January 22, 2014
January 22, 2014
From the desk of
SHADAC Director Lynn Blewett
I am starting a new series of blog posts to highlight some of the bright spots I see in the implementation of the Health Insurance Exchanges by the states and the federal government. My focus will be on the State-based Exchanges, or State-based Marketplaces which currently account for slightly less than half of the 2.1 private marketplace enrollment. Here are my first observations.
- As SHADAC’s State-Based Marketplace (SBM) Enrollment Highlights show, nearly 2.2
million U.S. citizens have successfully enrolled in health plans through either the SBMs or the Federally-Facilitated Marketplaces (FBMs). Although many had hoped for a smoother and quicker implementation, the exchanges are making progress and have actually reached roughly two-thirds (65%) of the Congressional Budget Office cumulative target enrollment of 3.3 million through December 2013. The health insurance exchange enrollment progress to date, in light of the obstacles that have been widely reported, is especially remarkable.
- Early results show that web contacts out-pace calls 8 to 1, suggesting that once the kinks have been worked out, web-based access to enrollment and plan information is a viable alternative to paper application.
- People who need health insurance coverage are signing up for care. Yes, there is concern that older adults (age 55-64) are signing up at a faster pace than young adults, but it’s also important to point out that the health insurance exchange is hitting its target population – those with pre-existing conditions who had been excluded from the private health insurance market (i.e., older adults).
- Additionally, evidence from Massachusetts suggests that more young people may sign up closer to the March 31, 2014 deadline. That is, healthy young adults don’t feel the pressure of rushing to sign up, especially if they think the enrollment process will be easier as time goes on. We expect more enrollment from young adults closer to the March 31, 2014 deadline.
- It’s difficult—but essential—to explain the role of reinsurance and risk corridors: two key provisions of the Affordable Care Act designed to address insurance risk in the first two years of exchange implementation. These provisions are crucial for successful implementation, yet they are largely underreported. The reinsurance provisions provide financial protection for health insurance plans that enroll high cost individuals. For the first two years of exchange operations, the federal reinsurance pool will reimburse health insurance plans for 80 percent of costs for claims between $60,000 and $250,000 per individual. Risk adjustment was included in the ACA with the intent of redistributing plan premium revenue at the end of a plan to accommodate the higher costs of plans that enrolled sicker populations. This is a zero-sum transfer of premium revenue among participating plans and will remain in place through 2017 when the risk profile of the exchange will be more stable.
One can look at the implementation of the Health Insurance Exchanges from a glass half-full or a glass half-empty perspective. I am persevering in the glass half-full perspective!