This post is sponsored by UST Health Care.
The most dramatic and significant aspect of the Affordable Care Act is now underway.
On July 11, 2011, the Department of Health and Human Services released its first set of proposed regulations governing the American Health Benefit Exchanges created by section 1311 of the Affordable Care Act. HHS also released proposed regulations governing the reinsurance, risk corridor, and risk adjustment provisions of the statute and posted a set of fact sheets answering questions about the new rule.
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Although the exchanges are only expected to enroll approximately 30 million individuals, this new feature of the American health care system will likely have a much broader impact on the industry and comes with several unresolved issues:
1. Timing. Only a few states have done comprehensive planning for their exchange — and some states haven’t even begun planning because either the legislature or the governor objects to the ACA. CMS has already begun to show some flexibility in the 2013 date for states to demonstrate that they can run their exchange; however, it appears that CMS will have to operate exchanges in quite a number of states in 2014.
2. Risk adjustment, reinsurance and risk corridors. Customers’ pre-existing medical conditions pose a significant challenge for health plans in the individual market. Plans can no longer rate enrollees, so the various risk adjustment systems will need to somehow function effectively. Hopefully, this grand actuarial experiment in the new exchange will succeed.
3. Role and payment for brokers/navigators. Insurance brokers have been a key element of the current health care system, yet their function in the new exchanges is still unclear. Although some may become “insurance navigators,” others in the individual market will clearly need to change roles.
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4. Employer-based insurance. Are the penalties large enough to convince employers to maintain their health insurance? Expert opinions vary widely, but the actual experience in 2014 is unpredictable. On one hand, employer-based insurance has the advantage of lower administrative costs and the incentive to deploy wellness programs. Alternatively, sending employees into the individual market shields the employer from health care inflation and provides more choice for the employee. 2014 will be a very interesting year for human resource departments and benefits managers!
5. ACO and the insurance exchanges. As health care providers form Accountable Care Organizations, they will become more comfortable assuming insurance risk. Once this occurs, they may decide to offer their services in the exchange — either independently or with an existing health plan partner. How will this ultimately affect the health plan sector?
There are many other unknowns in the new health exchanges beyond these concerns and there are too many moving parts to accurately predict the future impact of the exchanges. The challenge for today’s health care executives is to develop an agile organization that can effectively — and rapidly — respond to this new environment.
Join the discussion around the impact of the new health insurance exchanges and other ACA provisions at the UST Executive Conference on the Future of Health Care on Friday, October 28 in Minneapolis, MN.
This article is also available on High Performance Health Care of the University of St. Thomas Center for Health and Medical Affairs.
