Double-digit premium hikes ‘likely’ for 2015 exchange plans
A little over a year ago, Joseph Swedish took over the reins of WellPoint, the $71 billion insurance giant whose plans and affiliates finance the healthcare needs of nearly 70 million individuals. A veteran hospital administrator who previously ran Livonia, Mich.-based Trinity Health, Swedish switched sides at a time of major challenges for the Indianapolis-based insurer. Its previous chairman had left under a cloud just six months before the rollout of the Patient Protection and Affordable Care Act’s health insurance exchanges. In this interview with Modern Healthcare Editor Merrill Goozner, Swedish reflected on the first six months of open enrollment and what we might expect in the months ahead. Below is an edited excerpt.
Modern Healthcare: Give us your evaluation of how open enrollment has gone, both from an overall perspective and from your own company’s perspective.
Joseph Swedish: The enrollment process was rocky beginning in October. Obviously, we adapted, in some cases reasonably well. In other cases, it was a tough go, because the shifts changed the dynamics of how we priced as well as how we positioned ourselves to secure enrollment.
Having said that, we believe WellPoint is wellpositioned. We seem to have accumulated a lot of members.
In some states, such as California, we’re in the leading market share position, and overall, we really like our chances in terms of enrollment uptake in many, many states. When you put it all together, it seems as if we have come upon a reasonably good moment in time with respect to the March 31 end of open enrollment.
MH: Is enrollment disproportionately weighted to older and sicker people?
Swedish: We are one story among many stories of participating health plans. A lot depends on how you modeled what you thought would play out, with respect to age and acuity levels among the enrollees. It basically has turned out as we expected. That’s why we feel reasonably positive about what we’ve accumulated.
Could it be better? Yes, always, in our world of being an insurance company.
MH: The Obama administration has made a lot of changes in the rules, such as postponing the small business exchanges. How has that affected the enrollment process for you as you look toward 2015?
Swedish: It’s really hard to hit the bull’s-eye when the rules have changed. It’s just the reality of how these kinds of national policy rollouts evolve.
Everybody expects change. We are adapting, and I think for 2014, we see a picture that is not terrible. It’s just that we would have liked more predictability.
Looking forward to 2015, there are just so many unknowns. We are trying to evaluate what it means as we prepare for pricing releases in May.
Overall, it really is too early for me to comment on 2015.
MH: Towers Watson and others have put out reports that in the main insured markets we’re going to see moderate increases pretty much in line with healthcare costs, which have been moderate. On the other hand, in the exchange markets, do you think there are going to be pretty high increases?
Swedish: The public commentary from us, as well as our peers, is that there will undoubtedly be remarkable price increases.
In terms of scale, we just don’t know right now, and we’re going to have to evaluate the membership we have secured through March 31, and then begin predicting what additional membership we might be able to pick up, beginning in the next cycle.
The reality is, with all the changes that occurred, there will be an uptick in premium costs.
Many of the prognosticators are claiming double digits. Is that true? We just don’t know right now, but it does appear as if it’s likely.
“It’s really hard to hit the bull’s-eye when the rules have changed.”
MH: If we see double-digit rates when the new premiums come out in July, will that be a signal that Obamacare is a failure?
Swedish: Not at all. We’ve created access for many, many people who have not had access. The statistics are still coming together to pass judgment on just how many have entered that have never had health insurance, or did not have it for quite some time. So in that regard, I think there is success. From another perspective, there are many who have entered by way of subsidies. They have been given an affordability option that they previously did not have access to. We believe our plan offerings are very high quality and reasonably priced, relative to the value that enrollees are acquiring. So all in all, I think there are a lot of reasons to celebrate successes. The flip side is, absolutely there are challenges we’re going to have to work out. But we believe this will work out over time. I think we have to be patient.
MH: What is WellPoint doing in terms of working with providers to improve the quality of care and target population health?
Swedish: I can give you one example. Emory University Health System just announced a partnership with us where our CareMore operation is going to partner with them to manage the frail elderly around issues of readmission and the chronic illnesses they face. We will basically be embedded in Emory and provide clinical support in an area that is a very difficult management proposition for clinical care. So we are rapidly beginning the provider collaboration that many have envisioned. We believe there will be many like that in the near future, as providers and payers meld together to create solutions and improve care, outcomes and patient safety.
MH: What do you think about the attacks on health plans offering narrow provider networks?
Swedish: There are a lot of positives that go with socalled narrower networks. We believe, and it’s embedded in the Affordable Care Act, that network configurations do make a difference in providing quality and price performance that’s attractive to consumers. Payers are selecting providers. But providers are selecting payers, too. Choices are being made by providers and payers to create something of value for consumers. In many, many markets, there are multiple options for so-called narrow networks. In some markets, there are a limited number of options. Over time, the marketplace will sort this out very effectively as new entrants come into the landscape and offer products that compete against another narrow network.
So my advice is, let the market prevail. Over time it will work out.