Health Insurance Marketplace Premiums: Policy Considerations And Implications For Payers, Providers, And Patients

The recently released health insurance marketplace premium data answered a number of questions regarding plan choice, affordability and the heterogeneity of choices across the country.  The big takeaway is that premiums before tax credits will be at least 16 percent lower than projections from the Congressional Budget Office.   This is good news for Americans in states whose exchanges will be primarily run by the federal government who were waiting to find out if the premiums would be affordable.

But as Tim Jost points out in his Health Affairs Blog post, some premiums will be higher than those for plans currently available, even though the 2013 plans have higher deductibles, cost sharing, etc.  The comparison is truly not even apples and oranges given the deficiencies in current plans, but nevertheless, consumers might see price differentials such as those reported recently in the Wall Street Journal as a sign of higher cost without understanding the plan differences.

We also now know that most states will offer a number of plans, although one should be careful in interpreting the numbers released by HHS regarding average number of qualified health plans available; an average number of plans available in a state does not mean that the same number of plans is available throughout the entire state.  For example, there is an average of 54 plans being offered in Texas, but in the Dallas-Fort Worth metropolitan area, there are 43 plans.  Alabama has an average of 7 qualified health plans on the low end with Arizona offering 106 on the high end.

Choice does not necessarily correlate with cost, however.  Furthermore, if we are to extrapolate from the experience in Massachusetts, we know that many enrollees will likely choose the cheapest option, or the bronze plan, and the higher cost sharing could result in greater out-of-pocket costs to consumers.  Cost-sharing reductions (such as reduced out-of-pocket maximums and copays) are available to individuals and families with incomes below 250 percent of the FPL who enroll in silver plans (not the bronze plans that many are likely to pick) and to American Indians and Alaska Natives enrolled in any metal level.  Additionally, it is not clear if too much choice is a good thing, as past studies of choice in Medicare Advantage plans have illustrated that beneficiaries might find increased choices complicated or more confusing, thus making decisions that are not optimally aligned with their health needs.

Looking ahead, there are a number of policy issues for consideration which will have an important effect on how we look back on our nation’s greatest expansion effort since 1965.  They roughly fall into considerations that affect payers, patients and providers.  Here are five, in no particular order.

Risk Pool Adequacy.  I said these were in no particular order, but this is certainly the number one issue for federal/state governments and health plans. Of the approximately 7 million who are projected to enroll in the marketplace in 2014, up to 25 percent are estimated to be younger and healthy.  Risk mitigation such as reinsurance and risk corridors certainly will help, but if these estimates do not hold true, it will cause concern about the effects on premiums and future plan offerings.  Efforts are already underway to attract enrollees of all ages and types, but there are still many who are concerned that younger people will forgo enrollment and take a $95 penalty for 2014.

Provider Network Adequacy/Capacity.  The data released dealt with premiums and gave us a glimpse into the QHPs by state and major metropolitan areas.  It does not reveal the depth or degree of network adequacy and there is currently no metric which can be used to benchmark such adequacy.  Exchange plans are required to have a network “that is sufficient in numbers and types of providers” to ensure reasonable access without delay but how that will be monitored is unknown.

We know that in order to maintain affordability, many marketplace plans are contracting with a narrower network of providers at below commercial rates.  Interestingly enough, providers are agreeing to these contractual relationships largely to increase insurance market competition and enter into risk-sharing/ACO style arrangements with payers.  From a patient perspective, choice of providers and network arrangement may not be immediately obvious from the marketplace websites, but much like in Medicare/Medicare Advantage, it will be important to assess both whether the plans are affordable and whether they offer high quality choices for their care.  Some state-based exchanges, such as Colorado, have already announced that they will be offering information on quality of providers within plans on their marketplace website.

In terms of provider network adequacy, states such as Nevada recently passed legislation granting oversight around PPO and HMO network adequacy to the Division of Insurance, which has additional policy implications since such oversight generally resided within state divisions of Health and Human Services.

Consumer Protections.  The Affordable Care Act had already contained a great deal of consumer protections pertaining to the insurance industry.  The thoughtful inclusion of navigators is another bridge to enrollment and increasing health insurance access, but already there are reports of entities offering to find the best plan for individuals for a fee as well as others who are identifying themselves as navigators but are not affiliated with official organizations, have not completed any potential training, etc.  Some states have tried to counter this by requiring certification, background checks, continuing education, and the like, but it is certainly not standardized and likely also opaque to the consumer.  Federal and state exchanges already have a significant number of hurdles to jump and potential glitches to encounter, but the consequence of a potential abuse of consumer trust could great if accountability measures are not in place.

Premium Collections.  The release of cost estimate data makes Jan 1, 2014 much more real and tangible.  Another concern which could have deleterious policy implications is the issue of responsibility for outstanding collections and payment of services for individuals in the marketplace, some of whom have not had regular interaction with the healthcare system or familiarity with the process of insurance.  According to current regulations, exchanges are not obligated to pursue unpaid premiums for issuers.  The 90-day grace periods for non-payment of qualified health plan premiums will largely be managed by the issuer unless the exchange takes responsibility.  Outstanding debts to providers after the initial 30 days but within the 90-day grace period will likely be pursued by collection notices issued by providers to beneficiaries, adding further confusion and administrative burden to patients and their providers.

Spillover of Premium Cost Estimates.  This may be an obvious implication of the recently released data, but policymakers and researchers alike should pay special attention to potential spillover effects of the lower-cost premiums in the individual marketplaces into the small/mid and large group markets.  Certainly, the debate over whether large employers will migrate employees into exchanges upon reviewing the recently released data will continue, but the premium data begs the question of whether lower-cost options can be reproduced in other markets, or if the individual health insurance marketplace could become the default insurance choice for the majority of the country.  While this may not seem relevant for October 1, plans and providers are already preparing for 2015 contracts, benefits, and network design, so it will become increasingly relevant in the coming months.

In summary the initial news from states which have already released data, as well as the recently released federal data, holds great promise and opportunity.  Advanced thought leadership from health care stakeholders can help identify solutions to the aforementioned policy considerations in real time.