A year ago, major new Patient Protection and Affordable Care Act (PPACA) programs and health insurance rules were falling toward the health insurance community like a hammer. Today, the PPACA hammer may finally be touching the insurance community’s hair.
Employers and insurers are getting ready to send out a blizzard of PPACA forms.
Insurers are transferring $4.6 billion in cash to one another through the PPACA risk-adjustment program, which uses cash from health insurers with low-risk enrollees to compensate insurers with high-risk enrollees.
Struggling insurers are frowning at a $2.5 billion cut in the $2.9 billion in cash they were expecting to get from thriving insurers through the PPACA risk corridors program.
Many of the new, regulation-hampered Consumer Operated and Oriented Plan (CO-OP) carriers spawned by PPACA are failing, in part because of the risk corridors program shortfall.
Chief executive officers of some publicly traded health insurers seem disappointed about the performance of their public exchange plan operations.
Of course, the big health insurers reported strong profits for the first three-quarters of 2015. U.S. hospital companies have been doing fine. Surveys show the U.S. uninsured rate is continuing to fall.
Maybe the health insurance community has thick hair. Maybe the PPACA hammer will just bounce off the hair in 2016, without doing any serious damage to the community’s skull, and the market will look about the same in 2017 as it did in 2015, or 2013, or 2003.
But maybe this time around the hammer will get through the hair and crack the skull.
For a look at 10 ideas of what might happen in the coming year, and, at the end, a self-assessment of how we did with our forecast for 2015, read on.
1. Letting large numbers of CO-OPs fail will come back to haunt candidates in both parties.
The CO-OP program lured dynamic, media-savvy health policy people into starting plans, and vibrant, media-savvy consumers into joining the plans.
Republicans openly did what they could to strangle the CO-OPs. The Obama administration then proceeded to let many CO-OPs drown without doing much more than mew, slightly sadly. Earlier news stories suggested that the administration structured program funding requirements to keep the CO-OPs from pestering the established insurers.
The conventional wisdom is that policymakers in both parties contributed to the demise of plans that were popular with young invincibles with large Twitter followings. That seems about as wise as tapping a hornet’s nest with a fly swatter.
The failure of Health Republic Insurance Company of New York could lead to especially serious public relations problems: That CO-OP was created with help from Freelancers’ Union, a group for freelance workers ─ including hordes of personal essay writers, documentary filmmakers and YouTube video makers who enjoy telling the world about their customer service problems.
2. At least one CO-OP will grow up to be a gorilla.
At press time, some of the surviving CO-OPs seemed to be alive solely because their regulators were slow to file receivership petitions.
Others seemed to really be alive.
Any CO-OP that lasts until the end of 2016 may have steely managers, ornery nonprofit supporters, and a lack of any warmth whatsoever for traditional health insurers, for Republicans, or for the Obama administration officials who left them dangling.
3. At least one traditional health insurer will come down with a serious case of the same flu that’s killing the CO-OPs.
As the CO-OPs were perishing from the risk corridors funding gap, few other small or midsize plans rushed forward to talk about how strong their finances were.
One possible conclusion: Some traditional health insurers might be coping with risk corridors and risk-adjustment problems of their own.
4. Medicaid expansion will last as long as federal money is there to pay for it, and pretend to exist for years after that.
The money is supposed to keep flowing in 2016. In a few years, when the flow of extra federal money shrinks, or PPACA opponents cancel it, most expansion states will respond by letting current Medicaid enrollees keep their coverage, changing the requirements for new applicants, and reducing the value of the benefits provided. Good luck if you’re a new Medicaid applicant who actually wants to use your benefits.
5. The candidates on the ballot in November 2016 will have to show they know how to set up and run the ambitious programs they’re promising to build.
Whenever a Democratic candidate, in particular, describes some great new program proposal, the Republican opponent’s instinctive response will be, “So, why will that program work any better than the risk corridors program?”
6. Private exchanges will crowd out most of the public exchanges.
Why would most states spend money to run a glitch-plagued Web-based supermarket for health insurance when they could palm the job off on a private company, and let the private company handle glitch complaints?
7. At least one public exchange will grow like a weed.
The typical public exchange may be an orchid living off of PPACA nectar, but some may prove to be self-sustaining dandelions.
Possible contenders for the Dandelion Public Exchange (DPE) designation: Covered California (it’s big); Connecticut’s Access Health CT (it seems to get computers); and Connect for Health Colorado (it figured out how to sell vision plans).
8. The first mandatory Internal Revenue Service (IRS) Form 1095-B insurer coverage reporting year and mandatory Form 1095-C coverage offer reporting year will go poorly.
Who knows if any organization in the country will actually mail an accurate 1095-B or 1095-C coverage reporting form to the correct coverage holder by March 31?
But, on the bright side, for the affected entities: The reporting year will probably go so poorly that any filer that does much more then send one form stating “Heck if we know how much coverage you had” to Mickey Mouse will probably escape noncompliance penalties.
9. Trying to bring back any but the most limited form of medical underwriting will lead to a ferocious backlash.
Even outside the insurance community, many people seem to get the idea that forcing an insurance company to take in applicants who have been voluntarily uninsured for years, after those applicants develop a serious illness, is absurd.
But no one is bragging about clear-cut proposals for returning to the kind of medical underwriting that let insurers deny coverage to applicants who were a little overweight or simply had common risk factors, such as high blood pressure. In addition to adding annoyance and making instant online sales more difficult, bringing back medical underwriting could make patients leery of sharing the kinds of information plans want for risk assessment and risk management programs.
10. Policymakers will look for pretty ways to package limits on benefits.
Consumers are learning to hate high out-of-pocket costs.
Providers, and sick consumers, hate thin provider network directories.
Representatives for sick people can get bus loads of photogenic sick people into hearings whenever insurers try to use medical underwriting to control costs by shutting sick people out.
The hot new compromise solution may be talk about “condition management” and “quality improvement” pilot programs that limit the amount of care people get, in an indirect way, without anyone having to say in plain English, that the programs limit the amount of care people get, or to directly explain how much various types of health care providers’ revenue will fall.
How did we do?
We’ve been making year-end health insurance forecasts for several years now.
Here’s our own evaluation of how we did at reading the health insurance system crystal balls for 2014 and 2015.
Maybe you can use your own evaluation of our past forecasts to rate how accurate our 2016 forecast might be.
1. For some people, PPACA World will be heaven. RIGHT
2. Exchange managers will get into brutal court fights with the vendors that designed, built and integrated balky exchange enrollment systems. RIGHT
3. In states that have relatively low exchange plan enrollment because of exchange enrollment system problems, doctors, hospital executives, insurers and insurance regulators will send thank-you notes and bouquets to the information technology companies that caused the system problems that held down enrollment. NOT CLEAR
4. The insurers, agents and brokers that sell hospital indemnity insurance, accident insurance, critical illness insurance and other products that are exempt from PPACA underwriting and pricing rules will flourish. NOT CLEAR
5. Health policymakers will start thinking about what PPACA World 1.5, Son of PPACA, or Anti-PPACA World might look like. RIGHT
6. The people directly involved with the dental, vision and disability insurance markets will be looking for someone — anyone — to talk to. RIGHT
7. The flexible spending account (FSA) carryover rule will bite employers and their human resources’ staffers and vendors in the hind parts. APPARENTLY NOT.
1. The story of the PPACA exchange programs and exchange plans will continue to be full of drama. RIGHT
2. The Supreme Court will cause mischief. RIGHT
3. The three R’s fights will get nasty. PARTLY RIGHT
We thought the administration would wiggle budgets hard enough to pay most of what the program owed via the risk corridors program. We were just too cynical to imagine that the program might pay out just 13 cents on the dollar.
4. One of the CO-OPs will have turned out to have gone spectacularly wrong. PARTLY RIGHT
In this case, we were too naïve to imagine how many CO-OPs would fail, how quickly, and with such similar failure announcements.
5. A strong private exchange will start to suck the life force out of one really bad public exchange. UNCLEAR, BUT PROBABLY NOT
6. PPACA Medicaid expansion will grow on (most of) us. RIGHT
Even Matt Bevin, who campaigned to be governor of Kentucky based on wanting to repeal PPACA, now says he favors reforming Kentucky Medicaid expansion program coverage, not eliminating it.
7. Agents and brokers will make a comeback because everyone needs your ability to solve problems. IN PROGRESS
But it’s interesting to see that the more successful public exchanges seem to be talking plenty about strengthening their relationships with agents and brokers.