Uncertainty Is Certain in 2018 Healthcare

Wow, this has been an exciting week – the health care bills / withdrawals / repeals abound, but no resolution is in sight.

We do know that repealing the Affordable Care Act (ACA) will leave millions more without health coverage than under the current regulations – the CBO put the number at 32 million by 2026 (but, we’ll also lower the deficit by $473 billion).

While that does not seem to have support from the Senate, the uncertainty of the health care regulations is creating a lot of turmoil for insurance companies. How can you plan for the future, when the future of the health care rules might change?

NPR and Kaiser Health News (KHN) set out to see how much this uncertainty is costing consumers. If you were not aware, the insurance premiums were due to the respective state insurance boards in June. Many companies have been asked to revisit their rates and make adjustments, but what does all of this uncertainty do to the pricing?

A lot depends on the Federal subsidies in the marketplaces. If the current administration stops these subsidies in an effort to “gut Obamacare markets,” it will eliminate the “affordable” out of the Affordable Care Act for millions of Americans and many (especially healthier) people will be forced to drop their coverage due to the sharp premium increases.

It ends up, this uncertainty may cost consumers a lot next year. Per the NPR / KHN report, “In Pennsylvania, premiums next year without the subsidies would increase by an average of 20 percent, compared with 9 percent if they remain intact.”

The Pennsylvania Insurance Department further states that “Statewide average rate increases will be 36.3 percent if the individual mandate penalty is eliminated and cost-sharing reduction funding is also cut off.”

Average premiums in Pennsylvania in 2017 (without subsidies) are $533/month. That means, 2018 may have the following average premiums for those in Pennsylvania:

ACA Chart 2018

That’s just one state’s projections, and keep in mind that these are average statistics in Pennsylvania. Some will experience less and some more that what is noted above.

I am not sure who could lose their up to 64% subsidy (average of $340/month or $4,080/year in 2017) and then potentially shoulder an additional $2,300+ premium increase next year due to policy changes. That could be about $6,400 in additional premiums next year alone.

It does look like there may not be a full understanding of what health care premiums are from our current leader. I think $12-a-year premiums sound great, but even those of us with employer subsidized coverage don’t have that kind of deal.

Whatever the future holds, I hope we do not take coverage away from millions, either through mandate or affordability. Many employers are also struggling with affordability issues, and certainly do not receive any Federal assistance.

I do agree that all sides need to come together and come up with something to help fix the situation we are now in. There will be winners and losers in this process, but keeping the uninsured as the ongoing loser hardly seems fair.

However, this uncertainty may kill us before we ever get there…

Are you considering adding an ACO plan?

Employers are warming up to Accountable Care Organizations (ACOs), but is that the right option for your employees? There are already great resources on how ACOs work [i] – and I am not going to recount these details for you here. Instead, I want to help you determine if these types of plans might be a good fit for your employees.

ACOs are a product of the Affordable Care Act (ACA), but they are not completely unfamiliar territory for those of us who have been around a while. HMOs have a rather negative connotation to many of us who were enrolled in them 20-ish years ago, but they are very much an older and less tech savvy model of the ACO. If an ACO is streaming music from the cloud, and HMO is a cassette tape. They may sound alike, but they are fundamentally different.

Service Area Issues

A few important aspects of these plans have changed. Like HMOs, ACOs are specific to a particular service area, as they have to have a hospital network to succeed. So, to the extent possible, you will need to have a carrier knit together your ACO offerings if you have multiple locations, or have a benefits administration system that is smart enough to know who is eligible for which plan (and also reassign eligibility should an employee move service areas).

Cost Savings

The older HMOs relied on restrictions to care to drive costs savings. This added more administrative hassle (to both members and providers) and potentially to inappropriate restrictions for patients whose doctors were not good at documenting their case for the necessity of the care.

As the pendulum swung from the old model of restriction to a newer one of freedom, the new way to help control costs was to make the member foot the first part of the bill to a greater extent than they had to do in years – hence, the birth of the high deductible health plan (HDHP), or consumer driven health plan (CDHP).

Many employers added HDHPs/CDHPs over the last few years – we were looking for any way to help mitigate the rising medical plan trend. The main problem with this approach is that consumers really don’t have any easy ways to understand health care costs, much less become a smart consumer. 

Yes, we were all surprised when we went to the pharmacy in January and had a $300 fee, but that did not necessarily help us become better consumers. Many of us just grumbled under our breath and paid the bill – especially if our employer help us with some seed money in our HSA/HRA (or other savings) accounts.

But what about all of those great consumer tools? Even the best built tools and resources only help for some situations – I am probably not going to search for the lowest cost emergency room when I think I am having a heart attack. Nor do I necessarily understand why one place might charge more than another – maybe the more expensive provider is better quality? How are we to know, when health care quality is not well defined by anyone, much less your employees?

Accountability

For an ACO to work correctly, the accountability shifts from the member in the HDHP back to the provider, but with the technology to make the process (hopefully) much smoother. That sounds great, right? Doctors can help me navigate the system, their nurses will call and check on me when I forget to refill my diabetes medication, and they will help me navigate the complex health care systems.

However, we’ve just spent the last few years telling members that they had to be accountable!? No wonder employees are always confused. It’s like we’ve just told them butter is better than margarine, after years of pushing margarine. We give up!

That said, many of your members may really like the concept of having more savvy advocates for their health care – especially if they have a chronic condition or if most of their providers are already in the narrower network. Since I am a visual person, here’s how I like to think about how ACOs fit on the spectrum:

ACO Graphic

So, where do your employees want to fall on that spectrum?

  • Are they constantly confused about their plan and what is/is not covered? If so, they should move to the left.
  • In control and only asking very detailed questions? Maybe they can venture more to the right.

Savings

Will an ACO save your employer money? I am not sure we really know the answer to that yet. We do know thahave these plans do tend to attract the health (when priced at a lower price point) or those who already frequent the network. More time will help us determine if there are really savings to be had by pushing responsibilities back to providers. Unfortunately, the patient also needs to take accountability, including diet, exercise and medication adherence, Somehow, we can’t figure out how to create a plan that holds everyone accountable. I don’t think PPOs do that well, either.

Network Size

The other factor on this, of course, if the network size – ACOs typically have a significantly smaller network than most PPOs and HDHPs on the market. Let’s hope that some of that changes over time, as ACOs grow their network and integrate providers into their systems. 

For now, that’s another confusing factor in all of this – especially when many providers do not turn someone away when they show up and they are not in the member’s plan. Some even use non-network status this as a strategy and submit excessive bills to employer plans to exploit loopholes in non-network provider coverage. The usual and customary rates they receive are greater than the network price, so they waive any member fees and go after the insurance company with appeals and even lawsuits.

That’s exactly why some more provider accountability sounds so good to me right now, and I think (at least for now) ACOs are an option worth considering for many employers. Even if savings are unknown, increased member satisfaction with a more guided model may be the,right fit for your population, or even for you.

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[i] See the following resources:

Can we have an adult conversation about health care reform?

This video is about a week old, but I just found it today:

If you have the patience to watch it, John Green of the vlogbrothers (and an author of teen fiction) sums up the issues facing us with health care reform in about seven minutes. It is a bit like watching a whirling dervish, but they clearly researched the issues and have a handle on some of the trade-offs at stake.

It’s worth a watch, if only to see it all explained rather succinctly!

What do people want from health care reform?

According to a new JAMA Infographic, most people want lower out of pocket costs from their health plan. That is hardly surprising given the prevalence of cost shifting that has occurred by most employers in recent years. How that will happen, though, is not an easy fix for both employers and ACA plans.

Lowering pharmacy costs are also universally important to those surveyed. This is also probably due to the higher deductibles that people now experience and the transparency of these often very high costs now that co-payments are less prevalent. People now understand just how expensive pharmacy benefits are – except for those using specialty medications. I am sure many of these users are still sheltered for the full costs of these drugs. Manufacturer coupons are also not helping with this issue.

These data also confirm that the ACA now has a more positive image than in months past – maybe because the threat of it going away has made it more valuable to those who benefit from it (including those in employer-based plans who have benefited from richer benefits and broader coverage, even with the associated increased costs).

As you can imagine, the amount of Federal funding going toward assistance for lower income individuals is clearly divided along party lines. This is also the case around the Federal government’s involvement in health care, in general.

The main issue for legislators is that only 19% of those polled want the ACA repealed without a replacement in hand. That’s too small, even considering any margin of error, for congress to consider this as a viable option (at least without further push-back from constituents).

Click the link above to see more. Good insights into how your employees may feel about their plan, as well…

AHCA Pulled

Well, the big plan to replace the Affordable Care Act (ACA) did not happen, so what is an employer to do?

The good news is that you are (hopefully!) already doing it. Keep on keeping on!

The bad news is that all of that relief you were seeking from the AHCA is now gone, so we need to continue onward with the ACA for now.

First, keep up with your reporting and all other ACA requirements. I know the IRS does not require individuals to report their insurance coverage on their tax forms anymore, but you are still required to report to individuals and submit your federal filing on time.

Next, think ahead. The dreaded “Cadillac Tax” is still looming large in 2020. That means that the 40% excise tax for more generous medical benefits is still out there, and you should probably be planning toward falling under the limits in 2020.

What does that mean? Right now we are not so sure. We do know that the prior limits that were originally set to go live in 2018 will be indexed for the future implementation dates. However, we don’t yet know exactly what they will be. The 2018 limits were $10,200 for individual coverage, and $27,500 for family coverage, so using those numbers are the best bet for now.

We were also promised some relief to adverse selection including some allowance for an older/sicker workforce. That sounds like a step in the right direction, but still makes planning for 2020 difficult, at best.

My guess is that the 2020 implementation will be further delayed, as we debate the ongoing ACA (or any replacement) and how we pay for these now entitled benefits. Employers need to stay on top of compliance issues, and not bury heads in the sand. The year 2020 will be here sooner than any of us want.

Stay tuned and thanks for reading.