For the most part, the 2014 open enrollment season is now over. With last week’s deadline of March 31, we have reached a major milestone in the implementation of the Affordable Care Act (ACA). Initial estimates suggest that more than 7 million individuals are now enrolled in coverage through the federally-facilitated or state-based health insurance exchanges (HIX). And, that total may rise during special enrollment extensions being granted by some exchanges through the end of April.
Unfortunately, there is little time for executives to catch their breath. While what’s gone right and wrong will continue to be debated in the halls of Congress, discussed in company board rooms and highlighted in the media, stakeholders now need to begin focusing on the future.
The race to the beginning of 2014 open enrollment was an expensive and time consuming marathon, but now the industry needs to consider switching gears and focusing on the long road ahead. There are several short-term deadlines approaching that will likely require stakeholders to think broadly and strategically about their desired long-term positioning (see timeline below).
States: If contemplating a switch in the operational status of its HIX, states should consider not just how important short-term economic and political goals might be achieved with a new exchange model, but also whether that new model will be sustainable given other resource and investment priorities. States that faced challenges are likely to focus on how to make technology better and how to more effectively reach eligible enrollees. In addition, health care stakeholders will be paying increased attention to alternative models of Medicaid expansion that have begun to emerge from states such as Arkansas, Iowa, Pennsylvania, Michigan and, more recently, New Hampshire. As asked in the February 4, 2014, Health Care Current—have these states found a way to reduce the effects of churning by allowing health care consumers a choice in the matter? The result could be more cost savings for states and greater quality for consumers and other states could follow.
Employers: Employers are expected to optimize health benefit packages for their employees in ways that take advantage of developing opportunities and that make sense for their business in terms of the bottom line and attracting and retaining employees. They could be doing this while managing federal requirements for employers that continue to evolve. In February, the IRS delayed again the requirement for mid-sized employers to offer insurance to their employees until January 2016, while keeping the January 2015 deadline for employers with more than 100 employees. Also, Congress continues to wrestle with the definition of “full-time,” as the House of Representatives voted last week to increase the required hours from 30 to 40. These very complex and ever-changing issues are impacting many other operational and strategic choices.
Health plans: In thinking about whether they will participate in the exchanges during the 2015 benefit year, health plans may need to assess whether their products and pricing were on target this year and whether they will modify what they offer and raise premiums in the next go-round—despite having only a few months of data (i.e., spending patterns, disease burden) on their new customers. And, if the health plan still has a significant legacy individual pool of “grandmothered” products, how should the overall portfolio of risk be managed from a risk and pricing perspective? The continued growth in Medicaid and Medicare and the move toward defined contribution plans are prompting many health plans to think more generally about how best to attract, acquire, serve and retain members who can choose among options. This shift in focus is leading them to look closely at whether their current capabilities—designed and optimized to sell and serve group plans—are adequate for business success in the individual market. Lastly, for some plans, the promised performance of their new narrow networks has their group customers asking for a quote.
A new Deloitte report suggests that health plans are focusing on meeting regulatory requirements and strengthening retention capabilities in the near term, but are expecting to widen their priorities in the longer term to address consumer preferences, consumer experience and distribution capabilities. Among the 46 health plans surveyed, nine out of 10 said investments in two areas—product development and pricing and consumer experience—will be critical or highly important for improving their company’s competitive position in the commercial individual market over the next three years.
Making these strategic decisions is especially challenging because of new and evolving uncertainties:
- Consumer attitudes and behaviors: Will new enrollees stay enrolled and continue paying premiums? Why are some individuals still uninsured and what might it take to get them to enroll? Are subsidies and penalties sufficient incentives? Did people manage to stay unaware of their options? Is the reluctance to enroll a matter of attitude or affordability?
- Variation across states in operational approaches, eligibility requirements and technical difficulties: How will the various health care stakeholders manage while marketplace characteristics continue to evolve amidst shifting political climates?
- The ever-present possibility of regulatory and legislative changes and the potential for judicial appeals: For example, what will the outcome be if the U.S. Supreme Court rules that individuals in the federally-facilitated HIX do not qualify for subsidies?
- Increased patient load: Will providers be able to handle the increase in patients expected with greater access to insurance coverage? Will narrowing networks have an effect on patient loads or the prices providers are willing to accept?
- Exceptions to drug formularies and increased utilization management controls: What effects might these approaches have on the use and spending on prescription medications for health plans in the HIXs?
- “Copper” benefit design products that would offer less coverage at a lower premium: Are they a good idea? Clearly the uninsured consumer still on the sidelines continues to be the largest individual market segment. A competitor offering a cheaper “copper” product might be successful with this segment.
Though the future ahead is filled with a great deal of uncertainty, it is expected to take shape in part through the cascading decisions that different stakeholders make in response to upcoming deadlines.
It’s not yet clear where the future will take us, but, one thing feels certain: turning our attention to preparing for the possibilities that lie ahead seems critical for success. This could mean placing some bets—even if the return is uncertain.