State and federal health insurance exchanges stemming from the Patient Protection and Affordable Care Act (ACA) offer medical coverage for families and individuals that would have otherwise had little opportunity to obtain a health plan and healthcare access. Individuals that are unable to afford health insurance through other means, such as employer-sponsored health coverage, now have the ability to obtain medical insurance through the health insurance exchange system and its tax subsidies.
The individual mandate included in the Affordable Care Act requires every eligible American resident to have healthcare coverage or else risk a tax penalty. The health insurance exchanges, along with voluntary Medicaid expansion among select states, has allowed more American families to comply with the individual mandate and ensure healthcare access.
At this point in time, the Affordable Care Act has brought the uninsurance rate in the country to record-breaking lows. Approximately 20 million people have acquired healthcare coverage due to the legislation.
Ever since the ACA became law and the exchanges were established, the number of people who gained health insurance has been growing steadily. Last year, Department of Health & Human Services (HHS) Secretary Sylvia Burwell predicted that at least 10 million more people will enroll in healthcare coverage through the health insurance exchanges in 2016.
Additionally, the HHS report noted that about 80 percent of the people who will obtain health plans through the exchanges will be eligible for financial assistance from the federal government. Burwell also spoke about the high levels of satisfaction that consumers are showing for the health plans available on the health insurance exchanges.
Nonetheless, it is important to note that the federal government’s prediction that individuals with employer-sponsored coverage would move to the exchanges has not, as of yet, occurred. The majority of those who gain coverage through the exchanges include low-income young adults. In order to strengthen the opportunities available through the exchanges, this market may need to serve a more expansive population.
How payers can successfully serve consumers through the ACA exchanges
Health payers have faced some challenges when it comes to selling plans through the ACA health insurance exchanges. Some major insurers have even faced significant financial losses due to the way the ACA has changed some of the traditional factors of insurance coverage.
For instance, the ACA has required every eligible American to purchase health coverage while also expanding Medicaid, keeping young adults on their parents’ health plans until age 26, mandating payers cover all costs of preventive care, and eliminating the pre-existing conditions clause.
All of these factors have changed the way payers can operate, but there are specific actions insurers can take to successfully operate through the ACA health insurance exchanges. First, payers can take advantage of the competition available through the marketplace and meet consumer needs ahead of other insurers.
Payers can also incorporate spending and utilization data from a much larger section of consumers, and use that information to improve population health management and care coordination on the provider side.
When this information is shared across relevant provider systems in a timely manner, payers and providers can work toward preventing disease and more serious health concerns by targeting patients at risk of certain medical conditions before they develop serious and costly complications.
Payers should also pay attention to how they recruit consumers, especially through their websites. Since the majority of consumers research and purchase their health insurance online, payers may wish to renovate their websites to deliver a smooth and intuitive experience for consumers. The Clear Choices Campaign advised payers to develop user-friendly options with more clarity regarding benefits. Additionally, it is vital for payers to clearly spell out the total costs of a health plan.
Overcoming the challenges associated with the ACA exchanges
Some of the financial challenges of the ACA insurance exchanges have led a few notable insurers to make some important decisions regarding their participation in the system. UnitedHealthcare, for instance, has dropped out of the exchanges, while Aetna has decided it will not further expand in the exchanges and may drop out of this marketplace in the future.
Many others may consider dropping out of this marketplace as well, said Merrill Matthews, a resident scholar at the Institute for Policy Innovation.
“UnitedHealthcare doesn’t feel like it can stay profitable in that group of business and it would indicate that others might be struggling as well,” Matthews told HealthPayerIntelligence.com.
“Several insurers came out and said that they’re still committed to being here, but it might indicate the death spiral that we’re concerned about in the exchanges. There’s been a long-running concern that what the exchanges will ultimately be is the place where the people who are the sickest and need subsidies from the federal government will reside.”
“The question comes about – would even some of those people be able to buy cheaper insurance, even considering the subsidies, outside of the exchange if a death spiral initiates. If so, does that ultimately make the exchanges unworkable?” wondered Matthews.
Federal agencies will need to address a number of challenges in order to create a more functional health insurance marketplace. Health payers and vendors may need to change manual systems used for payment and eligibility and HHS may need to work toward creating a more timely and efficient system to deliver payments.
“UnitedHealthcare doesn’t feel like it can stay profitable in that group of business and it would indicate that others might be struggling as well.”
Payers may need to incorporate risk assessments and error rates as well as bring in accurate internal controls to better determine plan eligibility among beneficiaries. Health payers and federal agencies will need to work with qualified contractors to ensure stricter oversight and security of the health insurance exchanges.
When it comes to consumer data collection, payers and regulators will need to improve data privacy and security when sharing information between state agencies, federal sources, and commercial payers. Health payers will also need to work with their consumers and employers to improve enrollment rates and manage high costs.
“People are moving to high-deductible health insurance policies because those are the only ones really affordable under the Affordable Care Act. The health insurance profession has long known that high deductibles help control healthcare spending,” Matthews said.
“The more people pay out of their own pocket for healthcare, the less upward pressure you have on healthcare costs because people are making their own choices and looking for value for their healthcare dollar when they’re spending their own money.”
“What the Affordable Care Act was intended to do was to bring everyone into a relatively low deductible, low co-pay health insurance policy that was going to cover the vast majority of their expenses. What we have are very high-deductible policies that are forcing people to pay for an awful lot of care out of pocket that they used to pay for with health insurance,” he said.
The biggest benefits of the health insurance exchanges
The main benefit of the Affordable Care Act and the health insurance exchanges is the addition of 20 million people to the ranks of covered patients across the United States. Additionally, state exchanges like the one in California are looking to target more costly hospital care and remove these providers from their network. The data now available through these healthcare reforms allows payers to more closely align their interests and reduce spending by targeting expensive hospitals.
According to CMS Acting Administrator Andy Slavitt, the ACA has brought another positive to the healthcare industry. He believes that the ACA exchanges have actually boosted patient engagement - a clear benefit for consumers as well as providers.
Because consumers have more choices, they are more likely to educate themselves about their options in order to choose the best plans for their needs. Higher deductibles and more out-of-pocket costs are also prompting additional engagement as patients become choosier about the care they receive.
“Marketplace consumers are much more engaged and increasingly educated about what they purchase particularly compared to other health care consumers,” Slavitt stated at the Marketplace Innovation Conference.
“Seventy percent of renewing consumers on the Federal exchange came back to the exchange to proactively choose a plan instead of opting automatic enrollment. That creates millions of opportunities for consumers to find the right offering at every open enrollment.”
Health payers will need to work with government agencies to ensure they continue seeing these benefits bring a bigger advantage to their company as they operate through the health insurance exchanges.