While I spend most of my work days helping large employers with their health benefit programs, this past week I wore my Mercer health reform leader hat at my own personal version of health policy summer camp in Washington. I spent two days with the American Benefits Council’s policy board, took some meetings on Capitol Hill, and visited with Julie Rovner and Julie Appleby at KAISER Health News.
While employers have their hands full managing health benefits for their own employees and their families, don't underestimate their interest in the individual market and their concern for the public exchanges. In a series of meetings that ABC arranged on Capitol Hill and with Trump administration staff to discuss key issues for employers, the topic of the federal government’s commitment to cost-sharing reduction subsidies for individual policies sold on the exchange came up every time. CSR subsidies are central to the financial success of exchange business, and, though continuing them for now, the Trump administration won’t commit to future payments. Earlier this week, Republicans received another 90-day delay to consider how they’d like to proceed in the appeal of a case the House brought last year challenging the CSR subsidies. Without these payments, the insurance companies writing these policies are at risk for reimbursement that the federal government is contractually obligated to pay.
Employers do not want the individual market to crumble. Not only is that bad for people who depend on it -- including early retirees and former employees -- but cost pressures in the individual market will inevitably lead to cost shifting to private payers. My colleague Geoff Manville and I had a great conversation with Julie Rovner and Julie Appleby at KAISER about the problems creating instability in the individual market. My top three coming out of that discussion:
- Small risk pools. It was clear going in that the risk pool was not going to be ideal, but on top of that, many states are not big enough on their own to generate enough lives to create a stable risk pool. While 100,000+ lives may sound like a big group, when you divide it across multiple insurance companies and a variety of products, the "law of large numbers" doesn't work because the numbers aren't large enough. Look back 15 years when the biggest employers offered multiple self-insured plans and 10-15 insured HMOs -- and look at what they offer now. The past 10 years have seen a lot of plan consolidation.
- Young insureds MIA. One of the most popular ACA provisions, expanded group plan eligibility to include dependents up to age 26, was detrimental to individual plans. The biggest decrease in the uninsured occurred in the younger end of the market. Unfortunately for insurance companies, most of these younger Americans got coverage through their parents, not by purchasing it in the individual market.
- Federal government missteps. The government has not been the best business partner to insurers. To pick one example, think back to how essential health benefits were handled. As the public exchange implementation was coming down to the wire, there was an outcry from current individual policy holders facing significant premium increases for broader coverage that included all EHBs. At the last minute, the White House decided to "grandmother" those plans, which meant that insurance companies lost the additional revenue they were counting on from those policies. And now they face possible nonpayment of promised CSR subsidies.
What is the long-term future of the individual market? Some insurance companies have already declined to continue offer coverage in the public exchange in 2018 and others are still deliberating. We are in dire need of some leadership from the government to uphold their end of the bargain with the insurance companies. The individual market -- and people's lives -- are at stake.