With Thanksgiving approaching, I thought I’d share a few things in the healthcare market for which I am thankful:
- Every year more healthcare data is made public and this liberation of data, in turn, encourages more entrepreneurs and visionaries to develop innovative technology to benefit consumer health
- People across the ideological and political spectrum are contributing their insights about American healthcare and its potential improvement
- Consumers who apply for insurance coverage in 2014 will not be rejected due to health status or pre-existing medical conditions
- Despite all the controversy surrounding health reform efforts, the constant news stories about health insurance has led to many consumers and journalists becoming more educated on topics such as medical out-of-pocket costs, drug coverage, and healthcare provider networks. Hopefully, this will result in increased accountability for healthcare researchers, industry pundits, and politicians alike
- All the consumers who have used our web site to compare insurance options and learn how to become a more informed health insurance shoppers
- All the journalists and web sites who have taken the time to cite the results or our research reports and nationwide consumer surveys
Happy Thanksgiving from HealthPocket!
News on the Affordable Care Act often exhibits cycles where a particular topic will dominate top-tier journalists for a few weeks and then recede from discussion. I suppose that is true for all news. All the same, the presence of news cycles has made me think about what topics will appear, or re-emerge, in future cycles. Below are a few guesses:
- Customer satisfaction – Come January, enrollees will begin to use their new metal plans. By February and March, we should have some interesting poll data regarding what consumers like and/or dislike about the new health plans.
- Narrow networks – We have heard anecdotal reports about an increased use of narrow networks for 2014, particularly among exchange health plans. However, I have not come across any concrete data about how widespread narrow networks will be. The surveys on consumer satisfaction I expect to see in Q1 2014 may shed some light on the use of narrow networks and their acceptance by consumers. If we see consumers largely apathetic about narrow networks, let alone happy with them, we can expect an accelerated rate of adoption of narrow networks in 2015 given their cost advantages.
- Cost-sharing – Since the use of Affordable Care Act plans will begin in 2014, enrollees will be exposed to the cost-sharing of these new health plans. For those above 250% FLP who have no cost-sharing subsidies, we expect to see more expensive out-of-pocket fees for bronze plan enrollees than was the case in the pre reform individual insurance market. However, the new bronze plans cover some medical services that were often uncovered in pre-reform plans and would have been paid completely by the patient. It will be interesting to see how consumers react to this trade-off among lower tier metal plans.
- Pent-up demand – Previous research by HealthPocket indicated that a portion of consumers would visit the doctor more frequently if they had better insurance coverage. Additionally, another portion of the public indicated they would seek a medical procedure they had put off based on superior insurance coverage. Will this be the case in 2014? On the one hand, the new metal plans have broader insurance benefit coverage than the pre-reform it replaces. In other words, some medical services previously uncovered will be covered. On the other hand, higher cost-sharing has been found for medical services for the bronze plan and may be the case for the silver plan as well (the research has not been performed on this area yet). Which factor will prevail?
- Doctor accessibility – If the Affordable Care Act is successful, millions of previously uninsured will obtain health insurance coverage. Will this new insured population increase the wait to see a doctor? Moreover, will those enrollees who are in narrow network plans have longer waits than their broad network counterparts or will they have the same wait time because of a more efficient pool of healthcare providers within narrow networks? If wait times do increase, will this send drive more people to retail clinics seeking shorter wait times? If longer wait times do emerge more frequently for narrow networks, will these networks respond by contracting with more nurse practitioners and physician assistants rather than physicians?
A recent study from the Center for Studying Health System Change reported that 1% of U.S. families reported using a retail health clinic in the previous year in 2007 and by 2010 that usage had increased to 3%. The Robert Wood Johnson Foundation reported that retail clinics are “projected to account for about 10 percent of outpatient primary care visits by 2015.” A recent estimate claims that more than 1,400 health clinics now operate inside retail chain stores.
Does the increased presence and use of retail clinics matter? It should.
Retail clinics rely heavily on nurse practitioners who operate without an on-premises physician. These nurse practitioners are less expensive than doctors with respect to salaries. Consequently, retail clinics can provide basic care at lower costs than would be the case at a typical primary care physician. For example, Walgreens healthcare clinic advertises prices of $79 to $89 for patient exams pertaining to illness, pain, injury & skin exams. In comparison, FairHealthConsumer.org estimates that an established patient office or other outpatient visit (typically 10 minutes) paid out-of-pocket would cost $138 in a Boston suburb. Surprisingly, the price difference between retail clinics and physician practices has not resulted in faster adoption of these facilities by the public.
However, there are objections to retail clinics in some quarters. Dr. Sam Unterricht, president of the Medical Society of the State of New York, has stated “The society, and physicians in general, think retail clinics are a threat to the quality of care and a threat to physicians financially.” Part of the concern is the potential conflict of interests with respect to prescribing drugs dispensed at the pharmacy hosting the retail clinic or recommending other medical supplies sold at the pharmacy. However, conflicts of interest also exist for doctors who could direct patients to doctors and medical services offered by the physician’s practice. It would seem to me that the quality of clinical outcomes is more important in this discussion, though not to the exclusion of exploring potential conflicts of interests.
The clinics themselves are expanding the services they offer, from routine vaccinations to the treatment and management of chronic conditions such as asthma, diabetes, and hypertension. I have not seen any negative press regarding the quality of vaccination work, blood pressure checks, and other basic care provided at retail clinics. If that trend is maintained for expanded medical services such as the management of chronic conditions, retail clinics could be one small step toward curbing healthcare costs in the U.S.
Kathleen Sebelius stated “There is no doubt the level of interest is strong. We expect enrollment will grow substantially throughout the next five months, mirroring the pattern that Massachusetts experienced. They’re also numbers that will grow as the website, HealthCare.gov, continues to make steady improvements.”
I am inclined to agree that enrollment on exchanges will increase considerably in coming months. The inaugural open enrollment period for the Affordable Care Act is exceedingly long at six months. In my own experience observing Medicare drug coverage enrollment periods since 2006, I found a considerable portion of Medicare beneficiaries waited until the last two weeks before enrolling in a drug plan. With that said, the Medicare population is more highly motivated due to the health considerations of an elderly population.
Internet traffic contains some encouraging data for the administration on the matter of future enrollments. Even with the reduction in traffic from October, Google searches using the phrase “health insurance” remains at a high level. Along with data on related keyword phrases, the Google search trend data suggests a persistent interest in health insurance among the general public despite the initial peak in early October. Had search traffic for the phrase “health insurance” plummeted, the administration would have cause for concern.
Another variable in the enrollment story is the announcement today by the White House that “insurers can offer consumers the option to renew their 2013 health plans in 2014 without change, allowing these individuals to keep their plans.” It stands to reason that if millions with cancelled health insurance can now retain their existing coverage, it may reduce enrollment in Affordable Care Act plans. It was an interesting move by the administration given how far they are currently from their enrollment goal of 7 million. There are several ways to interpret this move but I believe all the interpretations are heavily speculative at this point.
The White House is expected to release enrollment numbers for the exchanges later this week and the media is brimming with predictions and commentary. The true significance of these enrollment numbers will likely be obscured by the criticism and cheerleading meeting the announcement from those with vested ideological interests. In order to avoid being swept up in the spin, we should ask the following questions:
- “What regions are included?” At this point in time, journalists are expecting data on all 50 states and D.C. If a more limited set of regions is reported (such as the federal exchange states alone), the enrollment numbers will be less effective with respect to judging health reform’s marketing success and will also open the door for more debate on the national enrollment numbers.
- “Who counted as an enrollee?” According to a November 11th report in the Washington Post, the administration “will count people who have purchased a plan as well as those who have a plan sitting in their online shopping cart but have not yet paid.” If this report is true, the value of the numbers is diminished due to the prospect of over counting enrollments. If, instead, enrollment figures are limited to people who have had a transmitted insurance application approved by either an insurer or the Medicaid program then we can argue over the significance of the numbers and not what the enrollment numbers really are.
- “Are the enrollment numbers for individual metal plans as well as Medicaid discretely reported?” The break-out of enrollment numbers is important for multiple reasons. First, enrollment in the different metal plans will illuminate consumer shopping behavior in a transformed health insurance market. Will the commoditization of health plans’ coverage under the Essential Health Benefits make the lowest priced Bronze Plan most compelling option or will concerns about out-of-pocket costs drive consumers to more expensive metal tiers? Additionally, will we find most consumers enrolling in the new metal plans or enrolling in their state’s Medicaid program? The percentage of Medicaid enrollees is important because Medicaid does not bring in revenue from consumers to offset state and federal spending on healthcare.
- “What percentage of the enrollees are expected to receive subsidies?” This percentage is a dual-edged sword politically. A subsidized enrollee is someone who has directly benefited from the Affordable Care Act but is also increasing the costs of the Affordable Care Act. Neither side on this matter is more right than the other.
- “What are the age distributions of enrollees?” A disproportionate representation of 20-something enrollees bodes well for the economics of the Affordable Care Act (if these 20-somethings are in good health and can be expected to use healthcare services infrequently). If there is a disproportionate representation of people age 50 and over, the economics of the Affordable Care Act become problematic since humans tend to use more healthcare services and prescription drugs as we age. More overall healthcare usage among health plan enrollees = higher premiums unless we decrease the cost of healthcare delivery (which we haven’t).
- “What percentage of the enrollees were not insured at the time of application?” The reduction of the uninsured population was among the most important goals of the Affordable Care Act. The standard insurance application form asks if the applicant has existing insurance coverage so the administration should be able to report this information. A high percentage of previously uninsured among enrollees would provide considerable public relations benefits at a time when press coverage has been dominated by the technical shortcomings of the exchanges.
One of the important questions I do not believe we will answer from the enrollment numbers concerns the percentage enrollees with pre-existing medical conditions and poor health including those unable to obtain health insurance due to those factors. The standard insurance application form does not capture this information. The information, itself, is immensely valuable. In the individual and family health insurance market, one in five applicants had been their insurance application rejected often due to health considerations. If very few enrollees have poor health or pre-existing conditions then the risk pool for the Affordable Care Act plans will be in a better position to curb premium increases in the future. If the opposite is true then it will be especially difficult to constrain premium increases.
HealthPocket performs a great number of surveys in a course of the year to better understand consumer perspectives on healthcare issues. However, we don’t survey the perspectives of the press. This lack of press surveys, however, does not mean we believe it is an unimportant topic. Quite the contrary, the topics that preoccupy the press determine what stories get written and, in turn, what information is supplied to the public through their newspapers and journals.
In the interests of providing some limited insights into the health reform interests among the press, below are some of the questions I’ve been asked by various journalists in the past few weeks.
- How will medical out-of-pocket costs change under the Affordable Care Act?
- Which insurance companies will be the winners and losers under the Affordable Care Act?
- When will the federal exchange be completely fixed?
- What advice would you give to consumers shopping for insurance right now?
- Why does the federal exchange have problems?
- What are my predictions regarding how many people will enroll in the exchanges by the end of the annual enrollment period?
- How does drug coverage under the Affordable Care Act compare to existing drug coverage?
- Will enough young and healthy 20-somethings enroll in the exchanges to keep premiums affordable?
A nationwide poll performed by HealthPocket in October found that there is growing public support for delaying the implementation of the penalty charged to people without health insurance. A September poll found that 41% of those surveyed supported the delay while in October that number grew to 51%.
An outstanding question is whether the public would demonstrate more support for the individual mandate if there was greater understanding of risk pools and their affect upon insurance premiums. In the pre-reform health insurance market, about one-out-of-five applicants for individually-purchased (i.e. not purchased by an employer or a group) health insurance were rejected. The rejections were most often due to medical underwriting where an insurer considers an applicant’s health status and medical history before approving an application for insurance. This process left many people with poor health and pre-existing medical conditions without health insurance. With the guaranteed issue provision within the Affordable Care Act, these applicants can no longer be denied insurance nor can they pay more for insurance due to health considerations. However, they bring higher costs into the system which will raise insurance premiums for everyone unless as many healthy people sign up as possible. Additionally, a previous InfoPoll by HealthPocket found a significant portion of the public would use healthcare services more often or get medical procedures they put off if they had insurance with superior coverage. In the individual and family market, the breadth of benefits of the new Obamacare plans is wider than 98% of existing health plans.
Add guaranteed issue with pent up demand and subtract the individual mandate and you have higher insurance premiums unless the cost of healthcare delivered is lowered or serious efforts are made at addressing lifestyle issues that contribute to higher medical costs (e.g. obesity, smoking, sedentary lifestyle, drub abuse, alcohol abuse). Successfully addressing lifestyle issues that contribute to higher medical costs would be a ‘game changer’ in terms of healthcare savings. However, 1) behavioral issues are notoriously difficult to address particularly by government entities and 2) if you think the individual mandate is controversial imagine how the public would react if serious efforts were directed at reducing obesity and drug & alcohol abuse. For example, there would be howls across the country if an insurance subsidy was tied to the maintenance of a healthy body weight or submitting to drug and alcohol screenings.