The U.S. Private Health Insurance Market
Iowa Waiver Request: Iowa on the verge of having no insures selling individual insurance on the exchanges in 2018 until ____________ agreed to stay.
Medica
Where do we see pure community rating for pricing for insurance?
Medicare advantage (Part C) and Part D--These work because premiums are heavily subsidized
What are the qualifications to receive either the premium or cost-sharing subsidies?
Must be a U.S. citizen or legal resident and must NOT have access to affordable, comprehensive employer insurance or public insurance.
True or false: The Affordable Care Act is the most significant U.S. health care reform since 1965 when Medicare and Medicaid were created
True
What impact did the ACA Insurance Mandate for large employers, "Play or Pay" have?
"Play or pay" insurance mandate where employers with 50 or more employees must pay a penalty if they fail to offer full time employees affordable, comprehensive coverage --Full time employees are defined as those who average 30 or more hours per week --Largest effect is on the 50-100 employee firms and on firms with many low wage workers
Describe the ACA premium subsidies.
-Help pay for health insurance premiums -In the form of a premium tax credit based on estimated income. -Can choose advanced option where credit paid directly to insurer -Available for all plans sold on the exchange EXCEPT catastrophic plans -Must have income between 100% and 400% of the FPL -Based on sliding scale
Describe the Cost-sharing subsidies.
-Help pay for other OOP costs like deductibles, copayments, and coinsurance -In form of limits on max OOP costs -Insurers charge patients the lower costs and then are reimbursed by the government -Only available for silver plans sold on the exchanges -Must have incomes up to 250% of the FPL -Based on a sliding scale
What are the 6 ACA regulations for employer and individual markets?
1. Dependents can stay on parents' insurance plan until age 26 2. Guaranteed issue (insurance company has to see you a policy) 3. NO pre-existing condition exclusions (have to cover all treatments, medications, etc for pre-existing conditions) 4. Free preventive care for all new plans ( not "grandfathered" plans, rules can change what is considered preventative care) 5. No lifetime maximum and phased elimination of annual limits 6. Limits on out of pocket costs (for covered costs, no experimental treatments)
Describe the Main issues about the Pre-ACA period from the article "Money Won't Buy you Health Insurance" by Donna Dubinsky
1. Each member of the family had to have their own individual insurance plane (very hard to get a family plan) 2. Pre-conditions that were relatively minor were reasons they were denied 3. Have to apply to multiple insurance companies at same time (that way you don't have to say you have been denied coverage before) 4. Had to hire insurance broker 5. Premiums increase by 20% each year
Why is the individual health insurance market struggling so much? Post-Election issues:
1. Enormous uncertainty 2. withholding payments for cost-sharing subsidies (huge problem) 3. congress has failed to definitively fund cost-sharing subsidies 4. Trump administration has reduced the open enrollment period and decreased funding for navigators and open enrollment advertising 5. Congress has failed to agree on any short term fixes for the market 6. Trump administration has been slow to respond to stat waiver request.
Employer health insurance premiums are exempted from which taxes?
1. Federal income tax 2. State and local income tax 3. Social security 4. Medicare
Why is the individual health insurance market struggling so much? Implementation issues
1. Grandfathering of pre-ACA plans (obama administration and state insurance commissioners) 2. Funding for reinsurance program was further reduced (congress)
ACA--What's not working?
1. Individual health insurance market still has SIGNIFICANT problems --Large premium increases (problematic for people who are not eligible for premium subsidies) --Narrow network plans --Large deductibles create access problems for some patients --Insurers leaving the exchange markets (no competition) 2. Coverage gap in states that did not expand Medicaid 3. Still have 9-10% of the population that is uninsured
What are the rules that insurance policies sold on and off exchange must follow?
1. Modified commenting rating where premiums may only vary by age (1:3), geographic area, tobacco use (1:1.5), and number of family members. --Tobacco users (1:1.5)-tobacco users spend 50% more --Age (1:3)-older people (say 60's) cannot pay more than 3x the amount of a 20 year old 2. Specified coverage tiers; all new plans must cover essential health benefits 3. Minimum loss ratio 4. Also must follow new insurance rules
What are the problems associated with the pure community pricing model?
1. Most prone to adverse selection 2. People are not paying an accurately decided premium 3. health people leave the pool, premiums go up as they leave= adverse selection health spiral 4. No incentive to stay health, premium wise
What are the ACA effects on small employers with < 50 employees?
1. Not subject to employer insurance mandate 2. Must follow new insurance regulations (6 ACA regulations) 3. Change from experience rating (in most states) to modified community rating 4. Creation of state level exchanges (marketplaces) 5. Some small employers will receive subsides to help them purchase health insurance
ACA--what's working?
1. Number of uninsured is at an all-time low 2. the process of purchasing individual health insurance in much simpler 3. possible for people in poor health to get health insurance 4. Less uncompensated care for hospitals, particularly in states that expanded Medicaid 5. Some improvement in the availability of affordable, comprehensive health insurance for low wage workers
Why is the individual health insurance market struggling so much? ACA design issues
1. Protection for people with pre-existing conditions resulted in sicker people gaining insurance, but also made the risk pool sicker and raised premiums 2. Allowing young adults to stay on parents plans until 26 removed young generally healthy people for the individual market 3. Reinsurance program was only funded for a limited period of time 4. Penalties for not having insurance were relatively small 5. Subsidies only for lower income individuals
Explain what changes the Iowa Waiver would make to the individual insurance market in Iowa
1. Reinsurance for people with yearly costs over $100,000 2. Increased subsidies for younger iowans and reduced subsidies for older Iowans 3. Some new subsidies for people over 400% of the FPL, but reduction in cost-sharing subsidies 4. single, standard plan (silver) sold on the exchanges
What are the problems associated with modified community rating?
1. Same problems as the other two just less severe 2. Still adverse selection (ex. health 60 year old paying the standard 60 year old premium is likely to leave the pool)
Describe the main issues about the Pre-ACA period from the article "Life, Interrupted: Medical Bills, Insurance and Uncertainty" by Su;eolca Jaouad
1. Sick people usually have a hard time working but need health insurance the most, but are also denied due to pre-existing conditions 2. During hospital stays, she would have doctor's come visit her that were outside of her provider network 3. Her mother's full time job became handing her medical bills
How do we fix the individual health insurance market? (short term)
1. commit to funding cost-sharing subsidies--if don't fund cost-sharing subsidies, insurers will raise premiums to compensate 2. Funding for reinsurance program 3. Expand subsidies to some people who are not currently eligible 4. Waivers to address state-specific problems
What are the problem associated with the experience rating pricing model?
1. people who are sick and old have the highest premiums cannot work to afford it. A solution= premium subsidies 2.Administratively expensive system to have
The Patient Protection and Affordable Care Act (ACA) was signed into law in March of ____________. Also known as ________________________.
2010, Obamacare
Define Pure Community Rating
A person's premium is based on the average expected claims in their geographic area. Sicker people pay the same premiums as healthier people. Example: Everybody living in Johnson County, Iowa with the same health plan pays $585 per month for their health insurance
Define experience rating
A person's premium is based on their own expected costs, i.e. people in poor health or with more health risk factors pay higher premiums than healthier people Example: A 20 year old with no chronic illnesses pays $200 per month, a 60 year old with diabetes and hypertension pays $1800 per month
What tier do all plans have to offer? What is the actuarial value and what does this mean?
All plans have to offer a silver tier plan. Silver tier plans have an actuarial value of 70%. This mean that 70% of costs at the population value for that plan (every person enrolled in that plan) is paid for by the insurer
Define Modified Community rating
Allow premium variation on selected characteristics (e.g. age, smoking status) but restrict premium variation based explicitly on health status Example: all 25 year old non-smoker in an area pay $300 per month and all 60 year old non-smokers pay $850 per month
What is the Individual Mandate?How does it compare to the cost of insurance? What was it pre-ACA?
Beginning in 2014, most people required to have health insurance or pay a financial penalty. --Penalty generally small relative to the cost of insurance, but penalty has increased since 2014 --some exceptions --considered a "tax" by supreme court There was no penalty for not having insurance pre-ACA
What is the ACA "Cadillac" tax? What groups of workers will be most affected by this tax?
Beginning in 2020, 40% excise tax on employer health insurance premiums above a designated threshold. --Plans included are expensive employer based plans --Only paying the tax on the amount of the premium over the threshold Employers with large amounts of sick, older people, Unionized workers
What are 4 coverage tiers? Which one has the highest premiums? Which one has the high patient cost-sharing?
Bronze, silver, gold, platinum --Bronze has the lowest premium, but the highest patient cost-sharing --Gold has the highest premium, with the lowest patient cost-sharing
Why have a list of essential benefits under the Essential Health Benefits ACA rules? Who wanted this?
Considered essential health benefits: Maternity care, mental health services, and prescription drugs the essential benefits allows for a basis for all benefits that plans must cover health care providers wanted a specific essential benefits list
Breaking new on 10/12, President Trump says the government will no longer pay what subsidies?
Cost-sharing subsidies
What major change did the ACA have on the individual Insurance Market?
Created the American Health Benefit Exchanges (aka "insurance Marketplaces")
What is the trend in Employer-Based Health Insurance premiums?
Employee costs for health insurance are increasing faster than earnings (more and more of employees compensation is taken away due to increasing premiums)
Who pays for employer-based insurance?
Employer, employee, state and Federal governments
What is the employer subsidy?
Employers pay a large percentage of the premium (employers pay a larger amount for families than single plan)
True or false: There has been many legislative changes since 2010 (ACA began)
False: No major legislative changes since 2010, but lots of debate, court cases, and rule changes
True or false: Same actuarial value means all the plans are the same
False: Same actuarial value does not mean that the plans are the same. (same actuarial value but lots of variability between what the patient pays)
True or false: The ACA decreased the amount of people in the individual market.
False: the ACA increased the amount of people in the individual market.
True or false: the premium tax credit is based on the cost of the third lowest silver plan in the area, so the amount of tax credit varies geographically.
False: the premium tax credit is based on the cost of the second lowest silver plan in the area, so the amount of tax credit varies geographically
What was the least changed by the ACA?
Fewer changes for the large employer health insurance market
What were the large changes made by the ACA?
Large changes in most states for the individual and small employer health insurance markets Large changes for Medicaid, although effect lessened by Supreme Court ruling in 2012
Who is given a lower tax subsidy in the employer-based insurance health insurance market?
Low income workers are given a lower subsidy (in a lower marginal tax bracket). This mean high income workers are given a higher subsidy
Who sets the rules for the exchange? Who run(s) the exchange?
In the ACA, the states set rules for the exchanges under federal guidelines. The federal government runs the exchanges if states opt not to create the exchanges. --Most states unwilling to or incapable of running their own exchange
What is the purpose of insurance exchanges?
Insurance exchanges are a way to present information to consumers, organize the sale of insurance, and encourage competition.
What is individual health insurance? Who buys it?
Insurance purchased directly from an insurer and no obtained through an employer or public program Self-Employed, unemployed, not offered employer insurance
Insurance policies sold on and off the exchange must follow same rules. Why does this matter?
Otherwise off the exchange would have done the experiencing rating pricing model= adverse selection death spiral
What are the two types of ACA subsidies?
Premium subsidies and cost sharing subsidies
What employers struggle to offer health insurance?
Small employers & Employers with many low wage workers Both have the same problems: less likely to offer health insurance, have less comprehensive health insurance --If employers with low wage workers do offer insurance, its a non-comprehensive plan (bad plan, high premiums, high deductible, etc) --Insurance works better for larger pools of people
Do grandfather plans have to follow these new rules for on and off the exchange?
Some exceptions for "grandfathered" plans"--already have an existing plan before ACA, does not have to follow these rules
Employers may purchase insurance from an insurance company or they may self-insure. What does it mean to self insure, and what is the benefit to employers?
The employer pays the insurance for their employees, so technically insurance is through the actual employer (employer is acting like the insurance company) Under ERISA (a federal regulation) self-insured plans avoid state insurance regulations (tax-subsidies)
What is the "government subsidy" for employer-based Insurance?
There is a tax subsidy for employer-based health insurance since neither the employer nor the employee pays taxes on the premium (this tax subsidy is expensive, costing the federal gov about 260 billion dollars)
Explain why President Trump's decision to not pay the cos-sharing subsidies occurred at such a bad time.
Timing was especially bad since premiums for 2018 had been set and the open enrollment period is approaching --Some insurers anticipated Trump's decision and factored it into their 2018 premiums --Insurers who did not do so may drop out of the market or ask permission to raise premiums
True or false: Based on President Trumps decision to cut cost-sharing subsidies, government costs are projected to increase.
True! the savings from ending cost-sharing do not compare to how much the additional cost of premium subsidies will increase
True or false: Employers make many decisions about health insurance
True--employers have an ENORMOUS amount of influence on multiple areas of health insurance
What is the impact of President Trump's decision not to pay the cost-sharing subsidies? How does this impact insurers? How does it impact enrollees?
Under the ACA, the cost-sharing subsidies must be given to eligible individuals, so they will continue to get them. Insures will have to pay for the subsidies out of they money they collect for premiums--insurers will increase premiums to compensate People who AREN"T ELIGIBLE for the premium subsidies, or who are only eligible for small subsidies are MOST affected by the increase
What is the pricing model in employer based insurance? Why does this work?
Within an employer, community rating since by law employers must not change sicker employees more for their insurance than healthier employees. Better off paying this premium through employer than getting an individualized plan
In the U.S., ________________ are a major source of health insurance coverage.
employers
Premium subsidies for the individual insurance market are only available through the ______________.
exchange
What is the pricing model across larger employers? Small employers?
experience rating pre-ACA, determined by each state post-ACA, modified community rating
