For the first time in our country’s history, more than 91 percent of Americans have health care coverage. More than nine out of every 10 people you see have access to quality health care and are protected from the high cost of medical bills if they get sick or injured. In the face of clear indications that the Affordable Care Act is making a huge difference in the lives of millions of Americans there is a drumbeat (once again) by some observers that the sky is falling and the reform embarked on six years ago is not “sustainable.”
While there has been very inconsistent “success” across states, this does not mean that the Affordable Care Act isn’t working. Instead, it is an opportunity to make a diagnosis of why it is working so well in some areas and not working in others. There are both state-based and federal marketplace states that have health plans that are delivering good value, keeping risk pools balanced, and building a foundation for success. California is one of those places where it is working — and our lessons can be instructive as we move to the next phase of the building on, refining, and improving the Affordable Care Act. Lessons from California, other states, and those health plans that have shown they can make markets work for consumers can inform the future of health care in America.
Indicators of Success
In California—the largest and most diverse state in the nation—the launch of this new era of health care has been largely successful though certainly not without challenges and bumps along the way. Here are some of the indicators of that success:
- The U.S. Census Bureau says California’s uninsured rate has been cut in half to 8.6 percent from 2013 to 2015. In raw numbers, California decreased the number of uninsured by 3.2 million people, which is the biggest decrease in the nation and more than the next three states combined. In addition, we have continued to make progress in many areas in 2016.
- The Centers for Medicaid and Medicare Services found that Covered California had the healthiest risk mix in the nation in 2015, about 19 percent lower than the national average. This marked the second consecutive year that California had the best risk mix in the country.
- Health plans in the California market have succeeded financially, generally meeting or exceeding their (low) profit targets and not forcing consumers’ to experience big swings in premiums.
- For the individual market, not only were initial rates in 2014 lower than many predicted, over the past three years the average rate increase has been about 7 percent — lower than the frequently seen double-digit increases that consumers faced prior to the Affordable Care Act.
- Covered California is on solid ground. We are sustainable without federal or state support, with substantial reserves and funding from an assessment on plans that averages 2 percent of the combined premium both on and off the exchange. The low assessment helps carriers lower their cost to bring in new enrollees compared to the prior market — meaning more dollars are available for health care.
California’s success is anchored in the fact that our state expanded its Medicaid program (known as Medi-Cal) and launched its own state-based marketplace. Other states have also leaned-on and used all of the tools of the Affordable Care Act, such as Washington, Rhode Island, and Massachusetts. Not only have they been able to keep rates under control, but they also offer a meaningful choice of plans with meaningful coverage.
However, the broad enrollment and success in the individual marketplace has not been without challenges. Like many states, California’s rate change for 2017 at 13.2 percent is higher than what we saw in 2015 and 2016, when we posted changes of 4.2 percent and 4 percent respectively. The reason for this is simple and one we have long known would be happening. This is not a sign of any impending crisis. Rather it is an expected transition year due mostly to the end of the temporary federal reinsurance program.
Key Policies Behind the Success
The reasons California has been relatively successful include a number of “key ingredients”:
Making tough policy decisions on behalf of consumers
California made three important decisions early on that have been foundations for its success:
- The state expanded its Medicaid program — which has brought health insurance to millions of Californians. A recent brief from the Health and Human Services Assistant Secretary for Planning and Evaluation found that health insurance premiums were lower in states that expanded Medicaid.
- Covered California’s board directed it to take an active role to shape the marketplace to work for consumers.
- California—like about only a dozen other states—converted all health coverage in the individual market into “compliant” plans and created one common risk pool as of 2014.
The first two elements have received much attention, but the last has meant that in many states, health insurance companies have faced huge uncertainty about their risk mix and priced their plans poorly — often losing money. A study by the actuarial firm Milliman found that insurers struggled and were less profitable in states that allowed these transitional plans to continue. That uncertainty will be settling out for those states over the next two years as those transitional plans end and those markets gain a unified and healthier risk pool.
Creating competitive markets
Covered California not only selects plans, but also works with them to make sure they are offering good, affordable networks and choice of providers in all areas. One of the biggest drivers of affordability is that carriers know they are competing for enrollment based on value — their networks, quality, and price. The major carriers in California—including some plans that had long served the individual market and some plans with a history of serving Medicaid—planned from year one to have networks structured to succeed based on their value. Our carriers knew the individual market. Covered California works with the plans it selects to help them understand the likely risk mix of those who will enroll. Plans “price right”—as low as possible—but not so low they cause “rebound pricing,” which can vary greatly from year to year.
Patient-centered benefit designs
Covered California requires all carriers to offer a common patient-centered benefit design for each metal tier. These designs mean that many elements of care are not subject to the deductible — meaning consumers see the value of their coverage and are more likely to stay insured. For example, none of the outpatient care available to anyone in a Covered California Silver, Gold, or Platinum plan is subject to a deductible. The federal marketplace is building on the lesson from California with the “Simple Choice” designs that are encouraged in the federal marketplace.
Ongoing and robust marketing
Even for consumers receiving subsidies, the decision to buy insurance is a choice, and less healthy individuals will always be more likely to enroll. This means that ongoing outreach and marketing is crucial not only to fulfill Covered California’s mission, but also to maintain a balanced risk pool, which is central to controlling costs over the long term. In the coming year, Covered California will be spending almost $100 million to support marketing and outreach — all funded from our assessment on health plans. But, in addition to that spending, we work closely with insurance agents and health plans to promote their spending to maximize enrollment.
Becoming part of the fabric of health coverage
We have data that shows when people leave Covered California’s coverage—as more than a million have since we opened our doors—the most common place they go is to employer-sponsored coverage. The result of the natural movement among sources of coverage (individual, employer, Medicare, and Medi-Cal) is that the average Covered California enrollee stays a little over 25 months, meaning each year, about half of our enrollees are new. This fact underscores why our marketing efforts are vast and ongoing. The Affordable Care Act being part of the broader fabric of coverage and care delivery is also having impacts outside of our walls. The availability of Covered California and Medi-Cal not only provides peace of mind for those losing employer-coverage, that enrollment is reducing the uninsured and the uncompensated care costs that are no longer being borne by employers and other payers. Through Medicare payment changes, the Affordable Care Act has driven changes in how providers are paid and provided new incentives to promote better value. These changes are likely part of the general trend in reduced cost-increases in the employer-sector.
Recognizing and acting on the fact that long-term costs are about how care is delivered
In our work with health plans, we focus not only on enrolling and keeping a balanced risk mix, but also on long-term efforts to lower health care costs that must be directed at changing how care is delivered. A diabetic with Covered California today may have employer-sponsored coverage tomorrow. Covered California has an array of contractual requirements with the plans we work with to improve how care is delivered — making it higher quality with lower costs.
The relative success in California and other states is not to deny that many parts of the country are struggling, but this too should not be a surprise. The Los Angeles Times recently noted that leaders in these struggling states, “blocked expansion of Medicaid coverage for the poor, erected barriers to enrollment, and refused to move health plans into the Obamacare marketplaces.” The article points out there are fewer options in states whose leaders have spent years working to undercut the Affordable Care Act.
Moving Forward and Making Improvements
As we come to the sixth year of the Affordable Care Act, the path forward should be to build on what works and make changes and improvements based on the lessons learned. Just as Congress does with Medicare and Medicaid, any law as big as the Affordable Care Act needs to be “tuned up” periodically.
In California, we are working to assess the role each of the ingredients described above plays in making health care more accessible. This is the right time to be asking questions about what is working well and about what needs to be improved. It only makes sense that it is time for a tune-up. Many improvements are occurring as part of the regular administrative processes, such as assuring that enrollment during Special Enrollment Periods is appropriate and making necessary changes to the risk adjustment formulas. Going beyond these changes, President Barack Obama recently called this out in an article in The Journal of the American Medical Association. Building on what works can include looking at a range of tools, including:
- Congress can revisit the level and nature of subsidies to ensure that more Americans have access to affordable health care coverage, which could include considering whether the federal reinsurance program should be extended and fixing the “family glitch” that is limiting many otherwise eligible families from getting subsidies.
- The federal and state-based marketplaces can more aggressively assure that consumers have access to benefit designs that promote timely access to needed care foster enrollment, retention, and consumers getting the right care at the right time. The current administration has started down this path with the voluntary “Simple Choice” designs, but assuring that these patient-centered designs are shown to consumers first will go a long way to fostering competition among plans for true value — cost, network, and quality.
- The federal and state-based marketplaces should actively engage the plans that are part of their portfolio to promote best practices in network design, contracting, and consumer engagement to be sure that there is true competition and that consumers have meaningful choice — this is and has always been a challenge in rural areas.
- Making the necessary ongoing substantial commitments to marketing and outreach to make sure consumers understand the new options and financial assistance available to them. The federal marketplace should increase its assessment on health plans to be sure that it has the marketing dollars needed to promote a healthy risk pool — an increase of the assessment by 0.5 percent should make a total of more than $600 million available for the robust level of marketplace marketing and outreach investment needed level to support a good risk mix.
- Finally, we all need to have continued focus on the underlying problem of high medical cost and the frequent lack of value in what we do for patients. The federal and state-based marketplaces need to engage in policies that promote care delivery that is higher value — marketplaces should play an active role with other public and private purchases to promote improvements in care delivery.
The Affordable Care Act is the single biggest piece of health care reform in our country in more than 50 years. We are only a few years in, but what we see is that states—like California—that have embraced the law, put the politics behind them and used all the tools it provided, are building competitive marketplaces that put consumers first with quality plans, good rates and easy-to-understand benefits. Now is the time to use these lessons to benefit all Americans.
While this is an achievement worth celebrating, the big question that policymakers need to address going forward is how to build on the tools and the lessons we are learning to build on the success of the of the law, so we can deliver a better health care system for all Americans.
from Health Affairs BlogHealth Affairs Blog http://ift.tt/2ezUq3I
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