Health Plan Weekly

Pandemic-driven macroeconomic uncertainty and rising prices remain the biggest challenges for employer-sponsored insurance plans, according to experts. The cost of health insurance premiums has made employer-backed health insurance unaffordable to the point of being useless for many families, while the pandemic has created a volatile environment for many employers, particularly small businesses.

During a Jan. 26 panel hosted by the Bipartisan Policy Center, a Washington, D.C. think tank, employer health insurance experts sounded off on the myriad difficulties facing plan sponsors and employee beneficiaries. Worries over cost and the pandemic took up most of the discussion.

Health insurer Anthem, Inc., reported solid fourth-quarter results on Jan. 26, with some numbers in line with expectations and others hitting above or below expectations. The company also indicated it’s bracing for medical costs to rise above normal levels this year amid the ongoing COVID-19 crisis — though perhaps not as much as in 2021.

Anthem reported $5.14 in adjusted earnings per share (EPS) for the quarter, beating the consensus of $5.11. “EPS appears to be aided by better-than-expected investment income to the tune of $0.42, which grew $23% [year over year],” Jefferies analyst David Windley wrote in a Jan. 26 note to investors.

People with employer-sponsored health plans spent 11.6% of their median household income on premiums and deductibles in 2020, up from 9.1% in 2010, according to an analysis published by The Commonwealth Fund. In 37 states, premiums and deductibles accounted for 10% or more of employees’ median income in 2020, with those in Mississippi and New Mexico facing the highest potential costs relative to income. The average premium for single coverage and family coverage reached $1,532 and $5,978 nationally.

With the open enrollment period for 2022 Affordable Care Act exchange plans now over in most states, the Biden administration announced a record-breaking number of signups. A total of 14.5 million people enrolled in ACA marketplace coverage from Nov. 1, 2021, through Jan. 15, 2022, including 10.3 million people who live in states served by HealthCare.gov and 4.2 million in states with their own marketplace, CMS said. Enrollment remains open in the District of Columbia and five states — California, Kentucky, New Jersey, New York and Rhode Island — through Jan. 31.

Hospital consolidation has entered a new stage: Large regional hospital systems have finished acquiring most of their smaller local competitors and have begun to combine with large health systems of similar size. Experts say the new phase of market concentration, which also includes large hospital groups acquiring physician groups and outpatient centers, is bound to increase prices for health plans and consumers — and that there’s little regulators can do to stop or reverse it.

Hospital deals are not new: Over the past decade-plus, hundreds of hospital groups have combined, following a trend toward consolidation and vertical integration across the American economy. According to the American Hospital Association, nearly 1,600 hospital transactions took place between 1998 and 2017. Health system market power is now more concentrated than ever: in most regional markets, two or three players control most of the inpatient facilities. In fact, in a majority of U.S. metro areas, one hospital system controls more than half the market.

Health insurers are struggling to comply with the price and billing transparency requirements of the No Surprises Act (NSA), according to a survey conducted by Change Healthcare, Inc. Meanwhile, insurers are lining up behind the Biden administration as it prepares to defend regulations implementing the NSA from a legal challenge brought by provider trade groups.

The No Surprises Act bans balance billing — when out-of-network providers send patients a bill for the amount an insurer refuses to pay — and requires payers and providers to work out the dispute themselves. If that fails, an HHS-approved independent arbitrator will decide between two payment amounts: one submitted by the provider, and one by the insurer.

For health insurers, the new year has ushered in a mandate to cover at-home COVID-19 tests and a highly transmissible coronavirus variant that is making it clear the pandemic is far from over. During its recent conference call to discuss fourth-quarter 2021 financial results, UnitedHealth Group explained how its massive, integrated health care enterprise is responding to both challenges.

The Biden administration on Jan. 10 unveiled new guidance specifying that all group and individual health plans must reimburse members for eight free over-the-counter COVID tests per month without cost sharing. The administration also said it would allow insurers to cap test costs at $12 each if insurers set up in-network agreements with pharmacies/retail stores that allow members to access free tests directly, without filing for reimbursement.

HHS Sec. Xavier Becerra renewed the COVID-19 pandemic public health emergency until April 16, extending the PHE that was first announced on Jan. 31, 2020, by then-HHS Sec. Alex Azar into its third year. The PHE declaration makes possible enhanced Medicaid funding — in exchange for states pausing eligibility redeterminations — and expanded telehealth flexibilities for Medicare and Medicaid beneficiaries.

New insurer entry into the Affordable Care Act (ACA) exchanges is slowing down after several boom years, according to a new Robert Wood Johnson Foundation report. “While the total number of plan offerings increased by about one third between 2020 and 2021 (from 10,289 to 13,596), this year’s increase to 15,638 constitutes growth of about 15 percent,” wrote Katherine Hempstead, Ph.D., senior policy adviser for the foundation.

The Biden administration on Jan. 10 issued much-anticipated details about its new requirements for private health plans to pay for at-home COVID-19 tests, sparking immediate questions from industry observers and insurer trade groups alike about whether this is the right way to go about expanding testing access.

“We absolutely agree that a comprehensive national testing strategy is desperately needed and overdue,” says Ceci Connolly, president and CEO of the Alliance of Community Health Plans (ACHP). Members of the organization representing nonprofit health plans have been covering physician-ordered, lab-based tests — as required by pandemic relief legislation — throughout the public health emergency, she tells AIS Health, a division of MMIT. “Unfortunately, this approach runs the risk of confusing a lot of people, frustrating people who probably have trouble getting tests and probably not reaching the target audiences. So it misses the mark.”

In 2021, investors poured a record amount of capital into health care, and industry insiders say that the flood of cash is likely to continue flowing in 2022. Experts predict that investments in health tech, which drew the highest level of investment of any health care sector last year, will continue to grow — and carriers may want to make a splash in new areas of business.

According to a white paper prepared by PricewaterhouseCoopers (PwC), deals in the U.S. health care sector increased by 56%, for a total volume of $203 billion, through Nov. 15, 2021, compared to the same period in 2020. Meanwhile, a report by Silicon Valley Bank (SVB) found that venture capital funding of health care startups in the U.S. and Europe hit $80 billion, “beating 2020’s record by more than 30%.”