2015: Our Predictions

There have been a lot of changes since the Affordable Care Act was passed – a lot of things that nobody saw coming. But, five years after health reform was signed into law, we may be facing our most unpredictable year yet. Still, that’s not going to stop us from making a few predictions. Here are our top five:

#1: HSAs will continue to grow

Yes, we’re starting with an easy one. Health Savings Accounts have experienced tremendous growth since they were introduced back in 2004. That growth has only accelerated under health reform, and we believe they’ll grow even faster in 2015. There are a couple reasons for this. First, many of the plans available in the individual marketplace are HSA-compatible, even though they may not be marked that way. This means a lot of people may have a compatible plan and not even know it. Second, HSAs are generally the lowest-priced option that offers a decent network. Some narrow-network HMO plans may be less expensive, but for people who want to continue to see their favorite doctors, the HSA plan may be a better option. The price differential between HSAs and PPO copay plans increased when the out-of-pocket limit on all compliant plans was tied to the HDHP OOP max starting in 2014. Finally, HSAs will represent the lowest-priced bronze plan for many large employers who are required to offer health insurance, and offering an HSA-compatible option as their base offering may be the best way for companies to avoid a penalty.

#2: Small employers will begin dropping coverage

Many people expected a lot of small employers to drop coverage early on, but that hasn’t happened. That doesn’t, however, mean that it won’t. A number of recent articles have brought attention to the fact that small companies are not only exempt from the employer mandate but that offering group health coverage could actually hurt their employees by blocking them from government subsidies in the individual market. As more employees learn how the subsidies work, there will be increased pressure on small employers to dissolve their group health plans. Recent news that 87 percent of people purchasing coverage through the federal marketplace will help increase that awareness.

#3: The number of part-time workers will increase

One of the early predictions about the health reform law was that employers would shift workers to part-time to avoid offering them health coverage. That hasn’t really happened. In fact, the number of people involuntarily working part-time hours (meaning they’d prefer full-time) has actually decreased since the law was signed. However, there’s a new trend reported by USA Today: businesses are hiring more part-time workers, often to replace full-timers when they leave. This trend will likely accelerate next year, and this means that more people who work for companies that offer health insurance will be eligible for government subsidies. Brokers who sell group health insurance may want to consider a two-pronged approach where they enroll the full-timers in the job-based coverage but do a separate meeting for the part-timers to let them know about their options in the individual market. These brokers could benefit from sending them to a private exchange site to enroll, allowing the brokers to solve the employees’ coverage problems and earn a commission without taking the time to do one-on-one enrollments.

The number of part-time employees could increase significantly if the Republican-controlled House and Senate vote to re-define “full-time” as 40 hours per week instead of 30 hours. This possibility is a lot more likely than it was when the two houses were divided.

#4: Individual enrollment will top 12 million

As of today, about 7.1 million people have either purchased coverage, made a plan change, or allowed their plans to renew automatically through the federal and state exchanges. By the end of the open enrollment period, there could be 10 million individuals enrolled in qualified plans. Throughout 2015, as more employers decide to drop their group health coverage, employees will have a special enrollment period in the individual market. And if a proposed rule from HHS is finalized, employees whose group plans renew in the middle of the year will also have a special enrollment period. This will keep brokers who sell individual plans busy all year long. By the end of 2015, we’ll be halfway through the next open enrollment period, and the number of people in qualified plans could exceed 12 million. The more people who are enrolled, the more likely it is the subsidies will survive.

#5: People will still have access to subsidies

In just a few months, the Supreme Court will hear the King v. Burwell case, which challenges the ability of the federal government to deliver subsidies through the Federally Facilitated Marketplace. If the court rules that this is indeed unconstitutional, the subsidies will be cut off in those states that did not create their own state exchange. The employer mandate would also fall apart in these states as the penalties under the mandate are triggered by at least one full-time employee receiving a premium tax credit. However, if enough people are harmed by this decision, there will be tremendous pressure on the state to either develop its own state exchange or contract with the federal government to administer its state exchange.

A recent article in the Oregonian discusses this possibility. While a direct contract with the federal government may not satisfy the requirement to establish a state exchange in order to deliver the tax credits, the article suggests that the state could “contract with a third-party considered eligible under the law – such as a nonprofit or the state Medicaid agency – which in turn could subcontract with the federal exchange.”

The real question is whether red states would consider this option since so many have been opposed to the subsidies, but an article in yesterday’s LA Times discusses the number of states with Republican governors that have either expanded Medicaid or are in discussions with HHS about possible compromises. Texas, according to the article, could be the next domino to fall. The fact that so many states have expanded Medicaid, according to the article, is a good sign for those who’d like to see the subsidies remain intact:

“The trend may bode well for a possible response to a looming decision from the Supreme Court on the legality of tax subsidies for many Americans. If the court rules that the subsidies are illegal in states that failed to establish their own exchanges for individual insurance, three dozen states may have to scurry to establish those exchanges or let millions of constituents lose their insurance. The GOP capitulation on Medicaid implies that many of these states will respond sensibly.”

Happy New Year!

So there you have it, our predictions for 2015. While we’re unlikely to get them exactly right, we did pretty good last year. One thing is certain – brokers who take a “wait and see” approach will miss out on some big opportunities. It’s much better to evaluate what you know and then take action to set yourself up for success.

We hope you have a happy and safe new year. We’ll see you in 2015.

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