The Health Exchange Story Line

The following is an excerpt from Navigant Healthcare’s Pulse Weekly. Click here for a complete copy of this week’s article.

The 2015 health exchange enrollment ended last night—extended for a week to accommodate those hit by bad weather and an unexpected late surge in enrollment that forced delays in the system. All signals are that the enrollment will exceed expectations nearing 12 million. And, Healthcare.gov, the federal marketplace platform, did not crash this time accommodating nine million of the new applicants with the state exchanges handling the rest.

Notwithstanding the glitch announced late Friday that 800,000 of 2014 enrollees received erroneous tax information will have to wait until early March to get a corrected statement, the exchange experiment appears to be a success. In all, 37 states elected to have the federal government handle their exchange and 13 states and the District of Columbia chose to go their own route including three (Nevada, Idaho, New Mexico and Oregon) states that used Healthcare.gov as their back-end. Coupling Medicaid expansion in 27 states and the newly insured through the state and federal exchanges, more than 20 million appear on their way to coverage heretofore inaccessible to them.

But there’s more to the exchange story: no one with certainty can notch these results as a big win nor can detractors necessarily claim its defeat. Like everything, insuring the uninsured and expanding access to affordable coverage has proven to be tricky, complicated and expensive and the end game is not yet in sight. Here’s what we’ve learned to date:

  • Consumers want health insurance of some type. They fear going without, but suspect even with insurance, they can be wiped out financially. As employers shift financial responsibility to their employees via high deductible plans that carry hefty premiums nonetheless, the value of insurance will be tested.
  • Insurers have done well as the exchange process rolled out. Profits among the investor-owned insurers have remained strong, especially since passage of the Affordable Care Act (ACA). The Consumer Operated and Oriented Plan Programs (CO-OPs) intended in the ACA to be a mechanism to assure competition against better capitalized insurers by offering lower cost premiums have proven problematic. Congress cut loans to CO-OPs from $6 billion to $2 billion, and many of the 23 CO-OPs are struggling to stay afloat. So the major insurers appear solidly positioned to accommodate the new enrollees with the bigger national plans and strong regional plans having the edge due to the lower margin business they represent.
  • The role and scope of federal oversight of the health insurance industry remains an open item. The ACA placed primary responsibility in the states, but the unexpected predominance of the federal marketplace (Healthcare.gov) and the collaboration between the insurance industry and proponents of the ACA suggests a larger role is possible.
  • The court decision in King v. Burwell combined with the potential backlash from the six million who’ll likely face a tax penalty for not having insurance last year (greater of $95/person up to three or 1% of adjusted gross income for the household) could dramatically alter the course for insuring the uninsured. Governors meeting this weekend in D.C. are discussing Plan B: what happens IF the Supreme Court rules subsidies for the 4.6 million who enrolled through the federal marketplace last year are illegal. The discussion about affordable coverage is far from over nor is the long-term role of Healthcare.gov, state run exchanges and private exchanges settled.

The Affordable Care Act is not likely to be repealed but remains cumbersome to the industry’s stakeholders. It’s goal to reduce cost by changing provider incentives from volume to value is a work in progress; its aim to increase access to affordable insurance apparently proceeding more smoothly though not without glitches.

Many who labored through the exchange enrollment process are hopeful they’re covered and planning visits to doctors’ offices already. The 2015 version of the marketplace was less suspenseful than last year’s fateful rollout, but it’s a long way from done.

Paul

Sources: See special section in Industry Pulse with updated sources and resources about health exchanges. In addition, these sources were used: “Robert Pear, White House Seeks to Limit Health Law’s Tax Troubles,” New York Times , January 31, 2015; Louise Radnofsky, “Wrong Health Tax Credit Statements Sent to 800,000,” Wall Street Journal, February 20, 2015; Abby Goodnough, “Healthcare Success for Midwest Co-Op proves its Undoing,” New York Times, February 16, 2015; “Drew Armstrong, Doni Bloomfield, Obamacare Pays off for Insurers Who Fought It,” Bloomberg Business, January 21, 2015; Kaiser Health Tracking Poll: January 2015Aon Hewitt; Jayne O’Donnell, Laura Ungar, “After Obamacare Surge, Officials Consider Special Sign-Ups,” USA Today, February 18, 2015

The opinions expressed in this article are those of the author and do not necessarily represent the views of Navigant Consulting, Inc. The information contained in this article is a summary and reflects current impressions based on industry data and news available at the time of publication. Any predictions and expectations noted herein are inherently uncertain and actual results may differ materially from those contained in this article. Navigant undertakes no obligation to update any of the information contained in the article.

©2015 Navigant Consulting, Inc.