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Only 100 Days Until Health Insurance Shopping Begins

We are now 100 days from the next open enrollment period. Millions of Americans will choose Obamacare healthcare plans – both on government exchanges and from private companies.

And we are nearly 700 days past the botched roll-out of Obamacare and the massive technology problems that plagued healthcare.gov and other state-based exchanges.

What is going about as expected?   What surprises us? What will we see next?

As expected:

  1. The number of consumers buying their own health insurance plans is surging. For years, the “individual market” had hovered around 8.5 million,1 while the number of Americans without health insurance neared 50 million.2 In the last two years, the number of uninsured has dropped to around 25 million,3 and nearly 19 million Americans now buy their own plans,4 roughly one-half through state and federal exchanges with hefty premium subsidies, and one-half directly from carriers, brokers, call centers – facilitated by companies like HealthCare.com. This trend will grow.
  2. Consumers buy the least expensive plans, and that almost always means the highest possible deductible and largest possible out-of-pocket expenses not covered by insurance. And often, it is not in their best interest financially or medically. Access to tools that help them pick the plan best for their individual needs would ultimately help curb costs while providing individuals better coverage.
  3. Government will make good on its promise to force transparency regarding pricing on providers, payers (insurance companies) and pharmaceutical companies. In 2016, there will be huge amounts of data publicly available about what procedures and drugs cost, and about what doctors are in which network. Next year is the watershed.
  4. The Affordable Care Act will do very little to make healthcare “affordable.” Health insurance premiums for those who buy a qualified health plan are increasing significantly. It took an extra year to happen because a maze of reinsurance programs helped subsidize insurance carriers in the first two years. But in 2016 consumers – as expected – could start to pay as much as 15% more than last year – with many carriers reporting increases of 30% or more.5 That can be an extra $1,000 out of pocket. Ouch.

What surprises us:

  1. Effectuation. That’s insurance-speak for the number of people who actually pay for the plan they enroll in. For years, about 85% of those of who enrolled in a health plan would actually pay the initial premium, and then each month about 3% of those consumers would drop their coverage for a variety of reasons — job or income change, married or moving, etc.6 Experts predicted reform would increase the number of consumers who pay the initial premium, and reduce the number that ‘lapse’ their coverage each month. The opposite has happened. Despite spending an hour or more filling out the forms to enroll, fewer consumers are actually paying the initial premium (resulting in inflated numbers of people who “sign up” for Obamacare in popular news articles) and they are dropping plans faster than ever. The result? Insurance carriers and brokers under-estimated the cost of signing up new customers, and over-estimated the lifetime revenue they would receive from each new customer. This is a leading to a massive shift in how insurance companies woo customers, and how they pay their marketers. It has led to a “land grab” as the largest carriers try to gain economies of scale.
  2. Confusion is not dissipating. Studies show that consumers are less confident now than two years ago that they could buy a plan online and easily enroll.7 The key word, “easily.” HealthCare.com is doing what we can do make it as simple as possible. But let’s face it. Buying a health plan is complicated because it is too hard to calculate the potential premium subsidies, and still too hard to determine which doctors are in what networks.
  3. Role of Brokers. The individual agents who sell health insurance were expected to go the way of the mom-and-pop travel agent. It has not happened. In fact, more agents signed up customers in the second open enrollment period than in the first open enrollment in 2014.8 Why? Either a result of old habits being hard to change, or Obamacare enrollment being more complicated than it should be, or both.
  4. Healthcare.gov is doing well; state-based exchanges are doing poorly. The feds have made their site work better; state-based exchanges are struggling to create the revenue needed to keep operating. And the Supreme Court made it clear that subsidies are here to stay, even if a state shuts down its exchange and replaces it with healthcare.gov. At least six states may shut down their exchanges and join the federal marketplace.

What we will see next?

  1. Shopping will get easier. The Internet will be the great equalizer, just like it was in travel and other consumer industries. Consumers will embrace new recommendation tools from companies like HealthCare.com.
  2. Health insurance will be dominated by three large national insurance companies (Anthem, Aetna, and UnitedHealthcare) and many state or regional small companies. There is behometh and boutique for health carriers, and no longer anything in the middle.
  3. Providers will offer their own health plans. Much like what HealthPartners in Minnesota has done, providers who have an established network of doctors and a captive audience of patients will offer health insurance plans and serve as provider and payer. Accountable Care Organizations will gain in strength and visibility.

What should change, that might not?

  1. Consumers should not have to visit a state or federal government exchange to enroll in their subsidies. Private companies can administer the subsidies just as well.   Given the opportunity, the private sector will make purchasing easier.
  2. The way subsidies are calculating needs to be simplified. Currently, subsidies are based on the cost of the second lowest price Silver plan, which changes ever year, in every state. And it is calculated by estimated income, divided by the number of members in your “tax family,” on a month to month basis. The math needs to be simplified to lessen confusion at tax time.

What do you think? I welcome your ideas and thoughts on what changes you think would benefit the process of shopping for Obamacare health insurance plans.

 

1 Kaiser Family Foundation. “Data Note: Attempting to Measure Early Impact of the ACA through National Public Opinion Polls- A Note of Caution and What to Watch For.” 2013. http://kff.org/health-reform/poll-finding/data-note-measuring-aca-early-impact-through-national-polls/

2 United States Census Bureau. “Income, Poverty and Health Insurance Coverage in the United States 2010.” http://www.census.gov/prod/2011pubs/p60-239.pdf

3 Healthcare Marketplace. “Report: Massive Drop in Uninsured Continues.” July 10, 2015. http://www.healthcaremarketplace.com/report-massive-drop-in-number-of-uninsured-continues

4 Kaiser Family Foundation. “Health Insurance Coverage of Total Population.” 2013. http://kff.org/other/state-indicator/total-population/

5 The New York Times. “Health Insurance Companies Seek Big Increases for 2016.” Robert Pear. July 3, 2015. http://www.nytimes.com/2015/07/04/us/health-insurance-companies-seek-big-rate-increases-for-2016.html

6 U.S. Census Bureau. “Highlights: 2012.” http://www.census.gov/hhes/www/hlthins/data/incpovhlth/2012/highlights.html

7 Connecture. “2015 Consumer Survey Results: How to Maximize Engagement and Retention.” May 21, 2015. http://www.connecture.com/webinar-recording-connectures-2015-consumer-survey-results-how-to-maximize-engagement-and-retention/

8 Benefit News. “Broker Participation in Federal Exchanges Nearly Doubles.” July 15, 2015. http://www.benefitnews.com/news/exchanges/broker-participation-in-federal-exchanges-nearly-doubles-2746868-1.html

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