Dr. Kevin Most: ACA News
Well, have we forgotten about the Affordable Care Act? Not much in the news for the past year? Wow !!! What a change in the past few weeks. We have heard about massive increases in premiums, well beyond what we have seen in the commercial market. We have heard insurance companies giving up and dropping out of the ACA marketplace. The news of the insurance companies picking up those displaced was initially a good story, until some decided to not honor the deductibles that had already been paid to the previous company.
Where are we headed? How did we get here?
Recently we have heard of the companies that have been participating in the ACA marketplace needing to increase the premiums, some of the increases have been quite dramatic , well beyond the yearly 8-10 % increases we have heard about in commercial health insurance changes historically. For example premiums in Texas for the Blue Cross plans are set to go up by 53% The company that owns the Texas franchise for Blue Cross is the same parent company as the Illinois Blue Cross. In Illinois the premium increases for the Blue Cross ACA plans are proposed to be between 23%- 45% Why is this occurring? Is this linked to the news that some insurance companies are getting out of the exchange business, probably.
Blue Cross lost $ 1.5 billion dollars last year on individual plans. How did that occur, well it appears that the actuaries thought that more healthy people would join the exchanges in the first years of the ACA. However the fine was so low that the healthy individuals decide to pay the fine and forego the insurance. Many thought the young patients not getting insurance was pretty predictable. The fine the first year was $95, so many healthy individuals chose to pay the fine. The next year the fine was raised to $325, and this year the fine was raised to $ 695 per person. The bad thing is that the insurance companies thought that many of these young healthy individuals would join the ACA insurance plans in year one. This was so important in the business plan, as the premiums from the healthy individuals cover the cost of the patients needing health care. This miscalculation is what triggered large losses for many insurance companies. This is one of the reasons that we have seen headlines of premiums being raised dramatically. The question now is, with the fine as high as it is , will all the healthy people now take the insurance. The bronze, high deductible plans, may have a premium that is lower than the fine for some individuals. Will the change in premiums and the addition of those who have been paying the fines make it profitable for the insurance companies now?
Last week we heard that Aetna was joining a list of insurance companies that have lost enough and have decided that this type of insurance will no longer be in their portfolio. Recently Land of Lincoln announced that they will be out of business at the end of September. The departure of those 2 companies impacts over 60,000 individuals in the state of Illinois. United Healthcare currently has plans to leave the exchange as well. Humana also is thought to be considering halting its product on the exchange. Cigna and Blue Cross remain and will probably be needed to pick up the displaced patients next year. How long will they stay in the business? Will the exchanges survive? Health Care Services which is the parent company of Blue Cross here in Illinois lost $1.5 billion dollars last year on individual plans which includes the ACA plans it is in. If losses to the insurance companies continue I am sure we will have more take a deeper look into this type of business.
Blue Cross is picking up many of the Land of Lincoln plan patients as plan has gone out of business as of the end of this month. This week Blue Cross announced that they would be willing to take on the patients but would not be able to honor the deductibles that had already been paid this year. Many may be upset with tis decision, however you really need to understand the business side of insurance. Deductibles fill the business plans of insurers a couple of ways, one is to make individuals think about the need for accessing care and the other is to think of the cost of care. So the individual who has hit their deductible, now has no filter, as to using health care or what the cost of care may be, so Blue Cross had to understand that as they decided to accept the displaced patients but would not accept the deductible.
So these patients now are responsible for a new deductible for the next 4 months although many of them have already paid their deductibles. I understand the business decision as the other company collected the deductible but the patient who may have difficulty even paying the premium is now responsible for the deductible again for the next 4 months as well as the premium. It is difficult to be upset with this decision as they are being asked to take the risk without being allowed to accept the business model that is built into the risk. The other side of this is the patients who have paid the deductible and are now ready to have other elective health care done this year, or not have the risk of needing health care for the next 4 months?
Should the employed individual who receives his insurance thru their company be concerned? Possibly. Many companies are looking at getting out of the insurance business. What I mean is that many companies who were self insured in the past are now providing employees the amount of the subsidy it was paying and telling them to go to the exchange and buy insurance on their own. This protects the company at a cost that is fixed and known and shifts the cost to the insurance companies. As the work force ages and chronic medical issues become more costly, shifting that risk back to the insurer makes sense.
Some good news about the Affordable Care Act came out last week. A review of medication use for patients on ACA insurance plans shows that individuals are filling more prescriptions and paying significantly less for the prescriptions. For many with chronic illnesses, prior to the ACA, they went without medication or only used medication in emergencies. Because they had no insurance they had to pay full price for the medications versus the negotiated pricing that insurance companies have. When these individuals got on a ACA plan and received healthcare, we saw a large increase in prescriptions being filled. This is a very good thing, as treating high blood pressure with inexpensive medication is much better that the cost of treating the patient with untreated high blood pressure who has a stroke or heart attack due to non treatment. The treatment of chronic conditions in a primary care office is much less expensive then treating the advancement of the illness in the emergency room. For example a patient with asthma can receive medication from the primary care doctor that will keep them out of the emergency room. The asthmatic who used to go to the ER 5-10 times a year may not need to go at all, and their quality of life is so much better. The individual with high blood pressure can be treated with medication that cost under a dollar a day and avoid the heart attack which cost the system a lot of money.
The one problem with this from the business side is that the insurance companies are feeling the brunt of this. The insurance companies may not see the benefit of the diabetic or individual with high blood pressure taking medications, as many of those benefits will be noted decades from now and a good chance that the individual will be on a different plan then.