We thought we’d end the month with a quick update on some of the trends we’re seeing as a result of the health reform legislation. Unfortunately, there really aren’t any trends. Instead, we’re continuing to see conflicting news stories in almost every area, so we’ll tell you what’s being reported and you can choose for yourself what to believe.
One of the advantages of private exchanges has been the ability to sell additional products, like life insurance, accident policies, and critical illness insurance. To this point, one of these products have been available through state or federal exchange sites. However, according to a couple recent stories, this might be changing next year.
First, the state of Colorado may soon be selling life insurance through its state-run exchange site. According to The Denver Post, the Colorado health exchange, which already sells medical, dental, and vision as a package, “is considering adding new products to its line, such as life insurance, to generate more cash.” The article reports that brokers would continue to receive commission on these products.
And, as reported by Vox, the “administration is quietly trying to stamp out some of the skimpiest health plans, a decision that industry officials say could trigger yet another wave of cancellation notices.” What the article is referring to is fixed benefit plans like hospital indemnity plans and similar products that pay a fixed amount on diagnosis, per hospital confinement, or per doctor visit. While these plans don’t provide comprehensive coverage, they have served as a nice alternative for people who don’t have a major medical plan but would like some sort of coverage in case of an unexpected accident or illness.
Similar to the HRA guidance we received back in December, the proposed rule would outlaw these products unless they were purchased along with other, ACA-compliant coverage. In other words, they could serve as supplemental insurance but not stand-alone coverage. The final rule on these products has not yet been written.
A lot of medical providers have been upset about the health reform legislation, worried that they will receive pay cuts and concerned that the 90 day grace period in the individual market will result in even more uncompensated care. But Modern Healthcare is reporting that Tennessee-based LifePoint Hospitals is finding the ACA to be “a bigger boost to the bottom line…than it had expected.” During the first quarter of 2014, the hospital’s net income increased 14.9%.
And one of the early criticisms of the individual marketplace plans was that the skinny networks being developed by a number of carriers would be unappealing to consumers, but just the opposite seems to be true. The St. Paul Pioneer Press explains that PreferredOne, a “small player” in the Minnesota individual health insurance market, which previously had a whopping 2% market share in Minnesota, was able to capture 59% of the state’s MNsure exchange market while mighty Blue Cross ended up with only 24%. The secret to PreferredOne’s success? Simple – fewer providers and lower premiums. “In the Twin Cities, the strategy involved selling polices with its new ‘Select’ network, allowing consumers to save about 10 percent on premiums because they are steered toward a limited number of doctors and hospitals.” In Minnesota, enrollment in both public and private plans through the individual exchange reached 200,000.
In New York, where exchange enrollment exceeded 960,000, plans will no longer be required to offer out-of-network benefits according to the New York Times. While the article notes that the decision is “likely to disappoint customers who have complained that they can no longer use their favorite doctors and hospitals,” restricting consumers to in-network services only does help keep costs down and will continue to be an option for insurers going forward.
The real test for the ACA is the long-term impact on insurance premiums, and the predictions are all over the board. While some reports, including a recent Fox News article, claim that premiums are rising faster than they have in decades, other reports, including one from the Washington Post, explain that pricing the plans is a challenge for insurers but it’s still too early to tell what premiums will look like for 2015.
Here’s a quote from the article about Blue Shield of California: “It’s still too early to draw conclusions,” said Amy Yao, Blue Shield’s chief actuary. “I have the best actuarial team in the whole country. Even with that, it’s less than 50 percent confidence” that they’ll hit the rate-setting sweet spot for 2015, she said.
One challenge for insurers is the possibility that their premium increases may be limited by law. Modern Healthcare explains that a California ballot initiative, which will be on November’s ballot for voters to consider, would give state regulators the ability to reject proposed premium increases from insurers. Insurance companies are already required to comply the ACA’s minimum medical loss ratio (MLR) requirements.
Last but not least, it all comes down to politics, and with the mid-term elections approaching it’s unclear whether the health reform law will help or hurt supporters. Politico is reporting that democrats in Pennsylvania, who realize that the ACA is popular among their base, are voicing their support for the law in their campaign commercials. On the other hand, The Washington Post reports that other democrats are doing their best to distance themselves from the health reform legislation.
For republicans, the strategy seems to be to develop an alternative to the ACA, but according to The Hill, even Paul Ryan, a long-time opponent of the Affordable Care Act, admits that “it’s going to be difficult to turn the clock back” and instead is suggesting a proposal that would “make ObamaCare voluntary” in order to “get rid of the coercion.”
In conclusion, this law is still as confusing as ever, even though we’re a third of the way through 2014 and health reform is very much a reality. Yes, that’s frustrating, but it’s also exciting, because as long as consumers are confused, brokers have an opportunity to offer some guidance. Of course, in order to take advantage of the opportunity, you do need to have the right tools. Learn how to get them here.