Premiums

Self-insured plans pay higher prices for many health care services compared with fully insured plans, according to an analysis of claims data published in this month’s issue of Health Affairs. Aditi P. Sen, Ph.D., the study’s lead author, says the findings “suggest that employers are generally not able to negotiate prices on behalf of their employees, and I don’t think that should be surprising. It really reflects the dynamics in health care markets.”

In self-insured plans, employers assume financial responsibility for their workers’ health care claims rather than having a health insurer take on that risk — theoretically giving such companies more incentive to drive costs down.

A survey of people enrolled in Affordable Care Act marketplace plans in California found that 28% had difficulty paying their premiums in 2021, according to a study published last month in Health Affairs. While that is an improvement from 40% in a similar sample of enrollees in 2017, Vicki Fung, Ph.D., the study’s lead author, tells AIS Health that more could be done to help people choose affordable coverage and determine whether they are eligible for cost-sharing subsidies.

Fung notes that health insurers could help people with consumers’ decisions, including coordinating with agents and brokers that insurers work with and steering people who are eligible for generous subsidies toward purchasing a similar plan via the ACA exchange rather than off-marketplace.

When the Biden administration celebrated the one-year anniversary of the Inflation Reduction Act on Aug. 16, the focus — from a health care perspective — was largely on the IRA’s unprecedented drug pricing reforms. While those provisions are important to the health insurance industry, the sector has also seen an overwhelmingly positive impact from the law’s extension of beefed-up subsidies for Affordable Care Act exchange enrollees.

“We at ACHP and all of our members worked incredibly hard to get the health care provisions of the Inflation Reduction Act passed,” Alliance of Community Health Plans (ACHP) President and CEO Ceci Connolly tells AIS Health, a division of MMIT. “Potentially the most significant health care provision in that act was the extension of the enhanced subsidies for working Americans to buy coverage and care on the individual exchange.”

Connecticut’s top law enforcement official is coming out swinging against big rate hikes requested by health insurers that sell plans in the state’s individual and small-group markets. In an Aug. 15 letter to Connecticut Insurance Commissioner Andrew Mais, Attorney General William Tong points out that the state’s Insurance Dept. may only approve rates that are not “excessive, inadequate or unfairly discriminatory,” and insurers must provide “transparent, factually supported actuarial analysis” to justify their rates. “In at least the case of Cigna’s 14.9 percent increase in the small group market, Anthem’s 9.8 percent increase in the individual group and 14.9 percent increase in the small group market, and ConnectiCare’s 17.5 percent increase in the individual market, the insurers have failed to meet that burden and their requests must be rejected,” Tong wrote.

Although health insurers have been vocal about their desire to transition people into Affordable Care Act marketplace plans if they lose Medicaid during the resumed redetermination process, a new “secret shopper” survey suggests those customers will encounter a thicket of aggressive marketing for limited-benefit plans that could ultimately leave them on the hook for massive medical bills.

Researchers at Georgetown University Center on Health Insurance Reforms (CHIR) conducted their survey between June 9 and June 30, 2023, creating two profiles for hypothetical Texas residents who were informed they’d be losing Medicaid due to income ineligibility. “Terri” is 22 years old with no pre-existing conditions, and “Lorraine” is 36 with high cholesterol. Both live in a two-person household and have an annual income of $25,000 — qualifying them for the maximum premium and cost-sharing subsidies the ACA marketplace can offer. That means they can access, theoretically, silver plans with a $0 monthly premium that cover an average of 94% of the cost of covered benefits.

As health insurers decide how to price their Affordable Care Act exchange plans for the 2024 plan year, inflation, COVID-related costs and Medicaid redeterminations are some of the major factors influencing their calculations, according to a new issue brief from the American Academy of Actuaries. Industry experts say that overall, gross premiums are likely to go up — but because few consumers will feel the impact on their net premiums thanks to expanded subsidies, insurers and regulators may not be driven to aggressively keep rates in check.

“I think the early read right now is the rate increases are going to be higher than last year,” says Fritz Busch, a principal and consulting actuary at Milliman who helped produce the report. In 2023, the average benchmark ACA exchange premium rose by 3.4%. “It’s going to vary by state, but you’re already seeing some [rate requests] well into the double digits — and some single as well — but I think, on average, it’s going to be higher.”

Payers generally applauded the passage of the No Surprises Act (NSA) in 2020 and the Consolidated Appropriations Act (CAA) of 2021, thinking the bills would lead to more transparency and lower costs. However, although the two pieces of legislation have contributed to larger amounts of publicly available claims and pricing data, state employee health plans (SEHPs) report that “significant barriers constrain translating improved access to data into more aggressive cost containment strategies,” according to a report released on July 10 from Georgetown University’s Center on Health Insurance Reforms (CHIR).

Sabrina Corlette, CHIR’s founder and co-director, tells AIS Health that from conducting the research and speaking with SEHP administrators she’s found “it’s going to take a while for the impact of those laws to be felt.” SEHPs provide health insurance for state and local government employees and are often among the largest payers in any given state.

In a new proposed regulation, the Biden administration seeks to reinstate limits on short-term, limited-duration insurance (STLDI) plans that the Trump administration had loosened — a move that health policy experts predict will have a small but positive effect on the Affordable Care Act-compliant plan market.

But HHS and the Labor and Treasury departments didn’t stop there — they also proposed changes to hospital and fixed indemnity policies and sought comments on whether they should address the proliferation of level-funded plans in future rulemaking.

“I thought that was interesting,” says Katherine Hempstead, senior policy adviser at the Robert Wood Johnson Foundation. “That seems like kind of an effort to, as much as possible, tidy up all those shards of business in the marketplace that are not good for the ACA-compliant market — either the individual or small group [segment].”

Friday Health Plans Management Services Company, Inc. is in the death throes of its life as an Affordable Care Act exchange insurer — regulators are stepping in to take over its operations, and it’s laying off all employees in its home state of Colorado. Meanwhile, Bright Health Group, Inc., which has already exited every ACA exchange in which it operated, reached a deal to sell its California Medicare Advantage plans to Molina Healthcare, Inc. in order to satisfy Bright’s creditors.

Experts tell AIS Health, a division of MMIT, that both insurers largely followed the same playbook: raising massive amounts of funding from venture capital (VC) investors and promising to delight customers with tech-driven, differentiated products. But those big plans fell apart when faced with the realities of an industry that is especially challenging to disrupt, and then capital infusions dried up when interest rates rose.

Although multiple states have set up some version of a public option — a government-established insurance plan — on their Affordable Care Act exchanges, two researchers are striving to convince policymakers to consider a public option program in California that they say will more effectively enhance competition and bring down premiums.

The “secret sauce” of the proposal is the state’s existing “delegated model,” in which provider organizations take on some or all the financial risk associated with delivering health care services, according to Stephen Shortell, Ph.D., a health policy professor at University of California, Berkeley.