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Life Health > Health Insurance

3 ways the PPACA exchange picture has changed

By Allison Bell

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The first Patient Protection and Affordable Care Act (PPACA) public exchange coverage has been in effect for almost a year, and the exchanges have gotten through one-third of their second annual open enrollment period.

But, even though PPACA World has been in place since Jan. 1, the exchange program picture is wavier than ever.

The enrollment numbers look better, but are confusing; the nature of the exchange plan customer base is still evolving; and it’s still not clear what the rules will be.

The new $1.1 trillion temporary government spending authorization bill that Congress passed over the weekend includes a provision that requires the U.S. Department of Health and Human Services (HHS) to use money from profitable health insurers — and only cash from profitable health insurers — to buffer insurers against poor individual health insurance underwriting performance.

The law prohibits HHS from using other funding sources to help insurers if a high percentage of health insurers have weak individual major medical underwriting results.

Steve Zaharuk, an analyst at Moody’s Investors Service, says the change could change the playing field for new nonprofit, member-owned “CO-OP” plans, and other plans that assumed the risk corridors program would give them the flexibility to price coverage aggressively.

See also: PPACA 2016: How will exchanges pay their way?

For a look at other factors making the true exchange picture hard to see, read on.

Mitch McConnell

1. The PPACA “3 R’s” risk-management programs are up against a tough fourth “R”

The risk corridors program is one of three major PPACA risk-management programs. The others are a temporary reinsurance program and a permanent risk-adjustment program.

HHS has known for months that it could face tough limits on how it will pay for the risk corridors program, and it has already talked about how it plans to proceed if it has to rely entirely on contributions from health insurers’ to fund the program.

But new spending bill risk corridors funding restriction may be a sign of the reality that the PPACA 3 R’s programs will coming up against another force that starts with the letter R: Republicans.

Republicans will control the Senate as well as the House, and they repeatedly vowed to do what they can to repeal PPACA, block implementation of PPACA programs, and prune the programs they can’t repeal.

Republicans have also won resounding victories at the state level. In Vermont, for example, Democrat Peter Shumlin returned as governor. But he was unable to win a majority of the vote, and he has ended plans to set up a government-run “single-payer” health care system.

Traditionally, however, health insurers and hospital companies have had strong relationships with the Republicans as well as with the Democrats.

Securities analysts have been assuming stability in the PPACA Medicaid expansion and public exchange programs as reasons for optimism about publicly traded hospital and health insurance companies.

Apple and orange

2. Comparing the 2015 exchange plan enrollment figures with the 2014 enrollment figures is hard

Early public exchange enrollment is much higher than it was a year ago, when severe system glitches crippled the application process, but it’s not always clear how or whether exchanges are including private exchange plan renewal business in their qualified health plan (QHP) selection totals.

HHS includes exchange users who are sticking with the exchange system by changing QHPs in its enrollment totals.

Covered California is leaving all known renewal business out of its QHP selection totals.

At other exchanges, it’s not always easy to tell which QHP selection activity is the result of people getting covered for the first time, or replacing coverage that was ending, and how much is the result of churn.

Managers of Connecticut’s state-based exchange, Access Health CT, have tried to break new enrollment out from renewals. At that exchange, QHP issuers have received enrollment information from 66,064 people who are renewing QHP coverage and 19,402 people who are buying QHP coverage for the first time.

In Hawaii, the Hawai’i Connector managers have received renewal information for 180 people and what they believe to be new QHP applications for 1,971 people. Managers there say some insurers have to process renewal business before they can start processing applications for new coverage, and that a renewal business backlog could lead to opportunities for system information gaps.

Meanwhile, because the open enrollment period for 2014 QHP coverage lasted from Oct. 15, 2013, through roughly mid-April 2014 in most of the country, and the open enrollment period for 2015 coverage is supposed to last from Nov. 15, 2014, through Feb. 15, 2014, the exchanges appear to be confused about how to show year-over-year comparisons.

In Minnesota, for example, managers of the state-based MNsure exchange presented two sets of comparisons for some indicators. That exchange compared the first month of the first enrollment period with the first month of the second enrollment period, and it also compared results for the period from Nov. 15, 2013, through Dec. 15, 2013, with results for the period from Nov. 15, 2014, through Dec. 15, 2014.

Similarly, when exchanges try to compare new enrollee demographics with 2014 coverage enrollee demographics, some states are comparing this year’s early enrollees with last year’s early enrollees. Some are comparing this year’s early enrollees with all of the 2014 enrollees. Others are not making clear explanations of what they’re comparing.

MNsure is comparing early 2015 enrollee information with information for all consumers who enrolled in MNsure QHP coverage in 2014.

There, the percentage of QHP enrollees ages 55 and older is now 41.4 percent, up from 31.9 percent for 2014 enrollees. It’s not clear whether that represents a real shift, or a result of differences between consumers who sign up for QHP coverage early and consumers who sign up for QHP coverage at the last minute.

Four metal bands, with platinum getting fogged

3. Platinum plans may be fading away

MNsure is only of the exchanges that report exchange QHP metal level selection information on a regular basis.

There, only 8.5 percent of the enrollees have picked high-actuarial-value platinum coverage so far this year, compared with 27.5 percent who picked platinum coverage during the open enrollment period for 2014 coverage.

The percentage of exchange users who have picked gold plans has increased to 21 percent, from 12 percent.

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