Manatt on Health Reform: Weekly Highlights

New study shows Marketplace premiums parallel the employer market; Montana likely to select a private insurer to administer benefits to its Medicaid expansion population; and Washington’s Exchange customers will begin paying premiums directly to insurers.


Marketplace Coverage Premiums Similar to Employer Coverage

Adults enrolled in single insurance plans through their employers pay similar premiums to those enrolled through a Health Insurance Marketplace, according to a new report by the Commonwealth Fund. Approximately 60% of adults with Marketplace coverage and 55% of adults with employer-sponsored plans paid less than $125 per month for health insurance coverage. The cost similarities decrease at the higher end of the income scale as consumers are eligible for less premium subsidies. Sixty-eight percent of adults with incomes above 250% of the federal poverty level spent $125 a month or more on Marketplace coverage, compared to only 37% of adults in employer-sponsored plans. A higher percentage of all adults were enrolled in high deductible plans through the Marketplace than in employer-sponsored plans, 43% to 34%, respectively.

Affordability is Key in Decision to Enroll in Marketplace Plan

Affordability, access to in-person assistance, and a positive consumer shopping experience are significant drivers in an individual's decision to purchase health insurance through the Marketplaces, according to a new report by the Commonwealth Fund. Premiums and cost-sharing were the most important factors in plan selection, with 41% of individuals selecting a plan based on premium and 25% selecting based on cost-sharing. One quarter of all adults in the United States have shopped for health insurance on a Marketplace, and nearly half of them ultimately enrolled. Of those who did not enroll, 57% were unable to find a plan they could afford, and 26% of those unable to find an affordable plan were likely in the Medicaid coverage gap. Receiving in-person assistance also had a significant impact on whether an individual enrolled in coverage; 78% of adults who received assistance enrolled in a plan compared to 56% of those who did not receive assistance. Finally, more than half of those who rated their shopping experience as good or excellent ultimately enrolled in coverage compared with only 18% of people who did not enroll.

Implementation of ACA Has Not Disrupted Employer Insurance Market

Premiums for single and family coverage increased at a rate consistent with previous market trends, and the number of employers offering health coverage to their workers was statistically unchanged from 2014, according to a new report by the Kaiser Family Foundation. Employers continue to shift cost-sharing to employees, with 46% of employees enrolled in a single coverage plan with a deductible of $1,000 or more, compared to 41% last year, and almost a fifth of covered workers enrolled in plans with a deductible of $2,000 or more. Meanwhile, the average deductible for all covered workers increased 67% since 2010 and 255% since 2006. In response to the employer mandate, only 4% of employers with 50 or more full-time workers switched some of their full-time employees to part-time status so workers in those jobs would not be eligible for health benefits. Approximately 5% of large employers said they intend to hire fewer full-time employees due to the cost of health benefits.

Arkansas: Governor Pauses State-Based Marketplace Transition

Governor Asa Hutchinson (R) has asked the Arkansas Health Insurance Marketplace Board to “pause” the transition to a State-based Marketplace (SBM) for the individual market, explaining that Medicaid reforms under consideration by the State may not necessitate an SBM, reports Arkansas News. Speaking to his Advisory Council on Medicaid Reform, the Governor said that he has been in contact with the Department of Health and Human Services Secretary Sylvia Burwell about this matter, and to discuss the potential Medicaid reform plan that seeks greater flexibility from CMS for Medicaid expansion.

New York: State Responds to OIG Marketplace Findings

The Department of Health and Human Services' Office of Inspector General (OIG) released the first in its series of audit reports on state health insurance Marketplaces. Through a review of 45 applicants to the New York State Marketplace in 2014, the OIG found that annual household income verification, eligibility data inconsistency resolution, and employer-sponsored coverage eligibility verification were not effective in 28 cases. In response, State officials noted several were known issues and they had already implemented improved functionality for the State’s Marketplace eligibility system to verify income and minimum essential coverage eligibility, and resolve eligibility data inconsistencies.

New York: Marketplace Co-Op to End Operations

Health Republic Insurance of New York (HRINY), the second-largest health insurance provider on New York's State Marketplace and the nation's largest co-op insurer, has been directed by the New York State Department of Financial Services to cease issuing new health insurance policies and to end operations after the expiration of its existing policies based on the likelihood that it will become fiscally insolvent this year. HRINY's 200,000 customers will be able to choose from 16 other insurers offering plans in the New York State of Health Marketplace during open enrollment beginning November 1. As a non-profit co-op health plan created under the Affordable Care Act, HRINY originally received $265 million of federal loans, but posted a net loss of $130.2 million in 2014 and the first half of 2015. HRINY joins co-ops in Nevada and Louisiana that are closing this year due to fiscal issues, after Congress cut off funding.

Washington: Health Benefit Exchange Will No Longer Aggregate Premiums

Beginning September 23, Washington Health Benefit Exchange consumers will make premium payments directly to their insurance companies as the Exchange ends premium aggregation and direct premium payments from consumers. Insurance companies will assume responsibility for sending consumers monthly invoices and alerting them to payment deadlines, collection policies, and grace periods. The Exchange Board approved this policy change in December 2014 in response to concerns raised by consumers and insurance companies. Since the decision, insurance companies, with support from the Exchange, have worked to develop the technological capacity to manage the hundreds of thousands of consumer accounts that will transfer to them in September.


Connecticut: Governor Cuts Hospital Medicaid Payments by $63M

Governor Dannel Malloy (D) announced an additional $103 million in cuts to the State’s budget, including a $63 million reduction in Medicaid payments to hospitals, and an additional loss of $130 million in matching federal funds. Hospital executives say the number of people on Medicaid in Connecticut is on the rise, and have argued that these cuts will impact key services aimed at keeping that population healthy. Hospital executives have urged the State Legislature to convene a special session of the General Assembly to review the Governor's decision and restore funding.

Montana: Blue Cross Blue Shield Expected to Administer Benefits for Medicaid Expansion Program

Blue Cross Blue Shield of Montana scored the highest among bids to administer benefits to Montana's expanded Medicaid population and is expected to win the contract. If the federal government approves Montana’s expansion plan, Montana will be the first state to contract with a private insurer to administer benefits to an expanded Medicaid population. CMS has posted Montana’s Medicaid expansion proposal for public comment through October 15. Montana has requested that CMS approve the proposal by November 1 so that the State can start providing benefits under the new program on January 1, 2016.

Oklahoma: Premium Support Program for Small Business Employees Expanded

Insure Oklahoma (IO), the State-run Health Insurance Premium Payment program for low- to middle-income individuals is expanding eligibility criteria to employees of businesses with 250 employees or less (up from 99 employees or less). Expansion of IO eligibility is authorized under a preexisting 1115 waiver originally approved in 1995 and extended through 2016. Employees enrolled in IO who purchase a private employer-sponsored insurance plan pay no more than 15% of the premium, IO pays at least 60%, and their employer pays at least 25%. This is IO’s third employer size increase since it launched in 2005 with an employer size limit of 25 employees. IO also offers an individual coverage plan to working Oklahomans and the temporarily unemployed without access to group coverage, and who earn less than the federal poverty level.



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