Tag: health insurance exchanges

Good riddance: United finally gives up on ACA marketplaces

April 27th, 2016 by
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United we hardly knew ye

United Healthcare announced that it’s exiting most of the Obamacare insurance marketplaces (aka exchanges) next year. Sound like a familiar story? In fact all the recent news coverage is just a rehash of last November’s announcement that United was probably going to exit.

As I wrote at the time (United pulls out of ACA exchanges: Should we care?), United’s exit is not a huge deal. The company specializes in selling high-priced plans to corporate accounts. In the price-sensitive world of the exchanges that’s a losing proposition. No surprise — United wasn’t getting traction.

In January (Like I said: United’s ACA exchange departure is no big deal) I reported on a study that showed that the name brand, high priced commercial players like United were losing out to insurers with a Medicaid managed care background and to mission-oriented Blues plans. United’s departure represents the failure of United, not the failure of the marketplaces. If United says otherwise it’s a sore loser.

Health plans thinking of competing in the marketplaces should say this to themselves a few times before diving in: “Exchange business is price sensitive business. If we can’t compete on price we might as well stay home.”

Now, if United were a little more clever and capable it actually could make a play for the exchange business, in a way that would boost its success in the commercial market as well. In particular, there are opportunities to better manage the way specialty care is delivered and paid for, by emulating the approaches used by the most efficient and innovative specialists. This would drive down the overall cost of insurance and improve care for patients. Some astute players in the bundled payments space are starting to figure it out. Somehow I don’t think United will be the one to make it happen.

Image courtesy of Stuart Miles at FreeDigitalPhotos.net

By healthcare business consultant David E. Williams, president of Health Business Group.

 

How narrow is a narrow network?

July 15th, 2015 by
Is narrow good or bad?
Is narrow good or bad?

Health Insurance Exchanges are one of the most interesting and potentially impactful features of the Affordable Care Act. The exchanges allow eligible individuals to compare health plans on an apples-to-apples basis and choose the one that’s most appropriate for their individual circumstances.

Health plans are interested in participating in these exchanges because they offer one of the few sources of member growth. Federal subsidies make exchange plans affordable for middle income buyers who make too much to qualify for Medicaid.

Not surprisingly, exchange customers are price conscious shoppers. That means plans have to work hard to offer low enough premiums to be competitive. The Affordable Care Act outlaws some of the ways health plans used to stay competitive, such as charging different prices based on health status, refusing to cover certain patients, making exclusions for pre-existing conditions, and offering skinny benefits packages.

One of the few things plans can do is to offer different networks of physicians, hospitals and other providers. Exchange plans have embraced the concept of “narrow networks,” which offer a smaller than usual collection of providers as a way to hold down costs. I have heard and seen a lot of anecdotes about what this means in practice, but now there is some real data.

Avalere has conducted an analysis of health plans in the top five exchange states to compare the size of exchange plan networks with the size of commercial networks in the same geographies. Sure enough, the plans included an average of 34 percent fewer providers on average, and 42 percent fewer oncologists and cardiologists.

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Although anyone’s initial reaction is that a bigger network is better, that is not automatically the case. If the narrower networks exclude the wasteful, low quality providers the result could be increased quality and cost effectiveness.  If network inclusion is based just on unit costs, then who knows the outcome on quality. And if fewer providers means it’s harder to get an appointment, that could be problematic. Patients might even end up spending out-of-pocket for out-of-network coverage.

I asked Avalere vice president Elizabeth Carpenter to answer a few questions that immediately came to mind: You report the average, but how much variability is there? How have network sizes changed since last year? How often do exchange members go out-of-network?

Elizabeth answered the first question as follows, “Overall, we did see noticeable variation among the five states we examined. However, interestingly, it was not consistent across provider type. For example, exchange plans in one state may cover a higher percentage of primary care physicians than another state’s exchange plans but may cover a lower percentage of hospitals.”

As I expected, Avalere hasn’t yet done the work to answer the other questions. Clearly there are lots of interesting studies to be done on the impact of exchange plans on costs, quality, and the overall insurance market. I eagerly await them.

Image courtesy of marcolm at FreeDigitalPhotos.net

By healthcare business consultant David E. Williams, president of Health Business Group.

ObamaCare signups: More than just the exchange numbers

April 17th, 2014 by
All that hyperbole for nothing!
All that hyperbole for nothing!

President Obama just announced that 8 million people signed up for coverage on federal and state health insurance exchanges during the initial open enrollment period for the Affordable Care Act, aka ObamaCare. That’s higher than originally projected, and much higher than how things looked when the glitch-filled healthcare.gov sputtered out of the gate. Cynics will pick at that accomplishment, claiming that it overstates the law’s impact by counting people who already had insurance, and those who don’t end up paying their premiums.

ObamaCare is a complex law (remember the big excitement about how many pages it takes to spell out) and it’s much more than just the exchange websites.

Focusing just on the 8 million who have signed up through the exchanges actually seriously underestimates ObamaCare’s impact on the number of people with insurance. Consider:

  • Close to 4 million people have signed up for Medicaid since October. It would have been more if opponents hadn’t blocked Medicaid expansion in so many states
  • Millions have signed up for private health insurance outside of exchanges: through brokers or directly with the health insurers
  • Many formerly uninsured young adults are insured through their parents up to age 26 instead of being dropped

There’s also another way to look at the folks who already had insurance who have signed up on the exchange. ObamaCare opponents have made a big deal out of people having their plans canceled because those plans didn’t meet the new law’s requirements. We’re suddenly told how everyone loves their existing plan –something I never heard touted prior to ObamaCare. Considering the hassle involved in getting a policy through an exchange, one could reasonably assume that people are getting better, cheaper coverage than what they had before. Even if that doesn’t increase the number of insured people, it improves the overall level of insurance within the population.

 

photo credit: Fresh Conservative via photopin cc

By healthcare consultant David E. Williams of the Health Business Group