Reprinted from INSIDE HEALTH INSURANCE EXCHANGES, a hard-hitting newsletter with news and strategic insights on the development and operation of federal, state and private exchanges.
By Steve Davis, Managing Editor
July 18 2013 Volume 3 Issue 12
Some of the nation’s largest health insurers will do little more than dip their toes in the state insurance exchange waters this fall, while their smaller competitors jump in with both feet. But the individual market outside of exchanges is in no danger of drying up, and actually could get a wave of non-subsidized enrollees searching for a less complicated enrollment process.
UnitedHealth Group in May confirmed that it would participate in just a dozen state exchanges — fewer than it had previously estimated. Aetna Inc. intends to sell non-group coverage on exchanges in slightly more states, 14, but has indicated it could scale that back if those markets don’t appear profitable, or if the exchanges aren’t ready. Cigna Corp. intends to participate in just five state exchanges.
Provisions of the Affordable Care Act (e.g., essential health benefits, risk adjustment, guaranteed issue) apply to products inside and outside of exchanges. And the single-risk-pool requirement makes clear that exchange and non-exchange plans are pooled together for rate-setting purposes, so that the pricing for products sold on and off of exchanges are the same. But despite the plan-design, pricing and provider network similarities, the non-exchange market might be seen as less risky by some carriers.
“From what we can see, I think there is going to be a robust marketplace outside of the public exchanges,” says Bob Hurley, senior vice president of sales and operations at eHealth, Inc. Some large carriers, he says, see advantages to staying off of the exchanges, at least in some markets. “They’re being selective about which public exchanges they work with…and are counting on the market outside of exchanges to really balance their business on the public exchanges, from a risk perspective.”
Although people with annual incomes up to 400% of the federal poverty level will qualify for federal premium assistance, the sliding scale means subsidies for those at the high end of the spectrum are very low. “There will be some question as to whether it is worth the consumer’s while to go through the exchange process, subsidy application and income verification to qualify,” he says.
Moreover, while the products must be identical, the back-end functions (e.g., processing applications and collecting premiums) will be anything but. “Carriers are going to want to capture the individuals who are not subsidy eligible and who want a simpler process,” Hurley adds.
But Catherine Murphy-Barron, a principal and consulting actuary at Milliman, says it’s too soon to know if consumers will prefer buying coverage outside of the exchanges. Exchanges will provide “a website that creates a convenient way for a buyer to compare products and choose a plan that fits their needs. If the exchange website is user friendly, an individual may be inclined to buy on the exchange because of the convenience,” she tells HEX.
Health insurers that participate in exchanges are not required to sell coverage on the outside, but if they do, the plan designs offered inside and outside must be identical, according to preliminary guidance from HHS. Among other things, the benefits package, provider network, premium rates, service areas and cost-sharing structure of the two offerings must be identical. Products sold outside of an exchange also will need to satisfy the same actuarial value (AV) metallic tier requirements — platinum, gold, silver or bronze — as those sold inside.
Carriers that participate on an exchange must offer at least one silver and one gold plan, but some carriers might prefer to build only bronze or catastrophic health plans, and make them available only outside of the exchanges, says Monica Lindeen (D), Montana’s state auditor and vice president of the National Association of Insurance Commissioners.
And the extent to which issuers are motivated and able to tweak offerings and prices outside the exchanges is significantly constrained by rules that govern rating, guaranteed issue and participation in risk adjustment on and off the exchanges, adds Deborah Chollet, Ph.D., a senior fellow at Mathematica Policy Research. In addition, federal rules reinforce market stability in several ways, by requiring that:
(1) Open-enrollment periods, if limited, be the same on and off the exchange;
(2) Issuers in the individual market (or combined individual and small-group markets) set index rates and plan-specific pricing just once per year; and
(3) Issuers report individual or small-group rate changes to CMS.
And because plans outside of exchanges must participate in risk adjustment and are subject to the minimum medical loss ratios, “presumably there won’t be as much benefit to attracting young invincibles as in the past,” says Chollet.
Blues Plan Has Some SHOP Concern
Independence Blue Cross filed 13 non-group products with 36 variations — to account for the “many different compliance aspects of the law” — with HHS and the Pennsylvania Insurance Dept. (PID), says Brian Lobley, senior vice president of marketing and consumer business. He says there is some concern that products sold to small employers via the Small Business Health Options Program (SHOP) could have a disadvantage against plans sold outside of the exchange.
While carriers that have filed products for SHOP are locked into their prices, it’s unclear if carriers can opt not to participate and have the ability to modify products and prices throughout the year. “We’re working with the [PID] and the feds to make sure we have a level playing field,” he explains. “We want to be able to offer products on SHOP, but we also don’t want to lock in so that our [off-exchange] competitors can come in and make adjustments on the fly.” Insiders interviewed by HEX, however, agree that carriers selling products off of exchanges aren’t likely to be able to game the system.
“Any fear about changes being made to plans midyear…that is not going to be the case,” Lindeen tells HEX. “Everyone was very concerned about that initially and wanted to be sure we didn’t allow any issues with un-level playing fields between what is offered inside and outside of the exchanges.”
http://aishealth.com/archive/nhex071813-02
No comments:
Post a Comment