Holding a nonpartisan, evidence-based conversation about how the Patient Protection and Affordable Care Act of 2010 is affecting the U.S. health insurance system is still difficult.
Deep Red enemies of Obamacare gave it a permanent F in 2010.
Deep Blue supporters gave the Affordable Care Act a permanent A, for “Amazing,” or a grade of “We could easily fix the problems, if only the Republicans would cooperate.”
Insurance advisors may be able to look past partisan rhetoric, but they may be too busy helping clients with specific PPACA-related problems to think much about the big picture.
We’ve tried to help by developing a system report card, and to spark discussion by showing how we fill out the report card, as of early June 2016. We’ve assigned letter grades ranging from F (or zero) to A (or 4). When we computed grade point averages (GPAs), we deducted 0.3 points for a minus and add 0.3 points for a plus. A B+, for example, is worth 3.3 points.
For a look at how we came up with a grade for the health insurance system of, roughly, a C+/B-, read on:
Employee Benefits Security Administration: C-.
It seems to have helped other agencies draft PPACA regulations in a methodical way. Labor law firms say it’s been auditing health plans for several years, but it posts no health plan compliance administration data.
Internal Revenue Service (IRS):A.
It implements PPACA requirements in a methodical ways, and it and its watchdog agencies post clear IRS PPACA program administration data in a consistent way.
U.S. Department of Health and Human Services (HHS)*: D+.
HHS runs PPACA programs through its Centers for Medicare & Medicaid Services division. CMS runs PPACA programs through its Center for Consumer Information & Insurance Oversight. HHS got complicated PPACA programs running quickly, in the face of fierce Republican opposition. But it rarely publishes the kind of data that a lay observer could use to determine how any particular PPACA program, other than exchange program enrollment, is doing.
State insurance regulators: B.
They developed PPACA regulations and procedures quickly. But, aside from Vermont, where the insurer strangled a Consumer Operated and Oriented Plan (CO-OP) in the cradle, they were slow to react to CO-OP problems.
An assister helps a consumer sign up for coverage at a health fair in Sacramento, Calif. (Photo: Rich Pedroncelli/AP Photo)
2. PPACA coverage expansion programs
CO-OP carriers: D.
When Kent Conrad and Max Baucus retired from the U.S. Senate, they orphaned this effort to use federal loans to create a new family of nonprofit, member-owned health insurers. Thirteen of the 23 CO-OPs have already died from a combination of HHS red tape, PPACA risk management problems, and bad pricing moves. But they have inspired entrepreneurs to create other new, non-CO-OP carriers, such as Oscar Health Insurance and Canopy Health Insurance, that could prove to be sturdier than the CO-OPs.
Coverage expansion program cost: ?
Analysts at Conning have suggested that coverage expansion may be costing at least $685 per newly insured American per month, or about $8,200 per year.
Medicaid coverage expansion*: A.
A research team led by Kosali Simon of the University of Indiana found that Medicaid expansion has led to a clear improvement in childless, low-income adults’ access to health care services. In expansion states, the average number of days when health problems kept those people from working fell to 9.3 in 2014 from 10.6 in 2013.
Health insurance exchange system: B-.
Boards of exchanges in some states, such as California, Colorado and the District of Columbia, post clear, detailed budget and performance data. Boards of some other exchanges seem to have studied at the HHS School of Health Program Transparency.
Advance premium tax credit (APTC)*: B-.
APTC money helps millions of moderate-income exchange plan users pay for coverage. But the APTC program requires recipients to predict what their income will be in the coming calendar year. The APTC is so complicated to administer that the IRS has had terrible problems with programming its systems to process APTC returns properly.
Cost-sharing reduction program: B.
This program has been quietly helping lower-income exchange plan users pay health plan deductibles and co-payments. House Republicans have asked whether HHS has the legal authority to fund the program.
(Photo: Allison Bell/LifeHealthPro)
3. PPACA commercial insurance architecture
Ban on annual and lifetime benefits limits: A+.
Ban on use of personal information other than age and location in health coverages sales decisions in open enrollment period coverage sales decisions: A+.
Guaranteed renewability: A+.
Rep. Jeff Sessions, R-Texas, and Sen. Bill Cassidy, R-La., have proposed killing most PPACA commercial health insurance provisions but keeping this in a PPACA overhaul bill.
Essential health benefits package: C.
The standardized benefits package is supposed to be a pillar of the PPACA health plan comparison shopping system. It was also supposed to help all U.S. children get preventive dental services. Instead, administration of the children’s dental benefit mandate is so poor that HHS doesn’t even publish clear data on the percentage of children who have (or lack) preventive dental services benefits.
Metal levels: A.
Even harsh many critics of PPACA seem to like the platinum-gold-silver-bronze system.
Preventive services package: B.
PPACA now requires non-grandfathered plans to cover basic preventive services, such as checkups and vaccinations, without imposing out-of-pocket costs on the patients. Surveys have shown that Americans’ overall use of preventive services has been increasing since the requirement took effect. But the Kaiser Family Foundation found in the spring that only 47 percent of the consumers it surveyed knew about the preventive services benefits requirements.
Summary of benefits and coverage, and the uniform glossary: B.
Everyone seems to like the concept of having all plans create a short, standardized “milk carton label” for health plans. Everyone seems to think the struggle to keep the notices short is conflicting with the need for completeness and readability.
4. PPACA ‘three R’s’ insurer risk management programs
PPACA reinsurance program: B.
This program is supposed to use cash from a fee imposed on health insurers to provide a cushion for individual coverage issuers with catastrophic claims in 2014, 2015 and 2016. HHS has collected enough revenue from the fee to pay obligations to insurers for 2014 and 2015. But PPACA also calls for the reinsurance program to make payments to the U.S. Treasury. The program has not yet brought in enough to make the payments to the Treasury.
PPACA risk corridors program: F-.
This program was supposed to use cash from exchange plan issuers that did well in 2014, 2015 and 2016 to help issuers that did poorly. The program collected only enough revenue to pay about 13 percent of obligations for 2014. Health Republic Insurance of Oregon, Highmark, Moda Health and Blue Cross and Blue Shield of North Carolina have sued the federal government for more than $500 million in program payments. New York state officials have hinted that they might sue on behalf of a failed CO-OP there.
PPACA risk-adjustment program*: ?
This program is supposed to use cash from an individual or small-group health plan in a market with low-risk enrollees to compensate plans with high-risk enrollees. HHS has published some data on the program, but not in a format that’s easy for a layperson to understand. Some new insurers say program rules discriminate against new insurers, because new insurers start out with little information about the health of their enrollees.
(Photo: Library of Congress)
5. PPACA’s sisters
Employee Retirement Income Security Act of 1974: A-.
ERISA, a law that’s supposed to minimize state-to-state differences in benefits rules, has been helping employers use a combination of self-insurance and stop-loss plans as a refuge against some PPACA rules that apply to fully insured employer health plans. The Supreme Court recently handed down a decision that uses ERISA to keep state insurance regulators from pestering self-insured plan sponsors with new mandatory survey programs.
Health Insurance Portability and Accountability Act of 1996: C.
PPACA seemed to be on track to make the very limited HIPAA health coverage portability requirements obsolete. Instead, federal agencies have been issuing new HIPAA health privacy and health information data security requirements. Covered entities must protect health information against data breaches, and they also must be ready to send patient records to a third party of a patient’s choosing within 30 days of receiving the patient’s request.
Mental Health Parity and Addiction Equity Act of 2008: C.
This law is supposed to keep health plans from using “non-quantitative treatment limits” to make any mental health benefits they offer than skimpier than their other health benefits. EBSA said in 2014 that employer compliance with the MHPAEA seems to be weak. The agency has been gearing up for what could be a tough wave of MHPAEA compliance audits. It recently published a long list of “red flags” its investigators will consider when screening potential audit targets.
6. Health care
Administrative burden*: F.
The PPACA has led to the creation of so many new forms that federal paperwork review filings have become an important source of information about federal implementation of the law.
Chronic disease prevention and control*: B.
Americans seem to be getting more checkups because of the PPACA coverage expansion rules, but there’s no clear evidence that improved access to care has improved diabetes management or management of other chronic conditions.
Health plan and health care quality: D.
Federal officials have focused almost exclusively on price when talking about how consumers should shop for PPACA exchange plans, and they are only now just starting to implement PPACA enrollee satisfaction survey and quality reporting requirements.
Health plan financial stability*: D.
Mark Farrah Associates says underwriting gains fell 53 percent between 2013 and 2015 in the large-group market and 67 percent over that period in the small-group market. Insurers’ underwriting loss in the individual market increased to $3.6 billion in 2015, from $1.2 billion in 2013. In the individual market, average premiums per member per month increased about 60 percent. Claims per member per month increased about 100 percent.
(Photo: Ted S. Warren/AP Photo)
The total number of people with PPACA-compliant individual major medical coverage has held steady at about 16 million from 2014 through 2016, according to Kaiser data. But the percentage of individual exchange plan users who said their coverage is a good value fell to 48 percent this year, from 58 percent in 2014.
Small groups*: C.
Enrollment fell about 20 percent between 2013 to 2015, to about 13 million.
Large groups*: B-.
The International Foundation of Employee Benefit Plans tends to get survey responses from large employers. Only 3 percent of all employers that participated in a recent survey by the foundation said they were unlikely to be offering health benefits in five years.
The Association of American Medical Colleges found that, in June 2015, 32 percent of consumer survey participants reported having had trouble with finding a provider. That was up from 16 percent in June 2014.
Insurers have expressed frustration by slashing agent sales commissions for individual coverage this year. But Mark Bertolini of Aetna has said selling through a PPACA exchange saves his company an average of about $1,300 per newly acquired enrollee.
Agents and brokers*: D.
Exchange producers have faced waves of compensation cuts and other hassles this year, but, in states such as California and Colorado, they were outselling nonprofit exchange helpers. They may be starting to increase consumer awareness of the reasons why working with an agent can be useful.
*Elements classified as critical to the viability of the current health insurance system.
Our overall GPA: C+/B- (2.5, with three missing grades).
Our GPA for critical elements: C+ (2.3, with three missing grades).
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