January 7, 2014
Moving into 2014, implementation of the Affordable Care Act (ACA) is likely to begin looking quite different to insurance companies.
During the initial enrollment period (October 1, 2013-March 31, 2014) for the Exchanges, companies have been “estimating into the unknown” about the mix of enrollees to expect, and total numbers of policies to be sold.
Preliminary indications are now that about 2 million individuals signed up through the ACA federal and state Exchanges during October-December 2013. Expectations for the next three months remain cloudy.
The general responses by insurance companies have been to take protective moves wherever possible: form narrower provider networks that will allow more cost control, maximize deductibles where possible, and minimize geographical areas in which coverage is offered.
The objective has been not to get “financially burned” during the first year.
But the second year is likely to be quite different. With some track record to rely on, and preliminary insights into the results of competition, insurance companies are likely to begin trying to improve their business positions.
More competitive efforts can involve lowered premium costs and deductibles, expanded geographic coverage, and modification of the initial narrow networks to be more appealing to Exchange shoppers.
It may be expected that the public will adjust rapidly to the strengths and weaknesses of the various plans being offered, and will start to migrate toward the “better deals” where possible.
There will be little pressure on shoppers to “sit tight”, because of the required open second-year enrollment starting as of November, 2014.
Insurance companies that are aggressive in seeking to become more attractive are likely to grow, while others may experience a loss of enrollees.
Many health insurance companies are also highly involved in subcontracting to offer Medicare Advantage coverage, and for management of Medicaid enrollees.
The initial expansion of Medicaid (due to 2013-2014 enrollment) is likely to increase business opportunities. And if more states sign up for expanded Medicaid in 2014, additional insurance company opportunities will develop.
If their Exchange-based sales, and Medicare and Medicaid contracts, are considered together, insurance companies are finding themselves more tightly bound to publically-financed health care programs across-the-board.
During 2014, insurance companies will also need to prepare for the large-employer mandate to take effect in 2015. Even this part of the private business is now subject to being reshaped by ACA public-program directives.
It will be interesting to observe how health plans evolve over the next few years, how enrollment changes, and how the insurance industry is reshaped.
Almost all information that is needed to track these changes will be in the public domain, so attorneys will be able to perform many of their own tracking analyses. Such insights can be of high value when representing health care organizations.
Attorneys are also likely to find that advising individual clients during 2014-2015 will require ongoing study of coverage alternatives and changes by insurance companies, to help guide decision making and protect client interests.
More on these and related ACA topics, with an in-depth discussion of organizational reactions to implementation issues, may be found in a recent book by the authors that describes evolution of the ACA, and in a new Practice Guide by the authors that addresses funding and access issues in health care.