Although I typically blog on Medicare matters for agents, I wanted to weigh in on week one of the Affordable Care Act’s first ever Open Enrollment. The Open Enrollment will last for 6 months from October 1st, 2013 through June 30th, 2014, although those looking for coverage effective 1/1/2014 will need to apply by 12/15/13. There were a couple main tenants of the ACA which stuck out in my mind:
- Shopping for Health Insurance will be as easy as comparing airline prices on Kayak. Not so much. I think this generalization was always a bit of a stretch, however, the current “glitches” in the healthcare.gov website look problematic. Will they be resolved? Eventually, but it’s hard to say if this will occur in days, weeks or months.
- If you like your Insurance, you can keep it. Maybe. However, many individual policies are being terminated and many employers are eliminating coverage for part time employees or employee spouses and driving them to the exchanges. We may see the same impacts on the small group market over time, as well.
- You can keep your doctor. Possibly. Most plans are keeping their costs low by using “narrow networks”. The lower than expected premiums on the exchanges are likely a result of these narrow network plans. As a result, access to care or keeping your doctor may not be an option if you opt for one of these plans. For example, in Washington state, Seattle Children’s Hospital is suing the DOI for approving plans that exclude them from the network. Five of the seven plans in Washington state do not include SCH and SCH is the only local hospital that performs many complex surgeries for children. In Dallas, only one of three plans include Baylor Hospital. Expect these narrow networks to become a bigger story as the ACA rolls on. Look forward to more lawsuits as hopitals find themselves locked out of certain markets.
- The ACA will bend the cost curve. Almost a definite no, in current form. The ACA was constructed with an 80% mandatory minimum loss ratio and many of the low income shoppers are price insensitive (meaning, their premium, regardless of what the insurance company charges, is capped by their income). Therefore, a plan with a higher premium and broad network (although perhaps not appealing to a non-subsidized shopper), could look quite good to a shopper who’s premium is capped based on income. This provides an incentive for the insurance company to charge higher premiums, pay out strong reimbursements to providers to ensure broad participation, to maximize the premium per enrollee and therefore maximize the 20% that they are allowed to keep. The additional premium is invisible to the shopper with a cap on premium and therefore simply gets passed onto the taxpayers. Frankly, I’m a little surprised there aren’t more high premium, broad network plans to attract the price insensitive shopper, but maybe I’m missing something here??
All in all, it will be interesting to see what the coming weeks unfold. There are certainly benefits to the ACA for many Americans, but there are also issues in the law that will cause “unintended consequences”. Unfortunately, while it would be preferable to see some of these provisions improved, it seems that there is little appetite to improve the law and the options are to keep it as is or to repeal it.
Now, back to Medicare!