This Los Angeles Times story illustrates the blurring of the distinction between payer and provider that has caught the attention of California managed care plan regulators.
Here’s a good analysis by the Associated Press of how the Patient Protection and Affordable Care Act (PPACA) might be affected by a Romney victory in next week’s presidential election.
In public health insurance, the Medicaid expansion might be curtailed. In commercial health coverage, payers are hoping for a repeal of the PPACA requirement they maintain minimum loss ratios of 80 percent and new tax levies on insurers.
But insurers aren’t keen on undoing the foundational political bargain of the PPACA’s individual insurance market reforms in which they must accept all applicants for coverage and individuals without other forms of public or private insurance must purchase coverage or face a tax penalty. There’s simply too much potential new business to be had with the mandate, the AP notes, citing a PricewaterhouseCoopers projection that it and state health benefit exchanges will generate $205 billion in new premium by 2021.
Nor is a Romney administration likely to pull the plug on state health benefit exchanges given the more than $2 billion invested in them thus far in the form of federal planning and establishment grants. Plus Romney has not publicly renounced the idea of public health insurance exchanges, a concept he innovated as governor of Massachusetts in 2006 by creating the nation’s first state run health benefit exchange, the Massachusetts Connector.
For health insurers and health care service plans, state health benefit exchanges represent a major business opportunity that will generate an estimated $205 billion in premiums by 2021, according to a report issued this month by PwC’s Health Research Institute.
“Public exchanges will create an irreversible shift in the insurance market that will ultimately change the way medical care is sold in the U.S.,” the report notes. It adds the caveat that managing this large new cohort of covered lives poses challenges. “Insurers will continue their battle to keep a balance of healthy and sick members to limit adverse selection. Providers and insurers will face clear challenges in serving a new customer base with a demographic profile and health needs that differ from today’s insured population in meaningful ways.”
In addition, many of the newly covered will churn between Medicaid and commercial coverage sold in the state exchanges as their incomes and life circumstances change. The full report, Health Insurance Exchanges: Long on options, short on time, can be downloaded here. (Registration required)
Health reform law will boost entrepreneurship and lessen Americans’ dependence on employment and employer sponsored health coverage
A major and not yet fully appreciated benefit of the Patient Protection and Affordable Care Act is it will boost entrepreneurship by giving would be entrepreneurs greater confidence to strike out on their own. At the same time, it will reduce Americans’ reliance on employment for both income and health coverage. Anything that will bolster the confidence of those looking to start new enterprises or work for themselves is a great thing as the economy crawls out of a deep and long recession.
The health reform law does so by two key mechanisms beginning January 1, 2014: 1) Barring health plans from using an individual’s medical history in deciding who to accept and the amount of their premiums and; 2) Creating in each state health benefit exchanges, providing budding entrepreneurs and self employeds an online marketplace of high quality health plans. Advance tax credits make coverage affordable by limiting how much they’ll have to pay for coverage until their incomes exceed 400 percent of the federal poverty level.
Being able to buy affordable coverage on their own through health benefit exchanges without having to rely on an employer sponsored health plan also correlates nicely with the growth of self-employed “free agents” such as Kansas City’s Mike Farmer, whose one-person company was profiled in this New York Times article. The Times cites Census Bureau data showing the number of nonemployer businesses like Farmer’s grew by 33.8 percent from 2000 to 2010. “I think we’re all headed toward an agent economy, where everyone becomes an agent or a service provider instead of an employee at some big corporation,” Farmer, whose mobile search app, Leap2, now has 10,000 users, told the newspaper. “That’s just how the world is evolving. It’s like telecommuting, but it’s taken to the level of telecompanies.”
Farmer’s reference to “telecompanies” has another name: virtual companies. Regardless of the terminology, Farmer’s onto something. Working for a large employer that requires a daily commute to an office building is increasingly becoming obsolete, courtesy of that great disrupter: the Internet. It makes self-employment far easier than it was just five years ago and reduces reliance on traditional employment for both income and health coverage. From a health perspective, that’s a virtuous trend, given indications that self-employed people are happier and healthier than traditional workers.
To the extent the health reform law makes it easier for Americans to earn their own incomes and not have to rely on an employer for health coverage and access to health care, it could well also be reinforcing healthier lifestyles over the toxic, sedentary commuter lifestyle that typically accompanies traditional employment and can lead to costly chronic health conditions. That’s a huge health reform in and of itself.