Will Healthcare.gov Get A California Makeover?
By Pauline Bartolone
Kaiser Health News, February 9, 2016
Experts say the California exchange uses more of its powers as an “active purchaser” than the vast majority of other states. That means it can decide which insurers can join the exchange, what plans and benefits are available and at what price.
The federal government — in pending proposed rules for 2017 — has signaled it too wants to have more of a hand in crafting plans. Healthcare.gov would be forging ahead on a path California already paved, swapping variety for simplicity in plan design.
“Not letting [health] plans define what’s right for consumers, but defining it on behalf of consumers … is a better model for the market,” said Peter Lee, executive director of Covered California.
“We want to make sure every consumer has good choice but not infinite choice,” said Lee.
Most other states, including those in the federal exchange, haven’t subscribed to that idea so far. They have a clearinghouse model, in which all health insurers and plan designs are accepted as long they comply with the Affordable Care Act. That can mean the same insurer offers multiple plans with slightly different premiums, deductibles and copays. Even within one metal tier, say silver, the same insurer might offer half a dozen slightly different plans.
Now, the federal government proposes to create standard cost-sharing designs in various metal tiers and make them easily accessible on healthcare.gov. And it’s considering how to improve “value” by being more selective about plans.
Covered California holds insurers to a higher bar than what’s required under the Affordable Care Act.
Covered California says it’s the only exchange in the country that requires all plans to be standardized (not just some, which the federal government is proposing).
But one of two health insurance regulators in California, the state Department of Insurance, said Covered California’s strict guidelines may not benefit consumers.
It has created a situation in which the exchange “has fewer carriers than would otherwise be the case,” said Janice Rocco, deputy commissioner of the California Department of Insurance.
Health insurers on a national level are “strongly” opposed to an active purchaser model for states served by healthcare.gov, including standardized benefits.
“It could discourage many from enrolling if they can’t find a policy that works best for them,” said Clare Krusing from America’s Health Insurance Plans.
“Where there is competition and choice is where consumers benefit and where health plans benefit,” said Krusing.
By Don McCanne, M.D.
Covered California – one of the more successful state-operated ACA insurance exchanges – has two features that are currently being considered for the federally-operated ACA exchanges: standardized cost-sharing designs and active purchasing of plans.
By creating standards for deductibles and other cost sharing, it makes it easier for plan shoppers to compare plans since the out-of-pocket expenses theoretically would be the same. After checking provider lists to see if their physicians are in-network, and checking formularies to see if their drugs are covered, shoppers can then select their plans based on the premiums.
Of course there are still some uncertainties. It is not uncommon to obtain care out of network, so another plan’s network may have turned out to be preferable. Also medical conditions change which might require drugs that are not in the plan’s formulary but may be covered by other plans.
In contracting with plans for the exchanges, Covered California decided to use active purchasing. In a non-transparent process, Covered California negotiates with the plans in an attempt to gain the best value for the plan beneficiaries. Under this process, not all plans are accepted, thus the insurers are motivated to offer better value than they might otherwise.
Active purchasing introduces more instability into the process. Plans moving into or out of the exchanges may face unprecedented changes in their administrative requirements which can be very disruptive to their business model. Changes required by the instability of contracts increase administrative expenses which are ultimately borne by the plan beneficiaries, adding to costs when the intent was to decrease costs. These disruptions apply not only to the private insurers but also to the physicians and hospitals who are included in the networks. Since active purchasing reduces the number of plans available, any change in plans covered would have a greater impact on the contracted providers thereby threatening insolvency.
To no surprise, the private insurers are not enthusiastic about either standardization of the plans or active purchasing. With standardization, the plans are less able to hide their innovations that improve the profits and competitiveness of the plans (i.e., the plans can be more competitive when the consumers do not know what they are buying). Active purchasing drives plan revenues down and exposes them to greater risk since the contract may not be renewed.
Clare Krusing of the insurance lobby organization, AHIP, says, “Where there is competition and choice is where consumers benefit and where health plans benefit.” Instead of plans competing for contracts with the ACA exchanges, they want to compete for individual patients. But the patients lose because there is less plan oversight when there is no active purchasing, and there is less transparency when the plans do not have to comply with standardized cost-sharing.
Cost-sharing standardization and active purchasing are the types of incremental reforms we can expect from those who say that we must build on what we have. These will do almost nothing for the problems that face us such as the 29 million uninsured, the tens of millions underinsured, the loss of choice of health care providers, and the interminable increase in health care spending.
We do have a better choice. Join the forces who are advocating for a single payer national health program. With single payer, we would no longer have to direct our health policies to maintaining a lucrative private health insurance infrastructure. Instead we could direct our health policies to taking care of patients, and that, of course, is what reform should be all about.