This being our 4th open enrollment under the Affordable Care Act (Obamacare), we have experienced health care reform from a unique view point.
I have enrolled Hoosiers from every walk of life, in almost every county in the state of Indiana. Being a top producer for the health insurance companies, this allowed us to become a broker advisor. A broker advisor has some influence, the carriers will listen to some of our suggestions. More importantly, the carriers will reveal interworking’s of operations.
The Affordable Care Act has some features that can be built upon, while other negative aspects should be removed.
Guaranteed issue is where one cannot be denied for preexisting conditions. This is the best feature of the ACA and should continue under the next round of health care reform.
With guaranteed issue, there needs to be cost controlling measures for the insurance companies. The first few years of the ACA, there was a government reinsurance program. This is where if claims reached a certain point, the re insurance would kick to stop the losses. Reinsurance should be included in the next round of reforms.
Risk Adjustment is a key feature of the ACA, that was supposed to help companies that took higher levels of risk. It turned into a very negative program. Carriers had to predict what level of risk they were taking prior to open enrollment. Then if they managed their risk better than what they predicted they were forced to pay. This created huge losses for companies. A carrier could look positive with premium vs claims but then they would end up owing the Government $22 million dollars. Essentially a company would be penalized. This needs to go away immediately.
Removal of ACA taxes:
Some of the taxes have resulted in higher premiums for consumers. Tax on medical device manufactures, Tax on Charitable hospitals, Tax on Drug Companies, Annual tax on Health Insurance companies, these all have lead directly or indirectly into health insurance premiums increases.
The Federal/State Exchanges
Under the ACA, the government forced all insurance companies to offer plan on the marketplace. Which sounds like a great idea until you see how the marketplaces are set up. Health insurance policies are confusing for most people to begin with, but now add the Gov. versions and it’s a true mess. The Idea of having all the plan in one place had good intentions but the result has been negative.
The market place create their own summery of benefit snap shots for each company. Most of that information was presented in a way only to confuse consumers. Best example is single & Family deductibles. The platform show family deductible and it appears to be the single deductible. It’s is obvious that architect of these snap shot does not under embedded and non-embedded deductible. The ACA law does not allow for embedded deductibles, meaning the family deductible must be met first.
Most of the states that set up their own exchanges, quickly realized that it was unaffordable to operate them. Most states dropped their state based exchange to go to the federal exchange.
Going forward market places should be determined by market conditions.
Tax Credits to make insurance affordable
Under this rule, if your income was under 400% of the federal poverty level, you would not pay more than 9.5% of income towards a policy. This gave access to a lot of people that were forces out of the health insurance markets. The process to apply and maintain these tax credits were flawed. The tax credit would be based off of the following years income, which you had to estimate. Many people had to pay back tax credits because they made more than expect. Commission sales, Overtime, Bonus and so.
With any health reform with guaranteed issued, health insurance premiums will remain high. Having a tax credit system of some kind may be essential. The tax credit should be based off previous year income, that way there is no surprise when one files their taxes. This would also eliminate most of the income verification request. I’m sure there could was of adding the ability to increase tax credits if income when down during the plan year.
May 31st of the last 3 years, 50% of the on-exchange policy holders dropped coverage. This is because they did not submit verification documents to the marketplace. This is a huge problem for carriers and members. Using previous year’s tax return may be the answer.
Specific health plans for certain markets
The government, should allow carriers to develop specific plans for the subsidized markets. These plans could have more of a managed care approach to them. If you are eligible for assistance, great, but maybe the plan should force the member to choose a primary care doctor and form a relationship with them. Along these lines, carriers should have flexibility with plan designs. There should be actuarially values the plans must meet but give each state the authority to enforce those plans.
For health plans that are not subsidized, carriers should have much more freedom on plan design. The market will determine which plan are purchased by consumers. As long as they cover pre-x but we could see the market get creative which would lower premium.
Medical Loss Ratio
Under the ACA, 80% of premium dollars has to go to claims for small group and individual health plan. This % should be adjusted for Individual plans. It is now proven the individual market has higher claims than expected. IF an insurance company can make manages their business better, they should be rewarded but have stipulations about premium increase and plan designs.
As for group health insurance, the MLR maybe helping to reduce rate increases but it should be adjusted.
All agent commissions should be removed from the 20% MLR. The agent community has suffered under the ACA, which has resulted in less young people coming into the industry. Which may have created navigators and enrollers, who are not liable for they say during enrollments.
Once the new administration takes office, their priority is repealing the ACA. This issue they will have, is under the ACA, carriers have to submit next year’s plans by May. The new healthcare law may will take 1 to 2 years to be fully implemented.
