With the health benefit exchanges less than a year away, MCOs and pharma are still mulling over how to respond in terms of pricing products, targeting clients, and gaining market share from the millions of new people who will be getting health insurance coverage in 2014. There are still numerous unanswered questions, but there are also queries that we can answer now. Here are five of the top questions we?re getting from the pharma world:
- If the penalty for not getting health insurance is only $95 per adult, won?t many people just pay the fine rather than get insurance?
Probably a fair number of folks ? especially young people ? will do exactly that. One of the biggest criticisms of healthcare reform is that the penalties aren?t steep enough to move people into health insurance. However, the penalties do go up over time: The first year is $95 per adult and $47.50 per child (up to $285 for a family) or 1.0% of family income, whichever is greater. By 2016, it will be $695 per adult and $347.50 per child (up to $2,085 for a family) or 2.5% of family income. Young adults will be the most likely to skip insurance, but the adult working poor, self-employed people, and retirees who are pre-Medicare and who also lack group insurance will likely migrate to the exchanges over the next few years.
- If many people choose not to participate in the exchanges, won?t hospitals continue to be stuck with indigent care and pass on those costs to the commercially insured through higher fees, resulting in higher premiums?
That is a big concern, and the Affordable Care Act addresses it in two ways: 1) States that choose to expand Medicaid will have millions of additional people who will be covered under this program. In states that don?t expand Medicaid, hospitals will be burdened with indigent care; expect them to lobby heavily for Medicaid expansion. 2) About 80 percent of the people projected to participate in the exchanges will qualify for federal subsidies, making insurance more affordable for them and (it is hoped) keeping them off the indigent rolls.
- Will employers drop insurance and dump their employees in the exchanges in 2017, when large employers are allowed to participate in the state exchanges?
The answer is ?jein? ? a German expression meaning ?ja? and ?nein?, or yes and no. We say ?jein? because we do expect some small employers that are currently offering health benefits to migrate workers into the exchanges so they don?t have to deal with the hassle of offering benefits (and employers with 100 or fewer employees can actually do that now). However, we expect large employers, most of which are self-insured, to continue self-insuring rather than default to the exchanges. This way they are not subject to state mandates and additional taxes, and they can craft benefits to suit their needs. But we do anticipate continued migration toward private exchanges, also known as defined contribution plans. These work similarly to a 401(K) for retirement; mostly used by self-insured employers, private exchanges offer the employee a defined amount of money to choose from an array of benefit options, with the choice of paying out of pocket for richer benefits.
- Can states that are currently defaulting to a federally run exchange eventually switch to running their own exchange, or are they stuck with the federal one?
Yes, they can. Illinois, which is currently crafting a partnership exchange with the federal government, plans to move to an entirely state-run exchange in 2015. Pennsylvania may also switch to a state exchange later if officials decide they can handle the operational costs.
- So if each state sets a benchmark plan for its exchange that other health plans have to emulate, will they have identical formularies?
No. They are required to offer the name number of drugs for each therapeutic category, but the actual drugs can vary from one another. Health plans can also tier the drugs differently and offer various cost-sharing options (copays, coinsurance) as a way to differentiate.
Look for many more questions as we navigate the maze of healthcare reform. Stay tuned as HealthLeaders?InterStudy continues to track developments across the states.
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