Public Exchange Plans Good Health or Not

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Public Exchange Plans Good Health or Not
Calendar13 July 2015

Robert Pear wrote a piece in The New York Times that has been widely carried by many news sources. He reported that insurance companies are seeking 20-40% rate increases in the public exchanges, saying the new customers are sicker than they expected. Of course, federal officials are pushing for lower increases. They could probably learn a lesson or two from employers who have become very skilled at negotiating with insurance companies over the years.  

A few days before Pear’s article appeared, the Centers for Medicare and Medicaid Services disclosed a report on the revenue and pay outs from the first year of the Transitional Reinsurance Fee Program. Funding for this program comes from plan sponsors over a three-year period. In 2104, plan sponsors paid $63 per plan participant for an estimated $9.7 billion in first-year fees. That amount decreases to $44 per participant in 2015, and then to an estimated $27 in 2016. The program reimburses insurance companies participating in the public exchange for individual claims between a $45,000 attachment point up to a maximum of $250,000. The target reimbursement is 80% of the actual expense. However, the first-year claims experience is reported to have been better than expected and the program reimbursed 100% of the eligible claims in 2014, leaving a $1.7 billion surplus in the fund to be carried forward for the 2015 benefit year.

Hard to tell which players are making out the best here!

Go to full article: www.nytimes.com

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