Premiums

Colorado’s Ambitious Public Option Could Impact Employer-Backed Insurance Market

Colorado received permission from the Biden administration on June 23 to go ahead with the final element of its so-called “public option,” the Colorado Option. Experts tell AIS Health, a division of MMIT, that the program’s design is likely to deliver more premium savings than Washington state’s public option — and that the savings could make their way to the commercial market, especially if Individual Coverage Health Reimbursement Arrangements (ICHRAs) make further inroads in the Centennial State.

Experts tell AIS Health that the Colorado Option is innovative and could produce substantial premium savings, in large part because it has aggressive premium reduction goals. Starting in 2023, premiums for Colorado Option plans must be 5% lower than 2021 premiums, ultimately resulting in 15% cuts in premiums in 2025. After that, starting in "2026 and each year thereafter" premiums may increase "above the premium in the previous year by no more than medical inflation, relative to the previous year," per a summary of the law from the state legislature.

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In 2023, Purchasers to Seek Mental Health, Cost-Controlling Benefit Solutions

Grappling with rising premiums, a tough labor market and COVID-fueled health challenges, plan sponsors are focusing on key benefits as they prepare for the 2023 benefits cycle. That includes a concerted focus on behavioral health services and health equity, working to improve telehealth access and implementing strategies aimed at managing the total cost of care.

As adverse mental health conditions have increased sharply during the pandemic, behavioral health solutions, such as expanded access via network design and an expansion of virtual channels, figure to be prominent among purchasers’ needs, according to purchasing experts and benefits consultants interviewed by AIS Health.

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Marketplace MLR Rebates Likely to Drop After Record Highs

Health insurers will likely issue about $1 billion in medical loss ratio (MLR) rebates this year, according to data from the Kaiser Family Foundation (KFF) and Mark Farrah Associates. That amount is a drop from both 2020 and 2021, which set the all-time highs for MLR rebates disbursed since the Affordable Care Act came into effect. Experts tell AIS Health, a division of MMIT, that the dropoff in rebates is related to pandemic utilization and a more stable policy environment for the individual marketplace.

Health plans selling insurance on the individual, small group and fully insured large group markets are required to return any premium revenue that is not spent on care (or care quality improvements) to members.

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News Briefs: Inflation Hasn’t Yet Affected Health Care Prices

Inflation has not yet impacted health care prices, according to new research from the Kaiser Family Foundation (KFF). The KFF study reports that in the 12 months ending in April 2022, “overall prices grew by 8.3% from the previous year, while prices for medical care increased by only 3.2%.” The authors added, “This is unusual, as health prices historically outpace prices in the rest of the economy. However, the relatively high rate of inflation seen in the rest of the economy may eventually translate to higher prices for medical care. This may lead to steeper premium increases in the coming years.” Generally speaking, according to the report, prices have grown faster for commercial insurance than public payers, a trend that held up in 2022. Though inflation is greater than it has been for a generation, its impact is likely delayed in health care because of contracting cycles. “Health prices are generally set in advance, administratively or via private insurance contracting, so there may be a delay in observable price increases,” the authors observe.

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Marketplace, MCOs Will Face a Rocky Transition When PHE Ends

When the Biden administration ends the COVID-19 public health emergency (PHE), states will disenroll millions of Medicaid beneficiaries — and insurers will have to take Medicaid MCO members off their books. Experts tell AIS Health, a division of MMIT, that carriers can take steps to retain some of those members by helping them enroll in Affordable Care Act (ACA) marketplace coverage — but say the number of people who make the switch will be far lower than the number of people who joined the Medicaid rolls during the pandemic (see infographic).

Medicaid and individual exchange enrollment have both boomed with the higher federal funding that was included in the American Rescue Plan Act (ARPA) — and both segments’ total enrollment and enrollee profiles will change significantly when that extra funding ends.

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Health Insurers, Hospitals Grapple With Inflation, Labor Costs

While inflation hits consumers at car dealerships, airline counters and grocery stores, health insurers and hospitals also are seeing inflationary pressure, particularly with the so-called Great Resignation underway and labor costs skyrocketing.

The Labor Department reported on May 11 that the Consumer Price Index rose 8.3% over the 12-month period that ended in April 2022, down only slightly from the four-decade high of 8.5% reported in March.

“There’s no question that the labor market is tight. So, as you think about inflation, we hear it certainly from our provider partners, and we see it in certain parts of our own business,” Anthem, Inc. CEO Gail Boudreaux told investors during an April 20 conference call to discuss first-quarter 2022 financial results, per The Motley Fool.

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Feds Approve Virginia Individual Market Reinsurance Program

HHS and the Treasury Department on May 19 approved Virginia’s waiver for a state reinsurance program starting on Jan. 1, 2023. Although states have been less aggressive when it comes to applying for reinsurance programs recently, the looming expiration of enhanced premium tax credits in the individual marketplace could create renewed interest in reinsurance, policy experts tell AIS Health, a division of MMIT. That would be welcome news for insurers who are in favor of such programs because they incentivize more individuals to enroll in plans, create a more balanced risk pool and help insurers deal with large claims.

Reinsurance programs are primarily focused on lowering premiums for individuals who did not previously qualify for subsidies on the Affordable Care Act exchanges. In early 2021, the American Rescue Plan Act (ARPA) made enhanced subsidies available to people whose incomes are above 400% of the federal poverty level, the previous threshold, leading to a smaller number of people who benefited from reinsurance.

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Marketplace, MCOs Will Face a Rocky Transition When PHE Ends

When the Biden administration ends the COVID-19 public health emergency (PHE), states will disenroll millions of Medicaid beneficiaries — and insurers will have to take Medicaid MCO members off their books. Experts tell AIS Health, a division of MMIT, that carriers can take steps to retain some of those members by helping them enroll in Affordable Care Act (ACA) marketplace coverage — but say the number of people who make the switch will be far lower than the number of people who joined the Medicaid rolls during the pandemic (see infographic).

Medicaid and individual exchange enrollment have both boomed with the higher federal funding that was included in the American Rescue Plan Act (ARPA) — and both segments’ total enrollment and enrollee profiles will change significantly when that extra funding ends.

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WellCare Kept PDP Enrollees Via ‘Conversational’ Outreach Pilot

A pilot with Drips’ trademarked “conversational texting” platform has helped WellCare significantly lower the percentage of Prescription Drug Plan policies that were being terminated due to nonpayment, according to a case study presented at the 13th Annual Medicare Market Innovations Forum, held May 11 and 12 in Phoenix.

Since WellCare was acquired by Centene Corp. in January 2020, the PDP team has been focused on “optimizing operational execution” and ensuring a positive member experience, said WellCare Senior Director of Prescription Drug Plans Talia Duany, who presented the case study with Drips. “When you’ve got 4.1 million members in an industry that’s shrinking — this year we saw the biggest [decline] in available PDP options, everyone’s moving into [Medicare Advantage] — having a robust member retention strategy” is critical.

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Average ACA Benchmark Plan Premium Continues to Drop in 2022

The national average premium for the second-lowest-cost silver plan, or benchmark plan, sold through the Affordable Care Act exchanges is $438 per month in 2022, a 1.8% drop compared to 2021, according to an Urban Institute analysis. Average benchmark premiums, by state, ranged from $309 in New Hampshire to $766 in West Virginia. The premium variation was associated with the type and number of insurers participating in a region. The presence of a Medicaid insurer led to lower benchmark premiums. In 2021, the benchmark premium in a rating region with only one insurer was $189.5 higher per month than in regions with five or more insurers.

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© 2024 MMIT