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Tag: The ACA

New Data on ACA Enrollment Shows Problems in Many States

The Department of Health and Human Services released updated data yesterday on enrollment on the Exchanges including, for the first time, greater breakdowns on enrollment by several key categories: age, gender, and the metal level of purchase.

The result of this long awaited and much requested data is, at first glance, very much a mixed picture. Some of the overall statistics do not look as problematic as some — including me — had feared they might be. But it looks as if there is a very serious potential for large adverse selection problems brewing in a number of states,  most notably West Virginia, Mississippi, Maryland and Washington State.

The good news for the ACA from the data

There are three major pieces of good news for those who support the goals of the ACA.

1. The overall gender distribution of enrollees, 54% female, 46% male does not appear on preliminary inspection to be sounding “red alert.” To be sure, the problem may be a little greater than would otherwise be suggested by the aggregated numbers if the middle age group is more heavily female and the oldest group of enrollees more heavily male that the aggregated numbers suggest.  And Mississippi is troubling with 61% female enrollment (and for other reasons, see below).

But, overall, and if they hold up, these do not appear to be the the kind of numbers that would be way beyond what insurers likely expected or that, standing by themselves, would be devastating to an insurer on an Exchange.

2. Several states have total enrollments and the age distributions that should reduce the possibility of a serious death spiral getting started. New York and California are the two big states doing better than most.  Connecticut is doing very well also.

3. The metal tier distribution is 80% for Bronze and Silver policies and only 20% in Gold and Platinum. That’s comforting for adverse selection. A higher proportion of enrollment in the more generous plans would have been a warning sign that enrollment was coming disproportionately from the sick.

There’s a footnote on this point later on — we are not out of the woods — but this is definitely better news for the ACA than a distribution of, say, only 50% Bronze and Silver purchases.

The bad news

Just because the ACA is doing better than some had forecast on an overall basis does not mean there will not be very serious problems in some states.  Given that the statute is presently unamendable as a practical matter, problems in just a few states can hurt a lot of people.

The data released by HHS yesterday shows that there are a number of states in serious trouble.

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To Buy Or Not to Buy

Now that consumers can generally make an efficient health insurance purchase at HealthCare.gov and most of the state-run exchanges, we can finally get to the real question.

Are the healthy uninsured going to buy it?

The big health insurance changes Obamacare made to the individual and small group market were arguably done in order to get everyone, sick and healthy, covered in a more equitable system.

To be clear, no one I know of wants to go back to the prior health insurance market that excluded people from being covered because of pre-existing conditions.

But what if most of the uninsured literally don’t buy Obamacare?

Then people will question whether or not all of this change was worth it: Why did those who were in the old individual and small group market have to accept all of the expensive changes, narrower networks, higher deductibles, and fewer choices if the uninsured largely don’t want it?

Are we moving away from a system where only the healthy could buy health insurance to a system where only the sick want to buy it?

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Gender Could Be as Big a Problem as Age for the Affordable Care Act

Concerns about whether insurance sold on  the individual Exchanges under the Affordable Care Act will succumb to an adverse selection death spiral have focused mainly on the shortage of younger enrollees into the system.

This shortage is potentially a problem because, due to section 1201 of the ACA, premiums for younger enrollees must be at least one third of that for older enrollees even though actuarial science tells us that younger enrollee expenses are perhaps just one fifth of those for older enrollees.

Younger enrollees are needed in large numbers to subsidize the premiums of the older enrollees. But at least premiums under the ACA respond at least somewhat to age.

The lesser studied potential source of  adverse selection problems, however, is the fact that medical expenses of women for many ages are essentially double those of men and yet the ACA forbids rating based on gender.

In a rational world, one would therefore expect women of most of the ages eligible for coverage in the individual Exchanges to enroll in plans on the Exchange at a higher rate than men. But, since the women have higher than average expenses than men, premiums based on the average expenses of men and women will prove too low, creating pressure on insurers to raise prices.

And, of course, there could also be some disproportionate enrollment by older men who have higher medical expenses than women of equal age. While I welcome contrary arguments in what I regard as a fairly new area of study involving the ACA, gender-based adverse selection would certainly appear to be  a real problem created by the structure of that law.

To me, it looks to be potentially as large a problem as age-based adverse selection. It is certainly one that needs continuing and careful evaluation.

Caveats
I see only three limited factors that reduce what would otherwise appear to be a significant additional source for significant adverse selection. As set forth below, however, I do not believe that any of these factors are likely to materially reduce the problem.

1. Ignorance
The first is ignorance. Adverse selection emerges only if individuals can accurately foretell their future medical expenses with some accuracy. To the extent, therefore, that men and women are ignorant of the effect of gender on their projected medical expenses, adverse selection is potentially diminished. I say “potentially,” however, because of a subtlety: people don’t have to know why their expenses are what they are in order for adverse selection to emerge; they only have to be somewhat accurate in their guess.

Thus, even if men and women don’t make the cognitive leap from seeing lower (or higher) medical expenses to issues of gender, but they still on balance get it right, adverse selection can exist. Thus, I end up doubting that ignorance of the correlation between gender and medical expense is going to retard adverse selection problems very much.

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Will There Be An Obamacare Death Spiral in 2015? Probably Not.

By ROBERT LASZEWSKI

If the Obamacare health insurance exchanges are not able to get a good spread of risk––many more healthy people than sick––the long-term viability of the program will be placed in great jeopardy.

Given the early signs––far fewer people signing up than expected, enormous negative publicity about website problems, rate shock, big average deductibles, narrow provider networks, and a general growing dissatisfaction over the new health law––it is clear to me that this program is in very serious trouble.

But that trouble would not necessarily transfer to the health insurance plans participating on the state and federal health insurance exchanges.

Obamacare contains a $25 billion federal risk fund set up to benefit health insurance companies selling coverage on the state and federal health insurance exchanges as well as in the small group (less than 50 workers) market. The fund lasts only three years: 2014, 2015, and 2016.

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Twelve Things We’re Pretty Sure We’ll See Happen In Health Care In 2014

While your humble columnist eschewed forecasting for 2013, he  has decided to reverse course and inaugurate the 2014 blogging season with a contrarian duodecimal exercise in futurism. Will this antidecimal augury align with the mysterious cosmic order and governing perfection?  Let the readers be the judge in January 2015……

1. Obamacare will neither succeed or fail.  This hugely complex law will have too many outcomes, statistics and analyses that will be subject to too much spin by both supporters and detractors. Like puppies clamoring for the mother’s attention, the loudest wins, but only in 15 minute media increments.

2. Inflation returns, with a vengeance: While we won’t know it until well into 2015 or 2016, 2014 will be the year that the sleeping giant of healthcare costs awakens. Millions of new insureds in an improving economy will finally get their pent-up pricey preference-sensitive health care needs fulfilled.

3. Duh, it’s the delays stupid: While low income Americans will appreciate having access to subsidized health insurance and Medicaid, the middle class’ unsubsidized sticker shock will threaten the fall 2014 elections. Caught between conflicting advice of insurance actuaries and political hacks, the White House’s regulatory choices will be obvious.

4. Commercial scientific misconduct: Unable to resist the allure of bonus payments (like this) or the branding that is dependent on the public release of quality outcomes, at least one large health entity will be caught committing “reporting fraud.”

5. Snowden blow-backas the promise of big-data grows, fearful health care consumers will be even less inclined toward allowing access to their health information.  Too bad they won’t be given a say.

6. Innovator’s Dilemma for health tech: solutions that are simple, transparent and modular will continue to make ‘from the bottom’ inroads into a tech industry that – like early data storage – is too complex, opaque and entangled.

7. Speaking of health techpatient-monitoring solutions that offer more insight and less data will grab market share.  Instead of a series of blood glucose results dumped into an electronic inbox, think algorithms that suggest insulin dose adjustments.

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How Health Plan Risk Adjustment Models May Change Under the ACA

Risk adjustment is a key mechanism to ensuring appropriate payments for Medicare Advantage plans, Medicare Part D drug plans, and Medicaid health plans.  Since health plans vary in their mix of healthy and sick enrollees, risk adjustment modifies premium payments to better reflect the projected costs of members served and compensate plans that enroll high-cost patients.

Historically, risk adjustment was only used in Medicaid and Medicare – in effect, redistributing some revenue from health or drug plans with a relatively healthier mix of members to those plans with a more costly enrollment profile.  However, the Affordable Care Act (ACA) extends risk adjustment to the individual and small group health insurance markets starting in 2014.

A new brief from The Synthesis Project tackles the issue and makes several interesting recommendations for how to improve risk adjustment methods for the post-ACA market. Without accurate risk adjustment, health plans have a strong financial incentive to seek out only the healthiest enrollees, especially under ACA-mandated adjusted community rating.  Under adjusted community rating, health plans may not vary premiums based on health status or sex and are limited in how much they may vary premiums based on age.  Under ACA, the healthy, the young, and men subsidize the health costs of the unhealthy, the older, and women.

Risk adjustment is therefore a necessary factor in stabilizing the dramatically new post-ACA health insurance marketplace, particularly the new Health Insurance Exchanges.  Even then, the ACA is a giant game of musical chairs.  The market under ACA will be chaotic and challenging, with a mix of winners and losers once the music stops and the dust settles, which will take at least three to five years.

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Headlines You’ll See in 2014

Affordable Care Act major issue in Campaign 2014; ‘fix and repair’ new focus. ObamaCare will be the defining issue in the coming election cycle, but the political debate will not be Healthcare.gov glitches or enrollment.

Rather, the issue will be sticker shock in insurance premiums and the complaints from doctors and hospitals that they’re being driven out of business. “Repeal and Replace” will not be heard; the new slogan will be ‘fix and repair’ for both friends and foes of the ACA.

Hospitals battle for survival. Faced with negative operating margins, sequester cuts and mounting bad debt, state and local officials and hospital boards will take dramatic steps to insure acute services survive. Some will merge local hospitals to be operated as a public utility.

Some academic medical centers will spin off their research enterprises into commercial ventures with bio-pharma and device partnerships. Some will merge or sell out to larger systems with stronger balance sheets.

And all will reduce operating costs and purge clinical programs no longer affordable. As patient demand and their severity increase, hospitals will operate their inpatient business as a cost center, and their enterprises as regional care management organizations assuming risk for costs, outcomes and safety. But none is delusional: hospitals face a battle for survival.

Physicians go it alone; holy war for future of the profession taking shape. Led by the American Medical Group Association and several specialty societies, large medical groups will join forces to advance a physician-centric platform for health reforms that protect physician-patient relationships, position primary care physicians as gatekeepers, and assume financial and clinical risk in contracts with insurers and employers via fully integrated health plans operated by the group.

Physicians will step up their political activism in 2014, armed with data showing their net incomes have suffered and their clinical autonomy compromised since the onset of health reform. In 2014, they’ll wage unsuccessful battles for replacement of the SGR and liability reform again.

And they’ll dust off advocacy advertising campaigns to drum up resentment of market pressures that threaten to deduce their profession to a guild employed by plans or hospitals. For doctors, 2014 will look like a last stand for the profession.

Occupy Health Care Breaks out; profits with purpose sought. Income inequality in the U.S. will spill over into health care in 2014. The social media fueled visibility of earnings and executive compensation in every sector of health care will spark local political activism.And interest in a single payer system will begin to build heading into the 2016 election cycle.

Just as value will be challenged, so will the morality of the U.S. health system, and a populist campaign to align profit with purpose sought.

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Healthcare.Gov’s Numbers at the Deadline

After the disastrous launch of Obamacare the enrollment of 1.1 million people in the 36 state exchanges run by the feds is a major accomplishment. It is likely that the enrollment in the 14 state-run exchanges will take total Obamacare’s private insurance enrollment to near 2 million for the year.

Does this mean that Obamacare is finally on track and moving toward success?

At least the front-end of HealthCare.gov is now clearly working.

I will suggest there are still some very important questions for Obamacare that need to be answered.

First, how many of these new enrollments are people whose policies have been cancelled under Obamacare?
As I have said on this blog before, I expect at least 80% of those in the existing individual health insurance market to lose their coverage by the end of 2014. Half of the market bought their coverage after March 2010 and therefore cannot continue while most of the other half of the market will not qualify under the Obama administration’s stringent grandfather rules.

What we don’t know is just how many of these people had to buy new coverage on January 1 given the widespread offers by carriers to “early renew” their coverage into late 2014. Then the President asked insurers and states to allow people to keep their coverage another year. It appears about two-thirds of the states went along with that request. Then many of the cancellations won’t occur until they renew throughout calendar year 2014.

We do know that California did not allow insurers to continue coverage for another year leading to 800,000 cancellations on January 1 and 200,000 cancellations by March. The state exchange has said that 300,000 of these are subsidy eligible and they can only get a subsidized policy on the exchange.

California will likely announce they have signed-up about 600,000 people this year. But given the cancellations that are occurring by January 1, is this a big accomplishment?

Washington State cancelled 260,000 policies and also did not allow the cancelled policies to continue past January 1. Half of these polices are subsidy eligible and can only get a subsidized policy in the state insurance exchange. Washington State might report 100,000 private plan enrollments by year-end. But if they cancelled 130,000 people who can only get a subsidized policy in their exchange, is this a big accomplishment?

The good news is that Obamacare will likely enroll almost 2 million people in 2013.

Even if we ignore that fact that many of these people were previously insured and had to replace cancelled policies (there were more than 400,000 subsidy eligible cancellations in California and Washington alone), 2 million people are only 10% of the 20 million uninsured in the U.S. who are eligible to buy coverage in the health insurance exchanges.

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Why You Shouldn’t Succumb to Defeatism About the Affordable Care Act

Whatever happened to American can-do optimism?  Even before the Affordable Care Act covers its first beneficiary, the nattering nabobs of negativism are out in full force.

“Tens of millions more Americans will lose their coverage and find that new ObamaCare plans have higher premiums, larger deductibles, and fewer doctors,” predicts Republican operative Karl Rove. “Enrollment numbers will be smaller than projected and budget outlays will be higher.”

Rove is joined by a chorus of conservative Cassandra’s, from Fox News to the editorial pages of the Wall Street Journal, all warning that the new law will be a disaster.

Robert Laszewski, president of Health Policy and Strategy Associates, anticipates a shortage of doctors. “There just aren’t going to be enough of them.”

Professor John Cochrane of the University of Chicago predicts the individual mandate will “unravel” when “we see how sick the people are who signed up on exchanges, and if our government really is going to penalize voters for not buying health insurance.”

The round-the-clock nay-saying is having an effect. Support for the law has plummeted to 35 percent of those questioned in a recent CNN poll, a 5-point drop in less than a month. Sixty-two percent now say they oppose the law, up four points from November.

Even liberal-leaning commentators are openly worrying. On ABC’s “This Week,” Cokie Roberts responded to my view that the law eventually would prove popular by warning of “a whole other wave of reaction against it” if employers start dropping their insurance.

Some congressional Democrats are getting cold feet. West Virginia Senator Joe Manchin recently fretted that “if it’s so much more expensive than what we anticipated and if the coverage is not as good as what we had, you’ve got a complete meltdown.”

Get a grip.

If the past is any guide, some fixes will probably be necessary – but so what? Our current healthcare system is the real disaster — the most expensive and least effective among all developed countries, according Bloomberg’s recent ranking. We’d be collectively insane if we didn’t try to overhaul it.

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They’re Not Deadlines. They’re Opportunities …

Confusion about Affordable Care Act (ACA) deadlines is rampant. That’s because there are lots of them and they keep changing. The fact is that some of them matter a lot more than others.

In my view, the BIG deadline is:

MARCH 31, 2014: Under the ACA, all Americans must have health insurance, and this is the latest date you can acquire it if you wish to avoid paying a penalty on your 2014 income tax. Some individuals will be exempt from penalties, including, as of last week, people whose policies were canceled because their plans’ benefits did not meet new ACA standards of adequacy.

Another date that has drawn attention but, in my view, doesn’t matter as much:

JANUARY 1, 2014: This is not a deadline so much as an opportunity. It is the first day, when, if you signed up in time (now December 24 for the federal website, but a few states have later deadlines)—and paid your premium in time (at the administration’s urging, many insurers are allowing a grace period through January 10 for the federally run marketplaces and some states have also moved this date)—you could enjoy the subsidized coverage available under the ACA. But if you miss these so-called deadlines, you still have until March 31 to sign up for coverage to avoid a penalty.

For the millions of Americans who are uninsured, or who could have enrolled in improved insurance through a state or federal exchange, missing these deadlines merely means you failed to make yourself better off as soon as you possibly could. BUT YOU WILL BE NO WORSE OFF THAN YOU WERE BEFORE.

There are also some dates that are consequential, but have received less attention, or have receded from the headlines:

NOVEMBER 2014: This is when the Obama administration promises online enrollment for the Small Business Health Options Program (SHOP) in the 34 states where the federal government is operating the small-business marketplaces for companies with fewer than 50 workers. For now, small businesses in these states can apply via paper application or an insurance broker or navigator.

Online access is available already in most of the 17 states and the District of Columbia that are operating their own SHOP exchanges.

JANUARY 1, 2015: The date by which employers with 50 or more employees will become liable for a tax penalty if they are not offering health insurance that meets minimum standards, and an employee becomes eligible for subsidized private coverage through the marketplaces.

The changing dates associated with the ACA are troubling to some, since they suggest confusion and even mismanagement by the Obama administration. It would obviously be reassuring if every declared date were honored and announced rules and intentions never changed.

On the other hand, I’m doing some long-delayed repairs in my home. The contractor said the work would be done by Thanksgiving, but there were unanticipated problems. We’re hoping now for Christmas.  I’ll be happy if it’s done by mid-January, but the key thing is whether, a year from now, I’m satisfied with the result.

Health insurance is obviously way more important to millions of Americans than any home repair project could ever be. But few things in life go exactly as planned, and it would be totally astonishing if the implementation of massive reforms to a sector accounting for 20 percent of our economy rolled out without a bump or a detour.  We should keep that in mind as we think about those changing ACA deadlines.

David Blumenthal, M.D., M.P.P., is president of The Commonwealth Fund, where this post originally appeared.

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