonprofit cooperative insurers that had more than 500,000 customers between them have closed this year. Some states are losing other large insurers. And just before Thanksgiving, one of the largest insurers in the country, UnitedHealthcare, started rumbling about its lower than expected earnings that many see as a harbinger for UHC pulling out of the Marketplaces fully for 2017 (see NY Times, Wall Street Journal accounts). This would have major ramifications for insurance options available to many Americans.

Is this the fault of the ACA? The reasons behind this are complicated. Some might say that attempting to insure the previously uninsurable, the sickest, through a model that doesn’t allow the business shouldering that risk to recoup fully their expenses was unsustainable to start with. Remember, the reason for the individual mandate is so that healthy folks, and young folks (usually the most healthy) would be part of the risk pool, generating revenue and balancing out the expenses of the sickest. However, until the individual mandate penalties hurt enough to push more healthy folks to purchase health insurance, and all of the consumers who have less adequate plans join the Marketplaces fully (when the grandfathered provisions of their health plans run out), there may not be enough healthy people in the plans to make this work. (The young have done a good job of getting enrolled but many of these are under 26 and on their parents’ employers’ plans, not adding to the Marketplace policy pools.)

In a new and uncertain market, the ACA did create a “risk corridor” program to cushion insurers from extraordinary costs. All insurers who offer QHP (qualified health plans) in the Marketplaces pay for this “risk corridor insurance,” and the government pays out their claims. (Good detail on how risk corridors work can be found in this Health Affairs blog). However, the program that was to be self-sustaining off of those premiums is not. There are more claims that there is money for pay out so insurers are getting proportionally less than they would have expected. The tenuousness in the risk corridor program may be pushing certain insurers to leave the Marketplaces. That was the case that Coventry made when it pulled out of Kansas. The withdrawals from the Marketplaces is understandable as these are, for the most part, for-profit companies and it may not make sense to require them to be in the business of losing money.

A differently funded risk corridor system, perhaps one that put more federal dollars in the pot to support insurers, could likely overcome this particular shortfall. It would keep more insurers in the pool, continue to foster competition among insurers for “covered lives” to choose their plans, and give consumers more choice. However, in this political climate it is more than unlikely than any fixes will be forthcoming. It appears easier to use this as yet another excuse as to why the ACA is a failure.

What Does Open Enrollment 2016 look like? Part 1

The latest numbers say that more than 1 million consumers have already selected plans through healthcare.gov. More than 2 million have submitted applications. Still, shopping for health insurance is not for the light of heart. It is serious business. To make an informed and reasonable choice requires an understanding of how health insurance works and what different policies cover, matched to an individual’s projected health care expenses for the coming year. At its base, it is a contract and only what is in the contract is covered.

Americans who are either without health insurance or had purchased a plan through one of the Exchanges are in the middle of another open enrollment period. It’s the third time for many through this process. This open enrollment period began November 15 and runs through January 31, 2016. For a plan to be effective on January 1, 2016 however, that plan must be purchased by December 15.

Because of significant changes in premium and out of pocket costs most are suggesting that people shop around rather than simply renew a policy they’ve already had. Benefits covered and the network of health care providers covered in different plans are also subject to change from year to year. This too suggests a careful review of plan details.

As insurers vie for more customers, and more healthy customers, this volatility of prices and benefits is likely going to be part of the fabric of this new insurance market. The good news is that less expensive plans can be found. A new Kaiser Family Foundation (KFF) analysis found that in 73% of counties, healthcare.gov enrollees could lower their silver level premiums by shopping around

For a more personal side to this with real life stories, see the NY Times article on the “…New Seasonal Stress.”