Health-Insurance Exchanges Are Falling Behind Schedule

Government officials have missed several deadlines in setting up new health-insurance exchanges for small businesses and consumers—a key part of the federal health overhaul—and there is a risk they won't be ready to open on time in October, Congress's watchdog arm said.

The Government Accountability Office said federal and state health officials still have major work to complete, offering its most cautious comments to date about the Obama administration's ability to bring the centerpiece of its signature law to fruition.

"Whether [the government's] contingency planning will assure the timely and smooth implementation of the exchanges by October 2013 cannot yet ...

Continue reading article with pop up player

View the original article here

Small-Business Exchanges Draw Few Insurers

Obamacare’s new insurance marketplaces for small businesses, which have already stumbled before getting out of the gate, are facing another pressing question just months before millions can sign up for benefits: What happens if insurers don’t show up to sell?

Early looks at insurance offerings on the Obamacare exchanges show that insurers aren’t exactly signing up in droves to sell on the new Small Business Health Option Program exchanges. In some states, just one insurer has signed up for the SHOP exchanges, which are supposed to foster competition and make it easier for small businesses to purchase coverage. The SHOP exchanges exist alongside the exchanges for individuals, which have gotten more attention in preparation for the health law’s rollout.

Continue Reading The Obama administration is still trying to recruit insurers to states where there’s been little interest in exchanges. But some health law advocates believe administration health officials have put a greater emphasis on standing up the individual exchanges, where they hope premium tax credits will be a big draw for millions to sign up for coverage next year.

In many cases, they also see little incentive for SHOP exchanges in 2014. A limited tax credit for small businesses available only in the SHOP exchanges has so far received less interest than expected, and a key feature providing employees with more freedom to pick their health plan has been delayed in most states.

“I think the SHOP exchanges are basically a 2015 issue, but we will see how they work out in the states that are doing them, and they might turn out to be a bigger factor going forward,” said Tim Jost, a Washington and Lee University law professor and supporter of the health law.

That’s the hope in Washington state. Just one insurer will sell exchange plans to small businesses in 2014, even as nine signed up for the state’s individual exchange. So the Washington exchange is scaling back the SHOP rollout, making the program available in only some counties in the first year.

Exchange officials in the state insist that they were ready for a full SHOP launch in the first year, but they said insurers, facing limited time to prepare for these new markets, focused on scooping up customers in the individual market, which the exchange had projected would account for 98 percent of enrollment in 2014.

“While we were disappointed overall this first year, it was just tough for [insurers] from a timing standpoint to get everything geared up and ready to roll for Oct. 1,” said Michael Marchand, director of communications for the exchange. Already, several insurers have indicated their interest in joining the SHOP exchange for 2015, he said.

Just one insurer has also signed up to sell coverage in North Carolina’s federal-run small-business exchange in 2014, prompting concern from advocates in the state.

View the original article here

New Health Exchanges Unlikely to End Insurance Monopolies in Some States

This story comes from our partner Stateline, the daily news service of the Pew Charitable Trusts.

In Alabama, if you get your health insurance through your employer and you lose your job, you quickly realize there aren't a lot options for purchasing coverage on your own. Blue Cross and Blue Shield of Alabama has had a virtual monopoly in the state since the Great Depression, and today it covers a whopping 89 percent of Alabamians.

In part, Blue Cross and Blue Shield is dominant in Alabama simply because it has been there for so long -- it sold its first policy in 1936 -- and potential newcomers have found it difficult to convince hospitals and doctors to give them favorable prices so they can compete with the entrenched carrier. But it also has to do with Alabamians themselves: On average, residents of the state are poorer and less healthy than other Americans, making them more expensive to cover and thus less attractive customers.

The lack of competition in nearly a dozen states could present problems when the insurance exchanges that are part of the Affordable Care Act launch in October. The exchanges are supposed to give Americans who do not get health insurance from their employers the opportunity to choose from an array of private insurance plans. The idea is to generate competition between insurers that will lead to lower premiums.

Individuals and businesses with up to 100 employees will be able to shop on the exchanges, and people who can’t afford coverage on their own will get government subsidies to help them pay their premiums. About 26 million low-income Americans are expected to receive subsidies to purchase health insurance through the exchanges.

Top 10 states with the least competitive commercial health insurance markets:

1. Alabama2. Hawaii3. Michigan4. Delaware5. Alaska6. North Dakota7. South Carolina8. Rhode Island9. Wyoming10. Nebraska

SOURCE: American Medical Association, 2012 market concentration analysis

But in states with a dominant insurance carrier, competition and lower prices may not arrive for quite some time.

A recent analysis by the American Medical Association found that a single insurance company held 50 percent or more of the market in nearly 70 percent of local markets nationwide. And in 30 states, a single insurance company covers more than half the people who purchase insurance individually, according to the Robert Wood Johnson Foundation.

The dominance by a single insurance company is particularly pronounced in Alabama, Hawaii, Michigan, Delaware, Alaska, North Dakota, South Carolina, Rhode Island, Wyoming and Nebraska.

In general, multiple insurance companies are eager to compete in states that have a large number of health care providers and a lot of people who can afford to pay premiums. A relatively young and healthy population is also an attraction. In states that don’t have those characteristics, competition can be sparse.

Alabama ranks 45th in the nation in overall health status, and 46th in median household income, according to the United Health Foundation and the U.S. Census Bureau, respectively. Over the decades, a few major insurance carriers have tried to dip their toes into Alabama, but most pulled out after just a few years.

In other states, there are different reasons for the lack of competition. In Wyoming, for example, the problem is that the state has relatively few health care providers and people have to travel long distances to get care.

Wyoming has only 18.7 physicians per 10,000 people, ranking it 47th in the U.S., according to the Kaiser Family Foundation. By comparison, New York has 34.8 physicians per 10,000 people, Maryland has 35.3 and Massachusetts has 39.7. The national average is 25.7. (Kaiser Health News is an editorially independent program of the Foundation.)

Blue Cross Blue Shield of Wyoming dominates the market. Do Wyoming consumers want more choices? "Sure they do," said Tom Hirsig, Wyoming's insurance commissioner. But Hirsig said it's a huge challenge for new carriers to develop provider networks in Wyoming. "My sense right now is that the individual market inside the exchange is not going to be stacked with lots of competition."

A shortage of hospitals is the problem in Rhode Island, where there are just 11 hospitals owned by two companies. Health Insurance Commissioner Christopher Koller said Rhode Islanders would like other options, but he isn't sure they’ll have them when the state’s exchange launches in October.

Big Changes

The vast majority of Americans get health insurance coverage through their employers. Millions of low-income Americans qualify for Medicaid, and seniors can sign up for Medicare. But for people outside of these groups, there are few good options when it comes to health insurance.

Many of these Americans pay high premiums if they are sick or middle-aged -- if they can find coverage at all. They also run the risk of purchasing policies that don't cover certain medical conditions or limit the total dollar amount of claims. That's why so many of them go without insurance altogether.

The health insurance exchanges are designed to change that. The policies that are included on the menu will have a uniform set of benefits and pricing structures that will be easy for people to understand and compare.

In addition, the new health law will make it illegal to deny coverage to people who have pre-existing conditions. It also will a mandate a minimum set of benefits; prohibit lifetime caps on claims; and require insurance companies participating in the exchanges to spend at least 85 percent of their revenue on health care.

The hope is that this new pool of previously uninsured people will attract insurers to enter new markets, creating competition where none exists now. Poor states across the South and West have the largest share of uninsured people, and thus hold the greatest potential for insurers to cash in on the $350 billion the federal government plans to spend over the next 10 years to help low-income people buy insurance.

Furthermore, the exchanges should allow smaller companies and non-profits to market their products more effectively, challenging entrenched incumbents. "When you go online, the Blue of Alabama won't look so much bigger than the next plan," said Andy Hyman of the Robert Wood Johnson Foundation. The exchange is meant to be an "equalizer," Hyman said.

What's Wrong With Monopolies?

Carriers that dominate a particular state often argue that they hold onto their position by keeping prices down. "There are lots of national carriers out there who would provide a product that is less expensive than what is in the market, if they could," said Kim Holland, director of state affairs for the Blue Cross and Blue Shield Association. "We’re not so naïve as to think that if we don't price our products correctly our customers won't find another alternative."

Some economists note that in some cases, a dominant carrier can use its heft to negotiate the best prices with hospitals and then pass along those savings to consumers. In some markets, dominant insurers are akin to utilities, explained Paul Ginsburg, director of the Center for Studying Health System Change. "You don't necessarily need more than one," he said.

Ginsburg said large carriers are likely to get better prices from hospitals and doctors, because providers can’t do without them. "I suspect that consumers have actually benefitted from high [market] concentration. It's really a bigger problem for physicians," he said.

Despite having the least competitive health insurance market in the country, Alabama's individual premium prices compare favorably with neighboring states and are below average for the nation.

But the AMA, which represents doctors, disputes the idea that big insurers always secure the best prices for consumers. They point to national studies showing that when insurance companies merge and acquire smaller companies, their profits go up and so do their premiums.

Exchange Experience

Two states, Massachusetts and Vermont, already have exchanges, and offer a glimpse of what the future might hold.

When Massachusetts launched its exchange in 2007, new players did not immediately burst into the market. One new carrier, Centene Corporation, joined the exchange to offer a limited network of providers for Medicaid beneficiaries. But competition in the individual market remained relatively unchanged.

But Massachusetts already had a relatively competitive market, so existing carriers competed with each other to create new, lower-cost plans in response to market demand -- and pressure from state officials to keep costs down. Despite the emergence of low-cost plans, however, average premium prices have continued to rise.

Earlier this month, Vermont became the first state in the nation to publish preliminary health insurance rates for its exchange. Not unexpectedly, the tiny state of only 626,000 residents did not attract any new insurance companies. And the price of the plans offered on the exchange? They cost about as much as what Vermonters were paying before.

All original KHN material – articles, graphics and videos – can be used for free, if you credit us and link to us. Learn more

View the original article here

Uh-Oh! Building ObamaCare’s Health Exchanges Has Already Cost Double the Expected Amount

Credit: WhiteHouse.govHere’s another ominous sign for ObamaCare’s future: The Department of Health and Human Services admitted yesterday that setting up the law has cost twice as much as expected so far. And you can't really blame Republican opposition for the overrun: That’s just accounting for the cost of building exchanges in states that said they want to run them.

Here’s The Hill with the report:

The Health and Human Services Department (HHS) said in budget documents Wednesday that it expects to spend $4.4 billion by the end of this year on grants to help states set up new insurance exchanges. HHS had estimated last year that the grants would cost $2 billion.

The department also is asking Congress for another $1.5 billion to help set up federally run exchanges in states that do not establish their own.

Just because HHS is asking for the money, of course, doesn’t mean it’s going to get it. So if not, then what? The HHS has promised it will, er, do something—something!—to make it all work. But it won’t say what. At least not yet:

HHS Assistant Secretary for Financial Resources Ellen Murray punted Wednesday when asked about the consequences if Congress also denies the new request.

The department is "determined to make them work," she said of the exchanges.

A big chunk of the grant money doled out so far went to California. It has reportedly received $909 million in federal funding to build its exchange. But even with the hefty funding it's not going smoothly. The state's insurance regulators have warned that residents should expect "rate and market disruption" when the state's health insurance exchange opens. 

View the original article here

Six Months to Go –– Will the Health Insurance Exchanges Be Ready on Time? Survey: Health Plan Execs Don't Think So

As the Obama administration continues its top secret effort to build federal insurance exchanges in about 34 states while 16 states are doing it on their own, that continues to be the big question.

HHS is using IT consulting firm CGI for much of the work on the exchanges and the federal data hub. CGI has their plate full since they are not only working on the federal exchange but also doing work for the state exchanges in at least Colorado, Vermont, and Hawaii.

Earlier this month, the Senate Finance Committee held an oversight hearing. The Obama guy in charge of exchange development testified before them. I thought it was notable that it was the Democrats who expressed the greatest concern, and frustration, over senators not getting a clear idea for just where the administration is toward the goal of launching the new health insurance exchanges on October 1.

I thought the following Reuters quote was telling;

I am absolutely confident that every state will have an exchange that will be functioning and ready, said Gary Cohen [HHS executive in charge of the effort], who declined to elaborate on the number and identity of states that could be in for difficulties."

He wouldn't elaborate on just where there might be problems? Why? Why does the administration have to be so secretive?

This lack of transparency has the health insurance industry––the people the feds are going to have to connect with––very worried.

In early February, information technology consultant Edifecs, which provides health care software services to health plans, hospitals, and other organizations, held a "Compliance Summit" for 125 executives from hospitals, clearing houses, state health insurance exchanges, and health plans. The audience included executives from 34 different health plans. I gave the conference's opening keynote speech.

These are the industry executives that the state and federal exchanges are working with day-to-day. So, if you want to get the perspective from those in the trenches with the state and federal health insurance exchanges (HIXs) on whether they'll be ready, this is a pretty good group to ask.

Edifecs did just that using interactive software in the room to get the audience's response to a number of questions.

The input from the marketplace doesn't inspire confidence:
The vast majority of those who attended are planning to participate in the new health insurance exchanges. They are worried that, with the feds and states getting such a late start in detailing requirements and with so little time left, that their own organizations can be ready. They are also worried because the information they are getting from the health insurance exchanges in order to do their share of the work is poor, to very poor. They are not optimistic that the government-run exchanges will be ready on time. Almost all of those surveyed are concerned that the exchanges have not involved them as users in gaining input from the industry––traditionally a very bad sign in system development. And, the executives are very concerned about being able to reconcile billing and eligibility information from the exchanges.From the Edifecs survey:

View the original article here

Medicaid Expansion and State Health Exchanges: A Risky Proposition for the States

Recent decisions by the Obama Administration concerning the health care exchanges and Medicaid expansion underscore what a risky proposition the Patient Protection and Affordable Care Act (PPACA) is for the states. Congress presumed in PPACA (Obamacare) that the states would agree to build and run exchanges and could be forced to expand Medicaid. The Supreme Court, however, ruled the Medicaid expansion voluntary, which has made states increasingly concerned over new burdens related to costs, control, and coverage—in both the exchanges and Medicaid.

State Health Care Exchanges

Cost. Proponents deflect attention from the true cost of the exchanges by focusing on the PPACA grants to fund states establishing them. However, unlike past federal-state policy ventures, like Medicaid or even the State Children’s Health Insurance Program (SCHIP), there will be no steady flow of federal dollars to the states. The law specifies that starting in 2015, any state implementing a state exchange must develop its own revenue source to fund the exchange’s annual operations. That puts the long-term costs squarely on the states.

Moreover, the recent announcement by the Department of Health and Human Services (HHS) that it will levy a 3.5 percent administrative fee on coverage sold through the federally run exchanges indicates there are significant costs if a state agrees to run its own exchange.[1]

Just this week a Maryland panel recommended to that state’s governor and legislature new taxes and fees to fund its state exchange.[2] The Maryland report projects annual administrative costs for the state’s exchange of $201 per enrollee in 2015, declining to $152 per enrollee in 2017.

In contrast, applying the 3.5 percent fee set by HHS to the $2,770 national average per-capita premium for all commercial group and individual major medical insurance sold in 2011 yields a projected annual administrative cost for exchanges of $97 per enrollee. The much higher Maryland figures are significant as they reflect thorough and detailed work by the state most committed to implementing a state Obamacare exchange.[3]

Control. Some argue that states should establish exchanges as a means to maintain control of their markets. However, in all matters not otherwise preempted by federal law, the states still regulate insurers (including those participating in the exchanges) regardless of who operates the exchange. States can also regulate exchange “navigators” through state professional licensure statutes to ensure a level playing field with existing insurance agents, regardless of who operates the exchange.

Furthermore, regulations promulgated by HHS allow states no meaningful flexibility or advantage by operating their own exchanges, relative to a federal exchange. Those states would simply be acting as vendors to HHS.

Coverage. Proponents point to the exchange as essential to expanding coverage. However, the law also created a federal default for states declining to establish exchanges. Therefore, the responsibility shifts to the federal government. With more Americans still opposed to the law than supporting it, the innumerable technical challenges to implementation, and large and uncertain future costs, there is a significant risk that the whole law could unravel, or even collapse, before fully taking effect. Given those prospects, states that agree to run exchanges could face significant fallout from failures at the federal level over which they have no control. Instead, a state should focus on creating a viable market for their citizens in the event that the law breaks down.

Medicaid Expansion

Cost. As proponents attempt to convince states that the cost of the Medicaid expansion will be covered by the federal government, the facts remain the same. To start with, the enhanced match is only for the expansion population, not the existing Medicaid population. In addition, it does not apply to administrative costs, which add about 5 percent to benefit payments. Finally, the full 100 percent enhanced match is temporary, with states picking up 10 percent of the new costs in 2020 and thereafter. At a time when Medicaid is already overwhelming current state budgets, it would be counterproductive for states to voluntarily add to those liabilities.

In addition, there are numerous other cost pressures states need to consider when assessing the expansion.[4] First, states will see increased enrollment among the non-expansion population as the law also expands eligibility by changing how income is measured and corrals those eligible, but not enrolled, into the program.

Second, states will face pressure from their hospitals to backfill $18 billion in federal payment cuts for uncompensated care. Third, the PPACA lifts Medicaid reimbursement for primary care physicians to Medicare levels, with federal funding of the difference—but only for two years. Once the federal funding expires, states will face pressure to maintain those levels and to increase payments to other physicians accepting Medicaid.

Moreover, regardless of HHS’s recent claim that it has backed away from previous proposals to shift Medicaid funding to a blended rate, the fiscal challenges facing Medicaid at the state and federal level make future financing adjustments to Medicaid unavoidable.

Control. While the HHS Secretary has touted offering flexibility to the states, the law and HHS regulations offer states no meaningful policy discretion. Specifically, the law extends the maintenance of effort (MOE) restriction from the stimulus law that prevents states from making key changes to their Medicaid programs. Moreover, the recent HHS decision to eliminate any possibility of a state expanding its Medicaid program short of the 138 percent federal poverty level (FPL) further underscores that flexibility was more talk than action. 

Coverage. As with the exchanges, proponents stress the importance of Medicaid in expanding coverage. Unlike the federal default in the exchange, there is no federal default for the Medicaid expansion. However, rather than throwing more people into a broken program, states should focus on improving the current program and developing sustainable alternatives for meeting the needs of the proposed expansion population.

Fighting Back to Minimize the Damage of Bad Decisions

Sometimes opposing bad policy—such as by declining to run exchanges or expand Medicaid— while important, is not enough. In those instances, lawmakers need to work to minimize the impact of bad policies that they are unable to fully reverse. They also need to insist on transparency, accountability, and a level playing field, so as to create public awareness of the true consequences of bad policies and build support for future reforms.

Still a Risky Proposition for the States

Enormous uncertainty still surrounds the health care law. With less than one year remaining before the major provisions of Obamacare take effect, it is no surprise that barely more than one-fifth of states have publically agreed to both establish a state exchange and expand their Medicaid programs. The other states would be wise to decline those risky steps and instead prepare better alternatives for health care reform.

—Nina Owcharenko is Director of the Center for Health Policy Studies and Preston A. Wells, Jr., Fellow at The Heritage Foundation. Edmund F. Haislmaier is Senior Research Fellow in the Center for Health Policy Studies at The Heritage Foundation.

[3]Author’s calculations using premium and enrollment data from Mark Farrah Associates, http://www.markfarrah.com/. In 2011, U.S. commercial insurers wrote $198,334,667,140 in group and individual major medical premiums covering 71,597,719 individuals.

View the original article here

Is the CBO Skeptical that ObamaCare's Insurance Exchanges Will Be Ready on Time?

In theory, ObamaCare's health exchanges will be up and running, enrolling new people before the end of the year. Fewer than half the states will be running their own exchanges, and so the Department of Health and Human Services has stepped in to run the rest. In recent months, however, a number of health policy observers have openly questioned the ability of the federal government to get ObamaCare's health insurance exchanges up and running by the end of the year. That might explain why HHS has been so willing to waive and extend exchange creation deadlines for state.

HHS insists that the federally run exchanges will be online on time, but it has also continued to delay state implementation deadlines in a way that could suggest the agency is not quite as ready as it claims to be. That makes the following passage from the new federal budget baseline published by the Congressional Budget Office this afternoon rather, well, interesting:

CBO and JCT [Joint Committee on Taxation] have slightly reduced their estimates of the rates at which people will enroll in the insurance exchanges or Medicaid as the expansion of coverage is implemented—a process that had already been anticipated to occur gradually. That change reflects the agencies’ judgment about a combination of factors, including the readiness of exchanges to provide a broad array of new insurance options, the ability of state Medicaid programs to absorb new beneficiaries, and people’s responses to the availability of the new coverage.

So is the CBO skeptical that the federal exchanges will be ready on time? That certainly seems possible, although the report does not specify whether it's uncertain about the readiness of federal exchanges as opposed to state exchanges, nor does it clearly indicate what its readiness concerns are.

HHS Secretary Kathleen Sebelius seems a bit concerned about the pace of implementation herself. At a health policy conference in Washington, D.C., yesterday, she declared ObamaCare the law of the land and asked for help making it work: "My challenge to all of you today, and actually my plea to all of you...is help us speed up the rate of change.”

View the original article here

ObamaCare Exchanges: State of the States

Last week, the Department of Health and Human Services (HHS) gave seven more states “conditional approval” to operate state-run Obamacare exchanges.

The announcement came two days after the deadline for HHS Secretary Kathleen Sebelius to determine which states will be ready to run their own exchanges in 2014. So it appears HHS was dressing up its numbers by granting conditional approval to more states—including ones that, in the end, will likely prove either unwilling or unable to set up state-run exchanges.

A handy summary table compiled by the Kaiser Foundation shows that exactly half (25) of the states are a firm “no.” As for the other half, HHS has so far granted conditional approval to 19 of the 21 states that submitted a blueprint for creating an exchange. The two others are Illinois and Mississippi. Mississippi’s governor wrote Sebelius on December 28 restating his opposition and informing her that Mississippi’s insurance department does not have legal authority to continue pursuing its plan for setting up an exchange on its own. The remaining four states have expressed some interest but have not yet even submitted blueprints.

These conditional approvals create the perception that states are moving ahead with implementing Obamacare while obfuscating the reality. At least four of the latest seven conditionally approved states are unlikely to have state-run exchanges in place by the end of the year. Specifically:

1)      Idaho, where the legislature seems firmly opposed to the idea, and executive branch activities haven’t gone beyond the initial analysis and planning phase.

2)     Arkansas, where the Democratic governor wants a state-run exchange, but the voters just elected Republican majorities to both houses of the state legislature.

3)     New Mexico, where earlier this year, the Republican governor vetoed the Democratic-controlled legislature’s exchange bill. The state has an existing small business purchasing market that some of the governor’s advisers would like to morph into a Utah-style market-based exchange. However, given disagreements between the governor and legislature, HHS’s inflexibility, and the limited time remaining, it is unlikely that New Mexico will have a state-run Obamacare exchange in place by the end of the year.

4)     Utah, where the state was building its own market-based exchange prior to Obamacare, and has been trying to use it to lever concessions out of HHS but with little apparent success.

As Sebelius noted in all her letters to governors of states granted conditional approval, the approvals are contingent upon their states meeting various conditions, one of which is: “Comply with regulations and expected progress milestones.” If the Secretary continues to take a “my way or the highway” approach with even a state like Utah, which had a pre-Obamacare exchange, she will disabuse even the most credulous of the notion that the Administration will allow state-run Obamacare exchanges to be anything other than branch offices of HHS.

Thus, as it now stands, only 14 to 16 states (plus the District of Columbia) are likely to actually be operating state-run exchanges come October, when open season begins. There may be another two or three states with so-called partnership exchanges, but the feds will be responsible for most of the major functions in those states. Indeed, the final count could be lower as some states trying to set up their own exchanges—faced with significant technical challenges and limited remaining time—give up and default to a federally run exchange.

As it looks now, HHS will need to set up and run federal exchanges in three-fifths to four-fifths of the states. The Obama Administration is about to rediscover the Pottery Barn Rule: “You break it, you own it.”

View the original article here