Ex­change trend­set­ters

Fed­eral pre­mi­ums will be com­pet­i­tive, ex­perts say

Modern Healthcare - - THE WEEK IN HEALTHCARE - Jonathan Block

While in­di­vid­ual mar­ket rates for ex­change plans for state-run ex­changes have come in lower than com­pa­ra­ble 2013 prod­ucts, Repub­li­cans have asked HHS Sec­re­tary Kath­leen Se­be­lius why no rate data were avail­able from states with fed­er­ally run ex­changes.

While state-run health in­sur­ance ex­changes have re­ported that pre­mi­ums for 2014 health plans gen­er­ally will be lower than for com­pa­ra­ble 2013 prod­ucts, con­gres­sional Repub­li­cans and oth­ers have ques­tioned whether that will hold true for ex­changes in the 35 states where the fed­eral govern­ment will op­er­ate them. But some ex­perts say they ex­pect the same trend for the so-called fed­er­ally fa­cil­i­tated ex­changes in many states.

“I do think most of fed­eral ex­change states (will) fol­low this pat­tern,” said Caro­line Pear­son, vice pres­i­dent of the health re­form prac­tice at Wash­ing­ton-based con­sul­tancy Avalere Health. “They are go­ing to be very com­pet­i­tive.”

So far, only two states with fed­er­ally run ex­changes, Ohio and Vir­ginia, have re­leased pro­posed ex­change rates. The states with fed­er­ally fa­cil­i­tated ex­changes have un­til July 31 to sub­mit their data to HHS, which will ei­ther ac­cept or re­ject those rates. HHS has a statu­tory dead­line of Sept. 4 to no­tify in­sur­ers of its de­ci­sion.

In Ohio and Vir­ginia, the aver­age pro­posed monthly pre­mi­ums for a sil­ver-tier plan for a non­smok­ing 40-year-old in the ex­change are $324 and $299, re­spec­tively, ac­cord­ing to re­search con­ducted by Avalere based on state plan fil­ings. In com­par­i­son, the monthly rates for sim­i­lar ex­change plans in Cal­i­for­nia and Rhode Is­land, which have state-run ex­changes, are $376 and $290, re­spec­tively.

Ear­lier this month, Pres­i­dent Barack Obama touted an HHS re­port that showed ap­proved in­di­vid­ual mar­ket rates for ex­change plans in 10 states and the Dis­trict of Columbia with state-run ex­changes on aver­age came in 18% lower than com­pa­ra­ble, cur­rently avail­able plans. Repub­li­can law­mak­ers then wrote to HHS Sec­re­tary Kath­leen Se­be­lius ask­ing why no rate data were avail­able from the states with fed­er­ally run ex­changes.

There is no guar­an­tee that ex­change plan rates will be lower than those for cur­rently avail­able plans in the states with fed­er­ally run ex­changes, said Rachel Dolan, a pol­icy spe­cial­ist on health­care re­form at the National Acad­emy for State Health Pol­icy.

Rates will de­pend on a num­ber of fac­tors, in­clud­ing whether the state pre­vi­ously en­acted in­sur­ance mar­ket re­forms, such as com­mu­nity rat­ing. In such states, pre­mi­ums are un­likely to rise sig­nif­i­cantly be­cause in­sur­ers al­ready had to sell cov­er­age to sub­scribers with pre-ex­ist­ing con­di­tions at reg­u­lated rates. Other fac­tors in­clude the num­ber of com­pet­ing health plans in each state, which varies sig­nif­i­cantly.

That means some states may have less com­pet­i­tive rates. Ear­lier this month, Hu­mana came to the res­cue in Mis­sis­sippi, an­nounc­ing it will of­fer ex­change plans in 36 coun­ties where no other in­surer had been will­ing to par­tic­i­pate.

Sev­eral national in­sur­ers de­clined to comment on their rate dis­cus­sions with HHS and state of­fi­cials.

Brian Cook, an HHS spokesman, de­clined to comment on when the agency would re­lease data on ap­proved rates for the fed­er­ally run ex­changes. He said HHS is work­ing on a re­sponse to last week’s let­ter from Repub­li­can law­mak­ers seek­ing in­for­ma­tion on the rates.

Leigh McGivern, a spokes­woman for the not-for-profit Co-Opor­tu­nity Health, which has won ap­proval to of­fer con­sumer-gov­erned co-op plans in Iowa and Ne­braska, said HHS has given in­struc­tions to in­sur­ers not to an­nounce their ap­proved rates be­fore Sept. 4.

Un­like in some states with state-run ex­changes, such as Cal­i­for­nia and Ore­gon, HHS has said it will not ac­tively ne­go­ti­ate rates with in­sur­ers. Pear­son doesn’t see this re­duc­ing the like­li­hood of com­pet­i­tive rates on the fed­er­ally run ex­changes. The im­por­tant dy­namic, she said, is that ex­change plans are com­pet­ing on price, and con­sumers can di­rectly com­pare those prices on an ap­ples-toap­ples ba­sis. That will drive down pre­mi­ums, she pre­dicted. “Car­ri­ers in this mar­ket un­der­stand they need to be one of the lower-cost plans,” she said.

While sev­eral ma­jor com­mer­cial in­sur­ers have said they will limit their par­tic­i­pa­tion in the ex­changes to se­lected states, plan com­pe­ti­tion on the ex­changes is ex­pected to get a boost when the fed­eral Of­fice of Per­son­nel Man­age­ment an­nounces the se­lec­tion of mul­ti­state plans that will be avail­able on the ex­changes in some states. That an­nounce­ment is ex­pected shortly.

There are broader ques­tions about whether the feds will be ready to launch the ex­changes in all 35 states, given that the Obama ad­min­is­tra­tion did not ex­pect so many states to turn that re­spon­si­bil­ity over to HHS. In June, a Govern­ment Ac­count­abil­ity Of­fice re­port found that while HHS has been mak­ing progress, “much re­mains to be ac­com­plished within a rel­a­tively short pe­riod of time.” The re­port also said there is a po­ten­tial for chal­lenges go­ing for­ward. While in­terim dead­lines HHS has missed in the past may not have a se­ri­ous im­pact go­ing for­ward, the GAO warned that fur­ther missed dead­lines closer to en­roll­ment could have a sig­nif­i­cant ef­fect.

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