ACA marketplaces keep chugging along

In the spring, I sounded the alarm on a troubling trend in the marketplaces:ACA marketplaces getting a bit too lucrative for insurers

Well, the solution to that problem--new market entrants--is materializing in many markets.

Covered California draws more insurers after state moves to bolster Obamacare

Those new policies [California's restoration of an individual mandate and creation of state-level premium subsidies] appeal to insurers. They’ve responded by expanding operations in the state, enhancing competition and offering consumers more choices.

California’s ACA exchange is not the only one benefiting from the renewed interest of insurance companies. Other states are expected to see more insurers enter or reenter their marketplaces next year. That’s a critical signal, experts said, that the state-based marketplaces, which cover about 11 million people nationally, are becoming more robust and less risky for insurers — despite ongoing political and legal battles over the ACA.

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Centene, which has 12 million enrollees nationwide, plans to expand into new ACA markets next year [10 new markets!--GB], a company representative said. It operates in 20 states, three of which it entered for the first time this year.

Two startup insurers, launched in recent years in part to serve the ACA marketplaces, also plan expansions in 2020. Bright Health, based in Minneapolis, announced in late July that it will offer ACA plans in six more states, on top of the four it now serves. And New York-based insurer Oscar, which this year offered ACA plans in nine states, including California, plans to enter Colorado, Pennsylvania and Virginia, as well as new areas of New York and Texas.

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The number of insurance companies offering plans in ACA marketplaces has fluctuated. From 2014 to 2016, the average number was between five and six, according to the Kaiser Family Foundation. That number declined to 3.5 last year, following Republican threats to gut or replace the ACA and Trump administration changes to the marketplaces. (Kaiser Health News is an independent program of the foundation.) Premiums in some areas rose 20% to 30%.

This year, the average number of plans ticked up to four.

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No matter how many times, how many ways they try to kill the marketplaces, they just keep coming back.

That's good but more needs to be done. The biggest problem remains that even though premiums have stabilized the price level in the marketplaces has been artificially re-set upwards by the Trump administration's malicious decision to break the system that helps low-and-middle income enrollees afford their deductibles; that decision bumped premium levels up ~34% immediately.

That prices out people who don't qualify for financial assistance for their premiums. (And their coverage levels have fallen: for some reason the Trump administration recently celebrated those people falling out of the market. ) A growing number of states have implemented reinsurance programs to bring their premium levels back down to earth. Every state should be doing this and enabling that should be a federal priority.

And, as always, we should celebrate the fact that the ACA cost far less than promised and put that money back into the program: fix the family glitch, eliminate the income cap on premium assistance, and lower the financial exposure of those receiving assistance. Make premiums and deductibles alike more affordable for consumers. Then we'll see enrollment rise and even more market entrants, reinforcing the competitive downward pressure on premiums we saw in the early days of the marketplaces when there were numerous competitors virtually everywhere.

(And if we really want to get nuts, tie Medicare Advantage and/or Medicaid managed care participation to marketplace participation. And consider ways to make it more attractive for employers to release their employees into the marketplaces--with their employer subsidy--under an employee choice model. Or at least bring back something like the long-repealed employee free choice vouchers to give people control over their own decisions. Recapture the spirit of '14!)

Offering more government subsidies does not lower the (overall) cost of X, it only lowers the appearance of the cost of X to those getting the subsidies (when they see a bill for 1/2 of the cost of X then that is what they perceive the cost of X to be).

Why not treat PPACA like we treat SNAP and give "the poor" $X/month on their PPACA cards (which can only be redeemed by medical care insurance providers (free to charge whatever price they wish) and tell them to shop for insurance (public, non-profit or for-profit) wisely?

ttwtt78640 said:

Offering more government subsidies does not lower the (overall) cost of X, it only lowers the appearance of the cost of X to those getting the subsidies (when they see a bill for 1/2 of the cost of X then that is what they perceive the cost of X to be).

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Not necessarily. More subsidies means a larger customer base and ultimately a more competitive insurer market. Studies of the marketplaces to date have produced the--obvious--result that greater insurer competition puts downward pressure on premiums. And in a world with guaranteed issue and community rating that pressure doesn't come from shedding risk; aggressive competition on premiums puts pressure on insurers to address their costs in the only way they can under the current incentive structure: 1) aggressive price negotiation with providers, 2) better population health management, 3) consumer decision-making tools and benefit design privileged lower-cost providers, and 4) facilitating re-organization of the health care delivery system through alternative payment arrangements.

All of those put direct pressure on costs.

Why not treat PPACA like we treat SNAP and give "the poor" $X/month on their PPACA cards (which can only be redeemed by medical care insurance providers (free to charge whatever price they wish) and tell them to shop for insurance (public, non-profit or for-profit) wisely?

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That is what we do. Subsidized marketplace shoppers have available to them a flat dollar amount that can be applied to any plan sold in the marketplace.

Greenbeard said:

Not necessarily. More subsidies means a larger customer base and ultimately a more competitive insurer market. Studies of the marketplaces to date have produced the--obvious--result that greater insurer competition puts downward pressure on premiums. And in a world with guaranteed issue and community rating that pressure doesn't come from shedding risk; aggressive competition on premiums puts pressure on insurers to address their costs in the only way they can under the current incentive structure: 1) aggressive price negotiation with providers, 2) better population health management, 3) consumer decision-making tools and benefit design privileged lower-cost providers, and 4) facilitating re-organization of the health care delivery system through alternative payment arrangements.

All of those put direct pressure on costs.



That is what we do. Subsidized marketplace shoppers have available to them a flat dollar amount that can be applied to any plan sold in the marketplace.

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Yet none sold outside of that government run marketplace. The government market place sells only banana splits (ice cream, bananas, whipped cream and cherries in fixed proportions) yet the private market place offers any of those items (and many others) as ala carte items - letting you save money by not adding any or all of those to suit your desired desert recipe.

ttwtt78640 said:

Yet none sold outside of that government run marketplace. The government market place sells only banana splits (ice cream, bananas, whipped cream and cherries in fixed proportions) yet the private market place offers any of those items (and many others) as ala carte items - letting you save money by not adding any or all of those to suit your desired desert recipe.

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All plans sold anywhere (with the exception of the garbage short-term plans) are ACA-compliant, regardless of whether they're sold through a marketplace or not. The marketplace is the private market.

Greenbeard said:

All plans sold anywhere (with the exception of the garbage short-term plans) are ACA-compliant, regardless of whether they're sold through a marketplace or not. The marketplace is the private market.

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Yep, and thus only banana splits can be had for desert. You are free, of course, to toss out the unwanted cherries but you must pay the provider for them because that is "fair". Meanwhile, SNAP allows one to buy only what they want - not the entire USDA pre-approved basket of goods.

Greenbeard said:

In the spring, I sounded the alarm on a troubling trend in the marketplaces:ACA marketplaces getting a bit too lucrative for insurers

Well, the solution to that problem--new market entrants--is materializing in many markets.

Covered California draws more insurers after state moves to bolster Obamacare




No matter how many times, how many ways they try to kill the marketplaces, they just keep coming back.

That's good but more needs to be done. The biggest problem remains that even though premiums have stabilized the price level in the marketplaces has been artificially re-set upwards by the Trump administration's malicious decision to break the system that helps low-and-middle income enrollees afford their deductibles; that decision bumped premium levels up ~34% immediately.

That prices out people who don't qualify for financial assistance for their premiums. (And their coverage levels have fallen: for some reason the Trump administration recently celebrated those people falling out of the market. ) A growing number of states have implemented reinsurance programs to bring their premium levels back down to earth. Every state should be doing this and enabling that should be a federal priority.

And, as always, we should celebrate the fact that the ACA cost far less than promised and put that money back into the program: fix the family glitch, eliminate the income cap on premium assistance, and lower the financial exposure of those receiving assistance. Make premiums and deductibles alike more affordable for consumers. Then we'll see enrollment rise and even more market entrants, reinforcing the competitive downward pressure on premiums we saw in the early days of the marketplaces when there were numerous competitors virtually everywhere.

(And if we really want to get nuts, tie Medicare Advantage and/or Medicaid managed care participation to marketplace participation. And consider ways to make it more attractive for employers to release their employees into the marketplaces--with their employer subsidy--under an employee choice model. Or at least bring back something like the long-repealed employee free choice vouchers to give people control over their own decisions. Recapture the spirit of '14!)

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LOL, yep, they came back because of good ol' capitalism. And people being able to VOLUNTARILY shop for plans.

ttwtt78640 said:

Yep, and thus only banana splits can be had for desert. You are free, of course, to toss out the unwanted cherries but you must pay the provider for them because that is "fair". Meanwhile, SNAP allows one to buy only what they want - not the entire USDA pre-approved basket of goods.

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Of course there are things you can and can't buy with SNAP. That's the point of giving people a pre-loaded card instead of cash. Wherever you're going with this misguided analogy, you should look into how SNAP works before trying to make it.

Bullseye said:

LOL, yep, they came back because of good ol' capitalism.

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Well, duh, that was the point of creating marketplaces.

Greenbeard said:

Well, duh, that was the point of creating marketplaces.

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How is forcing people to buy something from a short list capitalism? That was my point.

Bullseye said:

How is forcing people to buy something from a short list capitalism? That was my point.

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Wow, the marketplaces went from a triumph of capitalism in post #7 to, what, statism in post #9?

Yes, there are rules on sellers (so they can't compete on premium without focus on actual health cost drivers--refer back to post #3). How richly bizarre! Doesn't seem to be dissuading new entrants, as it didn't in 2014 before the GOP tried to drive them out.

Greenbeard said:

Wow, the marketplaces went from a triumph of capitalism in post #7 to, what, statism in post #9?

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I think you got that backwards.

Bullseye said:

I think you got that backwards.

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The same rules on payers are on place that were in effect since the opening of the marketplaces. The marketplaces are now creeping back to the 2014-15 high in payer participation as they recover from GOP sabotage. The only "statist" intervention has been the GOP campaign to use government power to squash the markets.

They failed.

ttwtt78640 said:

Offering more government subsidies does not lower the (overall) cost of X, it only lowers the appearance of the cost of X to those getting the subsidies (when they see a bill for 1/2 of the cost of X then that is what they perceive the cost of X to be).

Why not treat PPACA like we treat SNAP and give "the poor" $X/month on their PPACA cards (which can only be redeemed by medical care insurance providers (free to charge whatever price they wish) and tell them to shop for insurance (public, non-profit or for-profit) wisely?

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Generally yes, but it does depend. On how well the system is constructed, how much oversight and regulation is upon it, and how much aggregation there is. Insurance is a system of aggregation. People pay into a system and you aggregate risk over those paying in. The more people paying in, the more you can better aggregate the system. It's quite possible with something such as insurance to use the government to get better coverage with lower costs because you end up aggregating the whole population.

It's no guarantee of success, and you always have to be careful when exercising government force because that **** can get out of hand right quick. But it isn't mathematically impossible.

Ikari said:

Generally yes, but it does depend. On how well the system is constructed, how much oversight and regulation is upon it, and how much aggregation there is. Insurance is a system of aggregation. People pay into a system and you aggregate risk over those paying in. The more people paying in, the more you can better aggregate the system. It's quite possible with something such as insurance to use the government to get better coverage with lower costs because you end up aggregating the whole population.

It's no guarantee of success, and you always have to be careful when exercising government force because that **** can get out of hand right quick. But it isn't mathematically impossible.

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That's true, insofar as splitting costs over more people lowers the share of any individual contributor. But that misses the transformative aspect of what's at play here. If you force insurers to compete on premium in a transparent market, you don't let them shed risk by turning away customers or discriminating on premium or creaming off the top with variations in covered benefits, then they have to figure out ways to attack the underlying costs themselves. That's their ticket to competitive premiums.

So they might finally be prompted to be more aggressive in price negotiations with health care providers, as happened in the early days of the marketplaces. E.g., from 2015: Hospital prices drop for the first time

Payers' efforts to drive down hospital prices may be succeeding.

Prices that private and public health insurers paid to acute-care hospitals declined in January, compared with the same month a year ago, the first time they have dropped since the federal government began collecting these data.

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“This appears to be a combination of the public sector pressure, but an even more fierce change on behalf of the private payers,” said Paul Hughes-Cromwick, a senior health economist at the Altarum Institute's Center for Sustainable Health Spending.

“Insurers are more aggressively bargaining with hospitals and more aggressively investing in programs that lower hospital utilization rates,” said Neraj Sood, an associate professor in health economics and policy at the University of Southern California. . .

[T]he pressure on insurers to compete on price in the Affordable Care Act-created insurance exchanges may have better positioned them to wring price concessions from hospitals, Hughes-Cromwick said.

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Or they might re-think how they pay providers to facilitate changes in care delivery that will lower cost growth while promoting better quality for their member. BCBS of Massachusetts's Alternative Quality Contract is on of the longer-running and best-studied examples: Changing The Way Doctors Are Paid Made Patients Healthier And Saved Money, Study Finds

Their bet seems to be paying off, according to a study published Wednesday in the New England Journal of Medicine. Researchers followed hundreds of thousands of patients over eight years in the new payment program and compared them to similar patients who were not in the program.

“There was an 11.7% savings on medical claims on average over the first eight years when we compare against similar populations outside [of the program],” says Dr. Zirui Song, a health care policy researcher at Harvard Medical School and the lead author on the study.

And, he adds, “We see some evidence that patients were healthier in this program.”

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The second part of the program changed how doctors, hospitals and other providers are paid. In a typical health payment system, providers receive payments for each service they perform, but Blue Cross Blue Shield’s new program uses a different system, known as a global payment model.

In this system, primary care providers receive a spending target from Blue Cross Blue Shield for their members’ care. If they spend less than the target amount by the end of the year, the providers and the health insurance company split the cash. If the doctors overspend, they and insurer split the extra cost.

The theory is that this will encourage physicians to take extra steps to avoid expensive care like emergency room visits and hospital stays.

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Continuing on!

And since they can't just dump or divert sick people anymore, insurers will get more interested in how they keep and make their enrollees healthier: Insurers deploy data to advance population health management

The managed-care organization achieved that by not only providing behavioral health screenings and faster referrals to mental health services, but by addressing some nonclinical factors like poverty, food and housing insecurity, and environmental exposures such as homes with lead paint. Magellan wanted to see if solving those problems could affect behavioral health conditions such as isolation, prolonged stress and substance abuse—all of which can lead to suicide.

“We actually did things like buying air conditioners and delivering meals,” said Dr. Seth Feuerstein, Magellan's chief medical officer of medical and digital innovation.

For-profit Magellan isn't alone in addressing problems that previously were not tasked to healthcare organizations. In an effort to lower spending and improve patients' lives, payers and providers are becoming increasingly responsible for a community's overall health.

But insurers have always had an advantage given their access to information that follows the patient outside of the doctor's office.

And now, more insurers are leveraging that information to help their bottom lines. According to a recent Change Healthcare survey, 42% of payers are adding community programs and resources to their population health efforts. Another 34% of payers said they use census and socio-economic data along with clinical data to create new programs.

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And they're thinking about how they can build into their incentives structures signals to patients about the highest value (i.e., most quality/outcomes bang for the health care buck) services and providers: The Evidence for High-Value Benefit Designs.

This is what insurers under the ACA's regulatory framework who are under competitive pressure to offer the most attractive premiums have to do: figure out how to address the underlying cost growth in the health care system. This isn't just about more favorable division because there are more enrollees to split the costs across, it's about changing the way key actors in the health care system think about and approach their role in tackling the costs themselves. That's a BFD.

Ikari said:

Generally yes, but it does depend. On how well the system is constructed, how much oversight and regulation is upon it, and how much aggregation there is. Insurance is a system of aggregation. People pay into a system and you aggregate risk over those paying in. The more people paying in, the more you can better aggregate the system. It's quite possible with something such as insurance to use the government to get better coverage with lower costs because you end up aggregating the whole population.

It's no guarantee of success, and you always have to be careful when exercising government force because that **** can get out of hand right quick. But it isn't mathematically impossible.

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One of the main goals of PPACA was to reduce the out-of-pocket costs of those with medical care insurance. Requiring that more medical procedures and services be covered at no additional out-of-pocket costs simply requires (mandates?) that medical care insurance premiums go up to cover those (mandated) added benefit costs. PPACA was evidently expected to raise medical care spending and was accompanied by a change to the IRS code to raise the (expected normal?) spending on medical care expenses from 7.5% or AGI to 10% of AGI before any medical care expenses became tax deductible.

ttwtt78640 said:

One of the main goals of PPACA was to reduce the out-of-pocket costs of those with medical care insurance. Requiring that more medical procedures and services be covered at no additional out-of-pocket costs simply requires (mandates?) that medical care insurance premiums go up to cover those (mandated) added benefit costs. PPACA was evidently expected to raise medical care spending and was accompanied by a change to the IRS code to raise the (expected normal?) spending on medical care expenses from 7.5% or AGI to 10% of AGI before any medical care expenses became tax deductible.

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Wrong.

For a number of reasons.

One..those procedures and services being covered..can reduce the actual costs for the insurance companies. things like preventative screenings... so that the insured gets screened for high blood pressure and gets medication.. before they have a stroke that costs exponentially more.

Secondly.. many of those additional procedures and services were already being covered for less.. under employer provided coverage. The employer provided coverage cost less because of the larger and known risk of the insured pool.