The Rest of the Story on Health Exchange Enrollment

By tomorrow morning, the tally of enrollees in health exchanges will be between 6 and 7 million. Many of these will not finalize their paperwork until April 15, and many more might not pay their premiums. Nonetheless, given the underwhelming rollout of Healthcare.gov, and well-funded campaigns in some states to discourage enrollment, the number is impressive. But the rest of the story is more important. 

In coming weeks, these questions will be answered:

  • How many of these new enrollees will actually pay their premiums next month and be insured?

  • Are the new enrollees healthy or sick and in need of medical attention? How will the delivery system respond to these needs?  

  • Did the penalty induce enrollment, or were other factors more important to individuals? Was it the attractiveness of subsidies or something else?

  • Will troubled state exchanges (like Oregon, Maryland and others) try to fix their platforms, outsource to successful state exchange operators (like Kentucky/Connecticut) or invite the federal government to take over? What’s the long-term plan for the 14 state-run exchanges, and how will they be funded? And what’s next for Healthcare.gov? Is it fixed?

  • How will employers that provide health coverage assess the viability of health exchanges in their benefits strategies? Can these exchanges serve as a viable marketplace for employee insurance purchases (and allow employers to shift purchasing responsibility to their employees)? 

  • What is the long-term impact of health exchanges on the private health insurance industry? Is it a critical marketplace for their products? What’s the future of the individual insurance market?

  • And was the goal for health exchange enrollment—‘to reduce the ranks of the uninsured’—achieved if it turns out a significant majority of the new enrollees were previously covered?

No doubt, the muscle of the administration in tandem with efforts in many states contributed to the avalanche of late enrollment in March. Skeptics about the Affordable Care Act will likely discount the effort, noting it’s too soon to know the full impact of the enrollment push. And proponents are unlikely to say “I told you so” because they’re are sensitive to the political risk associated with support of the ACA.

The enrollment milestone is important because it signals the continued viability of the Affordable Care Act and assures its prominence in the upcoming election cycle. But it’s only a small part of the story of health reform and the role private insurance plays. There’s much more to the story.

Policy and Government news: 

  • Supreme Court hears employer challenges to ACA: Last Tuesday, Justices heard Sebelius v. Hobby Lobby Stores and Conestoga Wood Specialties v. Sebelius—two challenges to the ACA from employers seeking reversal of ACA requirements that all for-profit companies cover contraception, including sterilization and abortion, in their employee benefits plans. Churches and religious nonprofits were exempted from the requirement. At issue: does a for-profit company enjoy the same religious protection freedoms as individuals and churches. The court’s decision is expected by its adjournment this summer.

  • Circuit Court hears challenge to federal subsidies: Tuesday, the US Court of Appeals for the District of Columbia heard Halbig v. Sebelius which challenges the ability of the federal government to provide subsidies to those newly-enrolled through the federal health exchange since the ACA stipulates subsidies are accessible ‘through the state-run exchanges’.

  • Medicare physician payments fix passed in House: last week, the House passed a bill to avert the 24% March 31 Medicare physician payment cuts. The bill delays, not permanently fixes, the scheduled cuts and included one year delays in ICD-10 implementation, the “two midnight” rule,  and DSH payment cuts. The Senate will likely vote today.

  • ACA enhancements proposed by Senate Dems: Thursday, six Democratic Senators proposed 3 enhancements to the ACA: 1-the creation of a high deductible Copper Plan in addition to the ACA’s four metals (Bronze, Silver, Gold, Platinum), 2- expansion of small-business tax credits, and 3-changes to Healthcare.gov that would eliminate enrollment deadlines. 

  • FDA honing in on food safety: The FDA’s effort to reign in abuse of antibiotics in the food supply chain is getting traction. In December, it announced its effort to get drug manufacturers to modify their labels to curb use in animal feed. Last Wednesday, 25 of the 26 antibiotic manufacturers of most concern to the FDA agreed to remove language referencing “growth promotion” in selling their antibiotics. The drug makers also agreed to stop selling their drugs over the counter. Instead, they’ll be available when prescribed by a veterinarian. 

Industry news:

  • Autism sought in the workplace:  Germany-based SAP aims to hire 650 with autism by 2020 because it believes people with autism spectrum disorder tend to pay greater attention to detail. They’re well suited to jobs in de-bugging or testing software products.  (Shirley Wang“Companies Find Autism Can be a Job Skill” Wall Street Journal March 28, 2014)

  • Walgreens 2Q results: Last week, Walgreens told investors it would close 76 stores in the second half of 2014 and net new stores will be 55-75 for the year. CEO Greg Wasson said fewer new generic drug introductions hurt the retailer’s profit margin, which slipped from 30.1% in the 1Q to 28.8% in 2Q. For the quarter, same store sales were up 4.3%, front store sales up 2% and pharmacy up 5.8%

  • Glaxo voluntary recall of diet pills in US, Peurto Rico:Last week, London-based GlaxoSmithKline announced its recall of Alli (generic orlistat) after finding capsules and tablets in 7 states that weren’t Alli. The company is reviewing its manufacturing and packaging operations to find the problem.

Quotable

  • “In the era of celebrity politicians, it is difficult to have substantive dialogue. I think sometimes it’s been harmful, some of the biggest casualties in all of that have been the facts” Congressman Mike Rogers (R-MI) in announcing his intention to leave congress March 28, 2014. Chm., House Intelligence Oversight Committee

  • "Our constant fear of diseases—stoked by ads for drugs to combat illness—may be one reason behind the boom in biotechnology stocks. More likely, however, is our fondness for a good story and red-hot stock. Biotech has been so hot the past two years that the sector is starting to raise red flags. And, while it may have longer to run, it’s an area that the weak of heart and the short of cash should avoid." John Waggoner “Biotech Funds are for the Fearless” USA Today March 28, 2014

  • "There’s not a single case which says that a for-profit enterprise cannot make a freedom of religion claim." Justice Antonin Scalia March 27, 2014 in Supreme Court testimony Hobby Lobby v. Sebelius

Fact file

  • Corporate profits in 4Q: up 4.9% vs. 4.1% increase in GDP unadjusted for inflation; profits as a % of GDP were up to 11.1% vs. 5.4% average in the 1990s. S&P Capital estimates S&P 500 company  profits will increase 7.4% in 2014 and sales will increase 3.8% (US Department of Commerce Thursday, March 27, 2014) 

  • Biotech stocks hot: average health and biotech fund up 5.4% YTD vs. +.2% for average stock fund; 25 IPOs in biotech YTD vs. 45 in 2013 (John Waggoner “Biotech Funds are for the Fearless” USA Today March 28, 2014)

  • Nutritional supplement use decreasing, probiotics increasing: use by women declined from 58% in 2012 to 46% in 2013; vitamin C purchases were down 4.2% while probiotics increased from 31% to 37% (ConsumerLab.com)

  • Sleep meds: 8 million in the U.S. take sleep medication routinely; the drugs enable sleep 22 minutes faster than a placebo (CDC) 

  • Cigarette use: Smoking rates for those who smoked 100 cigarettes in their lifetimes has fallen since 1996: men from 27.3% to 22.2%, women from 22.2% to 17.9%; KY, TN and WV had the highest rates while UT and western states had the lowest (Institute for Health Metrics and Evaluation, University of Washington)

  • Medical school debt: Median amount for borrowers in 2012--$161,772 vs. $123,203 in 2004 (New America Foundation)