After years of debate, the Affordable Care Act – better known as Obamacare – is gearing up to begin in 2014. The Health Insurance Marketplace, offering options on the “exchange,” launched Oct. 1. Insight invited a panel of health insurance professionals to discuss what we might expect. Panelists are: Dr. Ashok Rai, president and chief executive officer, Prevea Health; Dustin McClone, executive vice president, employee benefits, McClone Insurance Group; and Joel Lingenhag, director of Individual, Small Group, and Exchange Sales and Service at Network Health Plan. Here are excerpts from their discussion.
INSIGHT: What do we know for sure about the Affordable Care Act?
Rai: The only thing we know for sure is that it’s not going away. Oct. 1 is the day we think we’ll know what is going on, but given the changes the administration has made at the last minute, such as with large group employers, there’s no guarantee.
McClone: The key certainty is that costs are going to go up. Probably the only other certainty is that it’s going to be constantly changing. It’s not going to be like Y2K where (people fear) all of a sudden the lights are going to go off. This is going to be a change that will happen over time.
INSIGHT: The mandate that companies with 50 or more employees buy insurance for their employees was postponed until 2015. What is the impact of that?
Lingenhag: From the employer’s perspective, it buys them a little time. A lot of the larger employers already offer insurance so I’m not sure it’s as big of an impact as it sounds.
Rai: The larger employers, especially manufacturers, have covered their employees. But there has been a lot of noise from the retail and hospitality industries, where health insurance traditionally hasn’t been offered. They are talking about the “29 rule;” nobody can work more than 29 hours a week because then they would be considered a full-time equivalent and need benefits.
McClone: There are so many different calculations of everything. No employer is going to have the time or ability to be a health care reform export.
Lingenhag: It’s an interesting paradox that you set up a very complicated system and then you have “navigators” who are not trained as thoroughly as agents to try to guide people through it. I think you’ll see more products that will be even more complicated to try to counteract some of the provisions of the ACA. Small group self-funding is a big one – I think you’re going to see products developed for that.
INSIGHT: What will be the impact on individual insurance?
Rai: Those who are young and healthy who are on the individual market are going to see some pretty significant sticker shock as they go to buy individual insurance. We lost the creativity to design a plan around that individual. For example, if you’re relatively young and you don’t need pharmacy coverage, we can adjust that. Now because there are a significant amount of mandates in the ACA of what needs to be in a plan and how it is delivered, all that flexibility goes away. Everybody’s got to pay for basically a Cadillac when they might have just needed a Yugo.
Lingenhag: One of the things that is needed to make this successful is an infusion of the young, uninsured – the so-called “invincibles” who don’t carry insurance because they’re healthy. They either take a catastrophic plan with a $10,000 deductible, or they choose not to take it. That’s who they need to be able to draw into the market to be able to offset the higher costs of bringing down the coverage for the older population. But how are you going to draw them in if the rates are three to four times higher than they are today? They’re looking at a penalty of $95 or 1 percent of income. Again, their income would have to be pretty high to offset the premiums they’ll have to pay.
Rai: This could get very, very expensive for the government if those young individuals don’t come into the marketplace because then you’re only going to be insuring everybody who is sick.
INSIGHT: What are some positive results of the ACA?
McClone: It’s probably more positive in other parts of the country than it is here in Wisconsin. A lot of the issues this was meant to address we didn’t really have a problem with in Wisconsin. If you couldn’t afford health insurance we had Badger Care, and if you couldn’t get coverage (due to pre-existing conditions), we had HIRSP (the state’s Health Insurance Risk-Sharing Plan). In some parts of the country these benefits didn’t exist.
The silver lining is this has forced people to ask, “Why are we doing this to ourselves?” A lot of companies every year were just taking an increase and saying, “Well, this is the way it is.” Now they are taking a step back to say, “What do we really need to do to be strategic and competitive?”
Rai: There’s been a huge increase in small to large employers focusing on the health of their employees for the first time. They’re saying I’d really rather you not get sick because of what it’s costing me. Employers understand the return on investment in their employees’ health.
Lingenhag: The appendage to (allow young people to remain on their parents’ health insurance plans until) age 26 has become popular.
INSIGHT: Will costs be reduced for some people?
Lingenhag: For the high-risk people it definitely should go down. The over age 50ish could see decreases, although some of that could be offset by some mandated benefits. But it’s all built on that belief you’re going to be able to attract those younger ones.
McClone: There will be a temporary group that will benefit from this, the community-rated model, those who were the most sick or unhealthy. Their rates could stay the same or even go down by some predictions. But that’s such a temporary issue.
INSIGHT: What insurers will participate on the exchange?
Rai: Prevea 360 will be the only local company on the exchange headquartered in northeast Wisconsin, available to all the counties we work within. Everybody submitted rates, but you don’t know where you’re going to land, if you’re going to be a viable product or not. We have no idea if this is a good business decision for Prevea to be on the exchange or not.
Lingenhag: There’s just so much uncertainty and you had to file your rates so far ahead of time. We (Network) will reevaluate it to see if in 2015 we want to enter that or not.
INSIGHT: How is the ACA going to change your business?
Rai: We have it on both ends. We have patients, because we are a health care provider, we have three partnered hospitals, so our 1,500 employees need to know how to answer questions. Patients are going to say, “What do I do?”
Lingenhag: We basically have changed the way we do business. Our biggest tool was underwriting, up front, in terms of selection. Now all the familiar tools we’ve had have been taken away, and we’ve got to come up with new tools. We’re in the process of figuring out what tools we have on the back end in terms of managing the care, risk adjustment.
McClone: People have never needed an advisor more than they do today. It used to be extremely easy to put up a shingle and be in our business. There are predictions that in the next three to four years, there might be only 10 to 20 percent of us standing, because you need so much manpower to stay on top of the regulations and to communicate with your clients.
INSIGHT: What about the future?
Lingenhag: Innovation is going to be very important going forward, trying to figure out whether it’s self-funded, more managed plans. Private industry is going to have to adapt and grow if we’re going to thrive.
McClone: I see a huge trend to a large percentage of employers going to these self-funded plans. That will get people to see what the underlying risk is and therefore start attacking that risk.
I kind of view this as a cold football game. The weather’s terrible but we’re all in it. You’ve got to find out between you and your competitor, who’s going to win. It’s below zero and you’re both miserable but you’ve got to find a way to get an advantage so you can get ahead.
You can bury your head in the sand or you can step up and say, “Hey, this is another way for us to create that advantage.”
Health exchanges in Northeast Wisconsin
Insurance brokers are finding themselves on the frontline of questions on the new health insurance exchanges, launched Oct. 1 as a result of the federal Affordable Care Act. What are they hearing?
“Everything from panic to apathy,” says Chris Hanson, president of Hanson Benefits, who was among insurance professionals invited by Insight to share her perspective on the ACA. “What we’re trying to do to alleviate some of the panic is to say: ‘Just take a breath.’”
Hanson and other insurance brokers have been showing their clients and potential clients a list of providers on the Wisconsin Health Insurance Marketplace that will participate on the new exchange. Those available on the individual market in Northeast Wisconsin are: Dean Health Plan (Prevea 360), WPS Health Plan (Arise), Common Ground (a new regional health insurance cooperative), Compcare Health Services and Molina Healthcare of WI. Common Ground and WPS will also offer businesses the Small Business Health Options Program (SHOP) on the exchange.
Employers are required to give all their employees information on the exchanges, available online at www.healthcare.gov.
The marketplaces are a key aspect of President Barack Obama’s health care law, which requires everyone to have insurance by Jan. 1 or to pay a penalty. About 500,000 people in Wisconsin are expected to seek coverage through the exchange, including about 92,000 who will lose Medicaid coverage in January and some 400,000 who are uninsured.