Spokane Journal of Business

ACA is reshaping small-group health insurance markets

Employer regulations aren't final, but system is likely to be complex

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ACA is reshaping small-group health insurance markets

2013 is a critical year for the implementation of federal health care reform taking place in 2014, also known as the Affordable Care Act (ACA).

Employers likely recall a first wave of implementation of the law in 2010, but the biggest changes come next year, with many issues for employers to consider and navigate in 2013. Along the way, the burning issue of rising medical costs and the resulting upward pressure on the cost of health care coverage continues to loom large for everyone who purchases coverage. These are key issues Premera is focused on as we work with our customers in the months ahead.

It's important to know that the ACA fundamentally reshapes the individual and small group markets for coverage, as states—or the federal government in many cases outside of Washington—create exchanges under the law, with a host of related requirements and regulations. Premera is actively engaged with state policymakers and regulators currently in the process of finalizing the Washington state version of the Exchange: Washington Healthplanfinder.

While the exchange is often described as "Expedia" for health care coverage, the reality of the project is much more complex. It's a huge government information-technology undertaking, relying on the creation of significant new state IT infrastructure, which must interface correctly with as-yet-uncompleted and new federal IT infrastructure (including IRS data), as well as with health plans, consumers, insurance agents, and others involved in the enrollment process.

What does that all mean for employers? A lot.

While the individual market side of the exchange often receives more public attention, the impact on small employers also is significant. Current small group customers will face a number of choices next year and beyond, including whether to purchase coverage in the small group exchange, also known as the SHOP (Small business Health Options Program).

A key issue for everyone involved in or considering purchasing small group coverage in the SHOP is that the federal and state regulations that govern the SHOP aren't yet final, nor are the specifications and complete structure of the SHOP itself. Premera has evaluated what is known of the SHOP today and found that it is particularly complex, much more so than the individual market side of the exchange, or even today's small group market. We are dedicated to be a consultative resource for our customers as they navigate these options in the months ahead.

One especially important variable in the SHOP is that it changes the enrollment process from employer choice, as in the current market, to employee choice. Employer choice means an employer selects one health insurance carrier to offer health plan products to its employees. Employee choice means employees can select any health insurance carrier in the SHOP that offers a health plan at the metallic level selected by their employer. This creates much more administrative complexity.

Another reason why Premera is looking closely at the SHOP is that while the individual exchange has federal subsidies that create a clear value proposition for some prospective customers, the SHOP may not. Thus, while the choice for individuals with access to federal subsidies might make a purchase choice in the exchange easy, the choice is not likely to be as clear for small employers. To find the best value, they will want to evaluate all of their options for purchasing coverage inside and outside the exchange. These are the types of considerations we expect to be discussing with our customers in the months ahead.

Obviously, the huge issue in health care today for many employers is the rising cost of coverage, driven most significantly by rising medical costs. Federal health care reform ultimately will increase access to coverage, which is a good thing. But it doesn't do enough to address the issue of rising costs. Provisions of the law that do address costs are primarily pilot programs, especially in Medicare, that will do little to control rising medical costs for non-Medicare customers, especially in the near future.

Premera is concerned about the ways in which the federal law actually adds to costs for all employers. Two significant provisions that add costs include a reinsurance assessment fee that will add about $63 annually to the bill for every employee and dependent covered by an employer's plan. In addition, insured customers can expect to see an additional surcharge of an estimated 2 percent based on the ACA's tax on insured health plans.

Such upward pressure on the price of coverage is exactly why Premera has accelerated our previous efforts to address this critical issue of rising medical costs by continuing to redesign the health care delivery system and offer innovative wellness products to our customers.

One effort that continues to show positive results is our work collaborating with hospitals and doctors to improve the cost-effectiveness and quality of the care our members receive. Last year we expanded a new program, known as Global Outcomes Contracting, with a number of clinics across the state, including Rockwood Clinic here, to implement a unique payment model that rewards cost-effective, evidence-based care.

Unlike efforts that have focused solely on integrated systems, Global Outcomes Contracting is unique in that it includes a variety of multispecialty providers and measures the health outcomes of a patient's entire experience. Initial results indicate this new approach is helping moderate rising medical costs.

Another way Premera is addressing rising health care costs is working with our customers to expand wellness programs and support healthier lifestyle choices. We continue to develop programs that engage our members and give them the tools they need to achieve their health goals.

In addition to giving our members the tools they need to succeed, we also work with our employer groups to develop customized worksite wellness programs through Vivacity, a company specializing in employer wellness programs. Vivacity's programs are proven to contribute to employee satisfaction and morale, while also helping employers reduce overall health care costs.

Working with hospitals, doctors, and employers to address the issue of rising medical costs and improve the health of their employees is obviously just part of our focus as we implement federal health care reform, but it's a critical issue.

The ACA will have a big impact on the health care system, in ways that will only be fully understood over time. For now, we're committed to implementing reform as smoothly as possible for our customers, while working with them to navigate coverage options and the issue of costs in the months ahead.

  • Bill Akers

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