Concerned with low enrollment in Pre-Existing Insurance Plans (PCIPs), the Obama administration is reducing premiums effective July 1 in two dozen states where the federal government runs PCIPs.
PCIPs were authorized by the Patient Protection and Affordable Care Act’s Interim High Risk Pool provision designed to temporarily cover individuals with pre-existing medical conditions until insurers and health plans must accept all applicants starting Jan. 1, 2014.
The remaining states that run their own PCIPs may also reduce rates, according to this Los Angeles Times story, which reports premiums could fall by as much as 40 percent based on more nuanced actuarial analysis.
While applicants will still have to demonstrate that they have been medically uninsured for at least six months, a requirement they provide evidence they have been denied coverage has been scrapped. Now a letter from a health care professional stating the applicant has a medical condition will suffice, according to The Times.
New England is proving to be the nation’s health care finance reform laboratory. In 2006, Massachusetts set up a state-run health insurance exchange and required all residents to have public or private coverage for medical expenses. Those two essential elements of the Massachusetts legislation became the template for the federal Patient Protection and Affordable Care Act (PPACA) signed into law last year. Barring intervention by the U.S. Supreme Court, those basic components of the Massachusetts plan will become the law of the land in 2014.
The latest New England health care finance experiment was launched this week with the signing of legislation that will put the state on a path to becoming the sole payer of all medical bills, known as “single payer.” The legislation creates Vermont’s state run insurance exchange, Green Mountain Care that opens for business on Jan. 1, 2014. Under the legislation, three years later the state — and not private insurers and health plans — would cover health care costs of all state residents.
The legislation calls for Vermont to obtain a waiver from federal officials under a PPACA provision allowing states to offer “innovative” health plans starting Jan. 1, 2017 provided the plans provide coverage that is at least as comprehensive as required for plans offered through health benefit exchanges and provide coverage to a comparable number of state residents.
In California, legislation to create a single payer system called the California Healthcare System is stalled for the rest of this year, having failed to meet a deadline this week to pass out of a legislative committee charged with estimating the bill’s cost.
As group health insurance premiums continue to rise, HealthLeaders-InterStudy reports growing interest among mid-sized California employers in directly paying employee medical costs, known as self insurance.
The findings are reported in HealthLeaders-InterStudy’s proprietary California Health Plan Analysis. The report notes CIGNA HealthCare is seeing “significant sales increase” in a self-funded product tailored to smaller groups, adding that other California group health insurers are expected to respond by developing self-funding products offering financing plans to mitigate the risk associated with paying all of a group’s medical claims.
Most importantly, since employers will be paying for their workers’ health costs out of their own coffers, they will have far greater incentive to promote employee wellness and management of chronic conditions. So far, workplace wellness efforts have produced a mixed verdict in terms of their effectiveness.
The bulk of individuals buying health plans through health benefit exchanges established by the Patient Protection and Affordability Act (PPACA) starting Jan. 1, 2014 will be low to low moderate-income earners, making less than 400 percent of the Federal Poverty Level (FPL). An actuarial projection by Mercer Government Human Services Consulting presented this week at a Sacramento, Calif. symposium sponsored by the California HealthCare Foundation estimates that just 25 percent of about 4.6 million Californians not covered by employer or government plans will purchase coverage through the California Health Benefit Exchange.
Most in the state’s individual market earning more than 400 percent of the FPL will purchase commercial insurance and managed care plan products offered outside the exchange, the Mercer estimate concludes. On the other hand, “virtually all” individuals earning between 200 and 400 percent of the FPL will opt to purchase their coverage through the exchange, Mercer projects, in order to benefit from subsidies in the form of tax credits.
That’s shaping up as a bifurcated individual market, giving rise to insurer concerns over the prospect of adverse selection, with higher cost insureds gravitating toward the exchange, particularly if commercial insurers continue their primary competitive strategy of avoiding those with pre-existing conditions. But as noted at this week’s Sacramento forum, insurers won’t be able to wall off higher risk individuals in the exchange since they will be required to pool risk from both exchange and non-exchange insureds. That has some insurers concerned that the experience of the exchanges could actuarially jeopardize commercial markets outside the exchanges.
The nascent California Health Benefit Exchange hopes to stave off adverse selection by penalizing or excluding from the exchange insurers that engage in marketing practices designed to cherry pick healthy individuals while directing higher-risk consumers to the exchange.
A New York Times piece published May 13 suggests insurers see tougher times coming once the exchanges open for business in less than three years. In the meantime, they’re making hay while the sun is shining and medical utilization is suppressed by a weak economy. “I think they’re going to go through a winter,” Paul H. Keckley, executive director of the Deloitte Center for Health Solutions, a research unit of the consulting firm Deloitte, told The Times.