Andy Slavitt said today that he expects insurers to have individual health products on the shelves in 2017.
Slavitt, a former UnitedHealth Group Inc. (NYSE:UNH) data unit head who is now the acting administrator of the Centers for Medicare & Medicaid Services (CMS), talked about how the commercial health insurance market might look next year during a hearing in Washington, D.C.
The House Energy & Commerce oversight subcommittee organized the hearing to look at CMS administration of the Patient Protection and Affordable Care Act (PPACA) reinsurance program.
“I wouldn’t characterize that our job is to convince people to stay” in the individual market, Slavitt said at the hearing.
But he added, based on conversations with regulators and industry experts, that he expects to see some issuers enter the market while others will leave. Slavitt said he anticipates that the overall level of product supply will be comparable.
CMS describes a consumer who is using the PPACA public exchange system as having a “full shelf” if the consumer can choose from a menu of exchange plans from at least three issuers, Slavitt said.
For 2016, he said, about 90 percent of public exchange users have been able to shop from full shelves.
PPACA calls for the parent of CMS, the U.S. Department of Health and Human Services (HHS), to collect a total of $25 billion in cash from a wide range of health coverage issuers for the 2014, 2015 and 2016 coverage years; to send $5 billion of the cash to the U.S. Treasury; and to use $20 billion to help issuers of individual major medical coverage pay the bills of enrollees with catastrophic claims.
PPACA says that, for 2014, HHS should collect $12 billion from issuers, send $2 billion to the Treasury and use $10 billion to help insurers with catastrophic claims.
For 2015, the reinsurance program is supposed to collect $8 billion in program revenue and send $2 billion to the Treasury.
Slavitt said at the hearing that CMS ended up collecting $9.7 billion in reinsurance program revenue for 2014, as CMS predicted it would in April 2015. CMS paid about $8 billion in reinsurance benefits for 2014, he said.
CMS expects to collect $6.5 billion in new program revenue for 2015, and it’s also keeping $1.7 billion in 2014 revenue not paid out for 2014 in the program fund, Slavitt said.
CMS will send $500 million in program cash to the Treasury for 2015, Slavitt said.
Some Republicans in Congress have argued that PPACA requires CMS to use reinsurance revenue to pay the Treasury before it pays the insurers, and that analysts at the Congressional Research Service have supported that interpretation.
Slavitt said CMS lawyers believe PPACA is clear about what CMS should do if CMS collects the amount of revenue described in the statute. However the statute is silent about what CMS should do if actual revenue falls short of what the statute says the program should collect.
Rep. Diana DeGette, D-Colo., asked Slavitt about the impact of the end of the PPACA reinsurance program on health insurers.
“Do you think when it phases out, the bottom’s going to fall out?” DeGette asked.
“I don’t think so,” Slavitt said.
“Why not?” DeGette asked.
“I think the market now has a better feel for the people being insured,” Slavitt said.
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