Health Exchange Signups Fall Short – The Yeshiva World

In February 2013, the Congressional Budget Office predicted that 24 million people would buy health coverage through the federally and state-operated online exchanges by this year. Just 11.1 million people were signed up as of late March.Exchanges are marketplaces where people who do not receive health benefits through a job can buy private insurance, often with government subsidies.“Enrollment is key, first and foremost,” said Sara Collins, a vice president at the Commonwealth Fund, a nonpartisan foundation that funds health-care research. “They have to have this critical mass of people so that, by the law of averages, you’re going to get a mix of healthy and less healthy people.”A big reason the CBO projections were so far off is that the agency overestimated how many people would lose insurance through their employers, which would force them into the exchanges. But there have been challenges getting the uninsured to sign up, too.

Source: Health Exchange Signups Fall Short – The Yeshiva World

There’s a strong element of irony here given the Obama administration’s stated position that health care reform should retain the employer-sponsored model that covers the majority of Americans under age 65. According to this report, it retained a bit too much  — to the detriment of a robust individual market the Patient Protection and Affordable Care Act insurance market reforms envisioned.

Federal study finds Medicaid expansion improves individual risk pool, reduces HIX plan premiums

The HHS analysis uses 2015 data on HealthCare.gov plans and enrollment to assess how Medicaid expansion affects Marketplace premiums. It controls for differences across states in demographic characteristics, pre-ACA uninsured rates, health care costs, and state policy decisions other than Medicaid expansion, finding a 7 percent difference in Marketplace premiums holding these factors fixed.

States that expanded Medicaid coverage under the ACA have Marketplace risk pools comprised largely of individuals with incomes above 138 percent FPL, while non-expansion states have Marketplace risk pools that include more individuals below 138 percent FPL. Because lower-income individuals on average have poorer health status than those with higher incomes, a state’s decision not to expand Medicaid affects the Marketplace risk pool and, ultimately, Marketplace premiums. Issuers have noted that Medicaid expansion is one way that states can strengthen their Marketplaces.

Source: Medicaid expansion lowers Marketplace premiums by 7 percent

The upshot of this analysis is the actuarial health of the statewide individual health insurance risk pools would be improved taking into account the correlation between socio-economic status and health status and removing households earning between 100 and 138 percent of federal poverty from the pool by making that cohort eligible for expanded Medicaid.

Given that some health plan issuers have withdrawn from state health benefit exchange marketplaces citing lower population health status — and higher risk — than anticipated, it would be interesting to see if there’s a correlation between states that opted not to expand Medicaid eligibility and states where plans have exited exchanges for plan year 2017.

NYT: Vision of robust individual health insurance market remains elusive three years after key ACA reforms

State health benefit exchanges established by the Patient Protection and Affordable Care Act were envisioned as robust marketplaces with many health plans offering a wide selection of providers. That robust marketplace is central to the law’s policy thrust to create a market in which consumers would fare far better value than in the dysfunctional pre-ACA individual marketplace, able to select from a broad range of health plans offering both value and choice of providers. More consumers thanks to premium subsidies and mandated coverage, in turn attracting a greater number of health plans and providers to tap into that enlarged market. More is better for all.

The New York Times published two stories Sunday suggesting that hoped for market vigor is proving elusive three years after most of the Affordable Care Act’s main reforms took effect and that market forces are favoring less over more. One story reports health plans driven by consumer demand for low premiums are narrowing provider networks as plans leverage market power to negotiate aggressive reimbursement rates with fewer providers. On the health plan issuer side of the market, The Times reports, there aren’t many playing in the state exchange space with consumers in large parts of the nation having only one or two exchange plans from which to choose.

Too early to declare failure of individual health insurance market statewide risk pooling

One of the primary reforms of the individual health insurance market under the Patient Protection and Affordable Care Act was to create a single risk pool for entire states for individual health plans effective 2014 and later. The purpose was to rescue the individual market from a death spiral crisis of adverse selection that threatened its existence. To keep their individual plans solvent pre-2014, plan issuers resorted to playing a game of whack a mole with their plans. As losses mounted in existing plans, they would shut them down and place them into runoff mode by closing them off to new enrollees. Then they set up new plans containing new enrollees stringently screened via medical underwriting in an attempt to hold down claims costs.

The result was widespread market failure. Many consumers in the individual health insurance market couldn’t purchase coverage because they couldn’t meet the increasingly strict medical underwriting criteria. Those already in existing plans faced steep premium rate increases making coverage unaffordable.

There are widely differing views on whether the Affordable Care Act’s single statewide risk pooling mechanism is achieving adequate spread of risk to remedy the adverse selection that plagued the market pre-2014. Media coverage is sloppy. Accounts such as this one conflate the statewide risk pool with the health benefit exchange marketplace. They are not one and the same. Individual plans are sold both on and off the exchanges. There is no separate risk pool for those enrolling in the individual market through exchanges and another for those who do not.

Many media reports frequently report individual market enrollees are “sicker than expected.” Higher medical utilization as the 2014 reforms kicked in was in fact expected. The Affordable Care Act contained premium stabilization mechanisms that took into account the possibility of high utilization due to pent up demand from those who were previously without coverage either voluntarily or because they fell short of medical underwriting standards or couldn’t afford the premium increases as the market imploded.

A problematic issue with current mainstream media coverage is the tendency to jump to the conclusion that high anticipated medical utilization in the early years of the individual market reforms are indicative of its long term viability. As the standard investment exculpatory disclaimer goes, past performance doesn’t guarantee future results, good or poor. Ditto short term volatility.

Respected health care industry blogger Timothy Jost offers a sharply contrasting perspective to bearish sentiment that the statewide risk pooling mechanism is a failure. He cites a report issued this week by the Centers for Medicare and Medicaid Service indicating claims costs were flat year over year from 2014 to 2015 as evidence the statewide risk pools are functional. Higher premiums for 2017, he writes, are due to health plan issuers adjusting rates to comport with actual experience in 2014 and 2015 plan years instead of the educated guessing they employed for 2014, the first year of the major individual market reforms. Also being factored in is the end of the reinsurance component of the Affordable Care Act’s premium stabilization mechanisms starting in 2017.