Health Plan Weekly

Premium Spikes in 2017, 2018 Fueled Unsubsidized Enrollees’ Individual Market Exodus

October 22, 2020

Between plan years 2016 to 2019, unsubsidized enrollment both on and off the Affordable Care Act exchanges declined by 2.8 million people, representing a 45% drop nationally, according to a recent report from CMS. That data, the Trump administration said, demonstrates that “people who do not qualify for subsidies continue to be priced out of the market.”

Indeed, as the CMS report shows, in 2014, 2015 and 2016 “premiums were reasonably flattish, then there’s a huge premium shock in ’17 and ’18 for the unsubsidized population,” says David Anderson, a research associate at the Duke-Margolis Center for Health Policy. “And when things are more expensive, people buy less of them.”

By Leslie Small

Between plan years 2016 to 2019, unsubsidized enrollment both on and off the Affordable Care Act exchanges declined by 2.8 million people, representing a 45% drop nationally, according to a recent report from CMS. That data, the Trump administration said, demonstrates that “people who do not qualify for subsidies continue to be priced out of the market.”

Indeed, as the CMS report shows, in 2014, 2015 and 2016 “premiums were reasonably flattish, then there’s a huge premium shock in ’17 and ’18 for the unsubsidized population,” says David Anderson, a research associate at the Duke-Margolis Center for Health Policy. “And when things are more expensive, people buy less of them.”

Anderson explains that from 2014 to 2016 there were a series “training wheels for the marketplace” — most crucially a three-year federal reinsurance program that paid for a significant chunk of insurers’ high-cost claims. That support disappeared, as the ACA dictated, starting in the 2017 plan year. Also in 2017, insurers that initially priced their plans far too low either started “pricing correctly or leaving the market because they went bankrupt,” Anderson says. And those market exits led to more insurer monopolies.

While subsidized enrollees were largely insulated from that the resulting price hikes, since advanced premium tax credit subsidies rise with premiums, unsubsidized enrollees saw their premium rates rise by hundreds of dollars a month in 2017.

For the 2018 plan year, similar dynamics remained at play, Anderson says, with the added complication of significant policy uncertainty tied to Republicans’ efforts to repeal and replace the ACA in 2017. Insurers responded by either exiting or pricing their products higher, driving even more unsubsidized enrollees from the individual market.

The story changed yet again in 2019. Although unsubsidized enrollment continued to decline that year, the rate of decline was substantially lower than the 24% drop in 2018 and the 20% decrease in 2017, CMS said in its report.

“The market stabilized at a new, lower enrollment, higher premium equilibrium,” Anderson says. Average monthly premiums for both 2019 and 2020 have been flat to slightly declining relative to 2018, he says, and more states have used reinsurance waivers to increase affordability for unsubsidized enrollees. And finally, competition among insurers has ramped back up in recent years, helping push down premiums.

Racial Disparities Are Highlighted by Pandemic

October 21, 2020

The COVID-19 pandemic has been especially harmful to people of color in the U.S., as they are more likely to suffer financial hardship, extreme cases of the disease or death than the white population. Experts say the devastation to communities of color is the product of systemic racism — particularly a lack of access to insurance coverage and quality care — and the pandemic’s economic consequences will make all of those problems worse.

According to a Sept. 15 report released by the Kaiser Family Foundation (KFF) and the Epic Health Research Network, people of color were more likely to test positive for COVID-19 and to require a higher level of care at the time of diagnosis compared to white patients, and they also were more likely to be hospitalized and die from the novel coronavirus than white patients were.

By Peter Johnson

The COVID-19 pandemic has been especially harmful to people of color in the U.S., as they are more likely to suffer financial hardship, extreme cases of the disease or death than the white population. Experts say the devastation to communities of color is the product of systemic racism — particularly a lack of access to insurance coverage and quality care — and the pandemic’s economic consequences will make all of those problems worse.

According to a Sept. 15 report released by the Kaiser Family Foundation (KFF) and the Epic Health Research Network, people of color were more likely to test positive for COVID-19 and to require a higher level of care at the time of diagnosis compared to white patients, and they also were more likely to be hospitalized and die from the novel coronavirus than white patients were.

The economic impact of the pandemic has been similarly dire for households of color. According to a Sept. 16 survey prepared by NPR, the Robert Wood Johnson Foundation and the Harvard T.H. Chan School of Public Health, majorities of Latino (72%), Black (60%) and Native American (55%) households all “report facing serious financial problems during the coronavirus outbreak.”

The survey also found that 25% of Latino households, 18% of Black households and 12% of Native American households “report serious problems affording medical care during the coronavirus outbreak.”

Policymakers say that COVID-19’s poor outcomes within communities of color are sadly predictable. During an Oct. 7 webinar organized by Axios, Rep. Markwayne Mullin (R-Okla.), a member of the Cherokee Nation, said that the problems in Indian Country are a direct product of underfunding the federal Indian Health Service (IHS), which is the primary insurer and provider for Native Americans. According to Mullin, the IHS receives about one-third of the funding per patient as Medicare, Medicaid and the Veterans Administration.

Leading public health figures have argued that racial disparities must be accounted for in plans to distribute COVID-19 vaccines. On Oct. 6, a panel convened by the National Academies of Sciences, Engineering and Medicine released a draft of a report titled Framework for Equitable Allocation of COVID-19 Vaccine. The framework emphasizes the importance of accounting for existing racial disparities in vaccine distribution, and noted the skepticism that communities of color have toward vaccines and the medical profession in general.

Election’s End Should Boost Managed Care Stocks

October 20, 2020

In recent notes to investors, equities analysts have suggested that politically, the best-case scenario for the managed care industry might be a Democrat in the White House and a split Congress. Still, they say, the outcome of the upcoming elections is less important than the anticipated benefits of simply moving past the uncertainty that they’ve generated.

The election and concerns about the Affordable Care Act’s future “kept a lid” on MCO stock prices most of this year, Jefferies analysts David Windley and David Styblo wrote in an Oct. 12 research note. “We think those are starting to come to an end and will improve sentiment and valuation. We believe MCOs rise regardless of election outcome.”

By Leslie Small

In recent notes to investors, equities analysts have suggested that politically, the best-case scenario for the managed care industry might be a Democrat in the White House and a split Congress. Still, they say, the outcome of the upcoming elections is less important than the anticipated benefits of simply moving past the uncertainty that they’ve generated.

The election and concerns about the Affordable Care Act’s future “kept a lid” on MCO stock prices most of this year, Jefferies analysts David Windley and David Styblo wrote in an Oct. 12 research note. “We think those are starting to come to an end and will improve sentiment and valuation. We believe MCOs rise regardless of election outcome.”

In an interview with AIS Health, SVB Leerink analyst Stephen Tanal says that the “overhang” affecting the prices of managed care stocks first took root two years ago. “I trace it back to December 2018 when [Sen.] Bernie Sanders [I-Vt.] started to, let’s say, turn up the volume on his campaign,” he says. Not long after that, the left-leaning faction of the Democratic Party “got very loud very quickly,” culminating in the February 2019 introduction of a Medicare for All bill sponsored by Rep. Pramila Jayapal (D-Wash.).

“That was a really bad month for managed care,” Tanal says, regarding stock prices of publicly traded firms. “It’s interesting — now, almost two years later, we’re completely away from that debate, [but] the stocks haven’t fully recovered,” he adds.

Before the death of Justice Ruth Bader Ginsburg, a Joe Biden presidency/Democratic Congress was the worst scenario for MCOs because of uncertainty related to Biden’s health care agenda, risk of Medicare for All resurfacing, and a potential corporate tax hike, the Jefferies analysts suggested. “However, that’s now a hedge against the low-probability but very negative impact of SCOTUS ruling against the ACA,” they wrote, referring to latest challenge to the law’s constitutionality. “Moreover, Biden’s agenda increasingly sounds benign.”

But Tanal says if Democrats control the House, Senate and the presidency, “it’s much more likely they’ll be able to pass meaningful health care legislation.” And the industry — and its investors — remain wary of that possibility.

California Passes Law to Expand Behavioral Health Reimbursement Parity

October 15, 2020

California recently passed a law expanding the requirements of existing behavioral health parity statutes to require that plans reimburse all “medically necessary” behavioral health treatment, including substance use disorder treatment, starting in 2021.

Plans will be required to base their decisions about medical necessity on evidence-based standards developed by nonprofit professional associations like the American Psychiatric Association’s Diagnostic and Statistical Manual of Mental Disorders (DSM-5). Previously, plans were only required to provide coverage at parity for nine behavioral health disorders.

By Peter Johnson

California recently passed a law expanding the requirements of existing behavioral health parity statutes to require that plans reimburse all “medically necessary” behavioral health treatment, including substance use disorder treatment, starting in 2021.

Plans will be required to base their decisions about medical necessity on evidence-based standards developed by nonprofit professional associations like the American Psychiatric Association’s Diagnostic and Statistical Manual of Mental Disorders (DSM-5). Previously, plans were only required to provide coverage at parity for nine behavioral health disorders.

The DSM-5, considered to be the gold standard of psychiatric diagnostic criteria, contains hundreds of mental health disorders — which means that California plans will need to drastically expand their coding for behavioral health treatment.

California payers opposed the legislation. Charles Bacchi, the CEO of the California Association of Health Plans, wrote in an editorial in the San Francisco Chronicle that “the bill writes into California law a narrow definition of medical necessity that will disrupt the ability of physicians and therapists to determine what is clinically appropriate for their patients.”

However, providers have said the opposite problem exists — that insurers have turned down medically necessary care due to the payers’ internal standards. California behavioral health care providers and patients have found reimbursement rules arbitrary, and acute services have not been reimbursed at proper levels, according to a September 2020 study prepared by Georgetown University Professor JoAnn Volk for the California Health Care Foundation.

A managed care policy expert who spoke to AIS Health on background says that insurers opposed the legislation out of concern that they would have to pay for indefinite care of chronic behavioral health conditions. The expert pointed out that there’s limited data on the efficacy of long-term treatment for behavioral health conditions, and as a result, plans will struggle to implement the kind of quality and efficacy metrics for behavioral health providers that are standard practice in network design for physical care.

Volk agrees that the literature on chronic behavioral health care is still emerging, but she points out that plans cover a wide variety of chronic physical conditions.

“There are chronic care issues here, and issuers may say that it seems like a really open-ended treatment plan,” says Volk. “But that’s what they do with diabetes and other lifelong illnesses. In that regard, it’s not different.”

Some Insurers End Broad Telehealth Cost-Sharing Waivers

October 13, 2020

When the coronavirus pandemic bore down on the U.S., health insurers not only moved to waive cost sharing for COVID-19 testing and treatment but also for telehealth visits of all varieties. However, some major insurers have now ended their across-the-board cost-sharing waivers for non-coronavirus-related telehealth visits, putting certain members on the hook again for copays, coinsurance and/or deductibles if they opt for a virtual appointment.

“I think what they’re trying to do is transition to a more sustainable model where the televisit is really an alternative to the in-person visit,” says Dan Mendelson, founder of consulting firm Avalere Health. “They need some kind of a copay there to limit unnecessary utilization.”

By Leslie Small

When the coronavirus pandemic bore down on the U.S., health insurers not only moved to waive cost sharing for COVID-19 testing and treatment but also for telehealth visits of all varieties. However, some major insurers have now ended their across-the-board cost-sharing waivers for non-coronavirus-related telehealth visits, putting certain members on the hook again for copays, coinsurance and/or deductibles if they opt for a virtual appointment.

“I think what they’re trying to do is transition to a more sustainable model where the televisit is really an alternative to the in-person visit,” says Dan Mendelson, founder of consulting firm Avalere Health. “They need some kind of a copay there to limit unnecessary utilization.”

Yet Shawn Martin, CEO of the American Academy of Family Physicians, says that reinstituting financial barriers to virtual care may not be the wisest move as the pandemic continues and flu season ramps up. “By doing so, insurers” are essentially incentivizing a higher risk modality, or they are incentivizing the most risky behavior, which is people don’t seek care at all,” Martin says.

CVS Health Corp.’s Aetna is one health insurer that has recalibrated its telehealth coverage policy. For its members in fully insured commercial plans, Aetna will continue waiving cost sharing for virtual and in-person coronavirus-related diagnosis and treatment through Dec. 31. But its previous policy of waiving fees for all types of telehealth visits ended as of June 4, says an Aetna spokesperson.

For members of Anthem’s individual market or fully insured employer plans, waived cost sharing for non-coronavirus-related telehealth ended Sept. 30. Anthem’s Medicare members will continue to receive telehealth cost-sharing waivers for all types of visits through Dec. 31.

UnitedHealthcare says in a recent update on its website that for its individual and fully insured group health plan members, “there is $0 cost-share for non-COVID-19 related telehealth visits with network providers through Sept. 30, 2020. After that date, members will be responsible for any copay, coinsurance and deductible, according to their benefits plan.”

Meanwhile, some health insurers — such as Highmark Inc. and Independence Blue Cross — are choosing to continue their broad telehealth cost-sharing waivers, according to a running list of pandemic-related insurer actions compiled by America’s Health Insurance Plans.