The Obama administration is boasting that 8 million Americans, including a good number of young people, have enrolled in public exchange plans. The big question now is how will new members fit into the risk adjustment puzzle? Aside from collecting premiums — it’s still not known how many of the new enrollees have paid for the first month — many exchange insurers are now trying to learn as much as they can about new enrollees to start assigning them risk scores. What is known is that in the 36 states with federally-managed exchanges, 28 percent of new plan buyers are between 18 and 34 years old — a bit less perhaps than what some may have hoped for, but probably enough to avert a premium “death spiral.” That proportion of young enrollees in federal exchange states jives with the youth turnout in the nation’s largest state exchange, Covered California. Of the 1.3 million Californians who bought subsidized private plans through Covered California, 29 percent are ages 18 to 34. Aside from collecting premiums — it’s still not known how many of the new enrollees have paid for the first month — many exchange insurers are now trying to learn as much as they can about new enrollees to start assigning them risk scores.
The Affordable Care Act’s risk corridors, reinsurance and risk adjustment programs will help with much of the transition to a newly regulated market, and, through the permanent risk adjustment program especially, help avert any problems with plans taking on disproportionate shares of higher cost members.
The risk adjustment program is not perfect, though, and there are a few unintended consequences that may plague exchange markets early on, as Milliman actuaries Jason Siegel and Jason Petroske argued in a report earlier this year.Not only is the proportion of young enrollees important across the 8 million-strong risk pool, but an even mix among plans will be a key factor in how fair the market is for insurers. As Siegel and Petroske found, demographics and hierarchical condition categories “may skew the results” of profitability in exchange plans — and to a “surprising” degree. With the factor of age, under the first year of the adjustment program, males 20 to 34 would have pre-tax profits (based on a 3 percent assumed margin) that are actually losses of about negative 3 percent, Siegel and Petroske found. By their estimates, male members are not profitable until age 45, generating between 2.5 percent and 7 percent in margins as they approach 65. That’s one reason why accurately capturing any health risks that young enrollees may have is important now, argued Kate Jordan, an engagement manager at Civis Analytics, a one-year-old startup founded by statisticians and technologists who worked on the Obama campaigns. The risk adjustment program "only works for an insurer if you have your risk coded,” she said. “In some ways, the worst case scenario for an insurer is to have a bunch of new risky people but not know those people are at risk because they haven’t gone to the doctor yet and haven’t submitted any claims," said Jordan, a former associate of management consulting firm, McKinsey. In that case, the new members might look like they are low risk, especially if they are young, but then are actually high risk, leaving insurers taking a “double hit” through the risk adjustments, Jordan said. From Healthcare Payer News
Guidance to help both the healthcare industry improve its price transparency efforts and patients to access needed price data were included in a report and consumers' guide issued Wednesday by major healthcare advocacy organizations and consumer groups. A task force led by HFMA developed guiding principles and recommendations for price transparency, highlighting ways hospitals, physicians, and health plans can share reliable information with consumers. The first-time consensus recommendations by a range of industry organizations sought to ease the ability of patients to obtain prices as they shoulder an ever-growing share of healthcare costs. "People everywhere want to be smart healthcare consumers, but information about healthcare prices is not easily accessible," said Joseph J. Fifer, president and CEO of HFMA. "For too long, it has been unclear how consumers should go about getting price information—who to ask, what to ask for, or what the information even means when they do receive it. This approach is a game changer." Instead of providing specific steps toward enhanced price transparency, the task force—which included America's Health Insurance Plans, the American Hospital Association, and Catalyst for Payment Reform—issued a series of principles for achieving price transparency. It will be up to insurers and providers to identify the specific ways they will aim to meet these principles. Among the principles the task force agreed on was that insurers should provide price data to their enrollees, while providers have the responsibility to inform their uninsured and self-pay patients about prices. The task force called on health plans and providers to make price information available in easy-to-understand formats so that consumers can make the most of the information at their disposal. Rich Umbdenstock, president and CEO of the American Hospital Association, said during a Wednesday roundtable that although hospitals have moved toward greater prices transparency, less than half provide their price data to patients in readily accessible ways. The recommendations are timely, Umbdenstock said, because the shift toward high-deductible health plans has moved health care from a wholesale structure toward a retail structure. Karen Ignagni, president and CEO of America's Health Insurance Plans, agreed that the push for price transparency is increasingly important as coverage expands under the Affordable Care Act and more people have to grapple with healthcare costs. "This report hit us over the head that we have transitioned from the issue of access to the issue of affordability," Ignani said. Mark Rukovina, principal at Community Health Advisors, cited the estimated $329 billion of out-of-pocket costs of health care—beyond premiums—in 2013 for patients to highlight the growing need for patients to understand their financial obligations and which treatments they can afford. "Consumers are critically concerned about prices and want to know in advance what the price will be," Rukovina said. Ultimately, Fifer said he hopes the industry is able to combine the price data with other critical information, such as quality and safety, to better inform healthcare decisions by consumers. From HFMA
Eight million people have signed up for ObamaCare. So what now? As ObamaCare enters its fifth year, big questions remain about how the law is working and whether it will live up to promises of providing affordable coverage and slowing the growth of medical costs.
The politics surrounding ObamaCare are equally uncertain. The botched rollout of HealthCare.gov emboldened critics and stoked Democratic fears that the law would be an albatross in the 2014 midterm elections. But last month's late enrollment surge pushed the coverage numbers above expectations, and recent polls indicate that voter disapproval of the law is waning. Republican leaders have made clear that their campaign strategy this year will center on attacking ObamaCare, but Democrats say that plan will backfire. Here are five things to watch as the next chapter of the ObamaCare debate unfolds. Will premiums rise on the exchanges in 2015? Health insurers are analyzing their risk pools right now in order to calculate premium prices for next year. If prices on the exchanges skyrocket in some states, Democrats could pay a heavy price. Republicans have long predicted that few young and healthy people would sign up for ObamaCare, creating an actuarial "death spiral" that would doom the marketplaces in 2015. So far, the Obama administration appears to have avoided that outcome. Adults between ages 18 and 34 now account for 28 percent of enrollments on the marketplaces, the White House said. While that percentage falls short of the 4-in-10 minimum that some experts see as ideal, it is roughly the equal to the share of young adults that signed up for coverage in the first year of Massachusetts's healthcare reform law. Actuarial groups and the Congressional Budget Office (CBO) are also optimistic. The CBO said Monday that the average 2015 premium for the second-lowest-cost "silver" plan would rise slightly next year and by 6 percent each year for the rest of the decade. Even if insurers seek dramatic rate hikes, the price changes must be approved by regulators in 37 states, according to the Kaiser Family Foundation.Still, some companies have warned that they are considering pronounced cost increases. If enacted, the higher prices will bolster the Republican argument that the law isn’t working for consumers. Is the law getting more popular? For much of its existence, ObamaCare has registered low public approval ratings as Republicans made the case that the law will increase healthcare costs and erode patient choices. Those attacks helped fuel the GOP's takeover of the House in 2010. Recent polls indicate that public sentiment on the law might be changing. A Gallup survey released last week found that 32 percent of voters fear ObamaCare would make their own healthcare situation worse — down from 40 percent a month ago — while a combined 66 percent say the law will either help them or won't affect them at all, up from 57 percent in the previous poll. Meanwhile, the percentage of voters who think the law will negatively impact the nation's healthcare system on the whole ticked down 3 points, Gallup found, while those who think it will improve that system ticked up. Obama and other Democratic leaders have long argued that the popularity of the reforms would increase as the law matured and more people reaped the benefits. Obama on Thursday said that prediction is coming true. "The longer we see the law benefiting millions of people, the more we see accusations that the law is hurting millions of people being completely debunked … and the more the average American who already had health insurance sees that it's actually not affecting them in an adverse way, then it becomes less of a political football, which is where I want it to be," Obama said during a White House press briefing. Will the shakeup at HHS have an impact? Health and Human Services (HHS) Secretary Kathleen Sebelius is set to depart once the Senate confirms her replacement, White House budget director Sylvia Burwell. The shakeup coincided with a burst of positive news about ObamaCare and raised questions about whether a change in leadership could help improve the law's image. Sebelius became a political lightning rod during her tenure. Republican lawmakers frequently accused her of misleading Congress, and at one point, threatened to investigate her for perjury. Burwell, in contrast, is practically unknown to the public as she prepares to take the reins at HHS. While a few Republicans criticized her nomination, an equal number have praised her performance at the White House. Former colleagues say she's a seasoned manager who will earn lawmakers' respect in her new role. If Burwell can avoid political missteps, it's unlikely she will confront the level of opposition Sebelius did. This alone could help calm the waters around the healthcare law. Will the Supreme Court throw a curveball? A potential wildcard in the debate is a case before the Supreme Court challenging ObamaCare's requirement that larger, for-profit businesses give workers access to birth control as part of a cost-free package of preventative care services. The mandate has sparked an outcry from Republicans and other conservative-leaning critics, who contend the provision violates the constitutional rights of employers who are opposed to certain forms of contraception on religious grounds. Democrats and other supporters of the mandate counter that the requirement does not violate religious freedom because employers are under no obligation to use the birth control they reject. The hot-button case has galvanized advocates on both sides of the issue, and the Supreme Court's ruling, no matter the outcome, will be sure to energize each party's ideological base a few months before the elections. The court is expected to announce its decision in June. Are more delays coming? After the botched rollout of HealthCare.gov, the administration enacted a series of delays and changes to the healthcare law that angered critics and added to the perception of a White House adrift. Combined with other policy delays — like the twice-deferred employer mandate —critics charged that Team Obama was manipulating the law in order to protect Democratic incumbents and cover up its own errors. Republicans have used the argument that Obama is not following the law to justify inaction on bipartisan priorities like immigration reform. If the administration announces further ObamaCare delays before November, its choices could feed criticism from the right and undermine the administration's message on healthcare reform. At the same time, further delays could pacify industry groups that would otherwise target Democrats in the midterms. From The Hill
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