Growth Accelerating for Private Insurance Exchanges, Report Says

 A new report by Accenture predicts that enrollment in private health insurance exchanges could grow dramatically over the next three years. A likely driver: the “Cadillac” tax on high-cost insurance that is set to go into effect in 2018.

By Chris Vest
APRIL 13, 2015

Enrollment in private health insurance exchanges has doubled in the last year, a trend that will likely continue over the next several years, according to a new report by global management firm Accenture.

Private exchanges are increasingly attractive to employers, as they serve as online marketplaces where employees may pick from a range of plan options. Faced with increased costs and a barrage of Affordable Care Act (ACA) administrative requirements in the coming years, employers are often choosing to outsource the task and have employees enter a private exchange.

Private exchanges enable employees to take a set amount of employer benefit and determine how generous a plan to purchase. Midsize employers with between 100 and 2,500 employees are responsible for the majority of the recent growth.

With 150 million workers receiving employer-sponsored health insurance, the market share held by private exchanges is still relatively small. Yet that may continue to change, as employers will face additional ACA taxes in the coming years. Accenture predicts that by 2018, up to 40 million workers will access employer-sponsored health insurance through a private marketplace, making them more popular than state- and federally funded exchanges.

One driving force behind increased adoption rate is likely to be the “Cadillac” tax on high-cost health insurance that goes into effect in 2018. According to the American Health Policy Institute, the tax is projected to affect 38 percent of large employers and 17 percent of all American businesses.

Private exchange participation rates may also increase after the ACA employer shared-responsibility provision went into effect on January 1 this year. Under this provision, employers with at least 50 full-time employees (or a combination of full- and part-time that is equivalent to 50 full-time employees) must pay a large fee if they do not provide health insurance that meets affordability levels and provides a minimum standard of coverage.

“As employers seek a compelling alternative, the private exchange model of reducing costs and administrative burden emerges as a clear favorite,” Rich Birhanzel, managing director for Accenture Health Administration Services, told Bloomberg BNA last week.

High-Deductible Plans Bring Lower Costs Now, But Will They Mean Pricey Consequences?

Kaiser Health News (KHN) is a nonprofit national health policy news service. 

March 26, 2015

Got a high-deductible health plan? The kind that doesn’t pay most medical bills until they exceed several thousand dollars? You’re a foot soldier who’s been drafted in the war against high health costs.

Companies that switch workers into high-deductible plans can reap enormous savings, consultants will tell you — and not just by making employees pay more. Total costs paid by everybody — employer, employee and insurance company — tend to fall in the first year or rise more slowly when consumers have more at stake at the health-care checkout counter whether or not they’re making medically wise choices.

Consumers with high deductibles sometimes skip procedures, think harder about getting treatment and shop for lower prices when they do seek care.

What nobody knows is whether such plans, also sold to individuals and families through the health law’s online exchanges, will backfire. If people choose not to have important preventive care and end up needing an expensive hospital stay years later as a result, everybody is worse off.

A new study delivers cautiously optimistic results for employers and policymakers, if not for consumers paying a higher share of their own health care costs.

Researchers led by Amelia Haviland at Carnegie Mellon University found that overall savings at companies introducing high-deductible plans lasted for up to three years afterwards. If there were any cost-related time bombs caused by forgone care, at least they didn’t blow up by then.

“Three years out there consistently seems to be a reduction in total health care spending” at employers offering high-deductible plans, Haviland said in an interview. Although the study says nothing about what might happen after that, “this was interesting to us that it persists for this amount of time.”

The savings were substantial: 5 percent on average for employers offering high-deductible plans compared with results at companies that didn’t offer them. And that was for the whole company, whether or not all workers took the high-deductible option.

The size of the study was impressive; it covered 13 million employees and dependents at 54 big companies. All savings were from reduced spending on pharmaceuticals and doctor visits and other outpatient care. There was no sign of what often happens when high-risk patients miss preventive care: spikes in emergency-room visits and hospital admissions.

The suits in human resources call this kind of coverage a “consumer-directed” health plan. It sounds less scary than the old name for coverage with huge deductibles: catastrophic health insurance.

But having consumers direct their own care also requires making sure they know enough to make smart choices like getting vaccines, but skipping dubious procedures like an expensive MRI scan at the first sign of back pain.

Not all employers are doing a terrific job. Most high-deductible plan members surveyed in a recent California study had no idea that preventive screenings, office visits and other important care required little or no out-of-pocket payment. One in five said they had avoided preventive care because of the cost.

“This evidence of persistent reductions in spending places even greater importance on developing evidence on how they are achieved,” Kate Bundorf, a Stanford health economist not involved in the study, said of consumer-directed plans. “Are consumers foregoing preventive care?  Are they less adherent to [effective] medicine? Or are they reducing their use of low-value office visits and corresponding drugs or substituting to cheaper yet similarly effective prescribed drugs?”

Employers and consultants are trying to educate people about avoiding needless procedures and finding quality caregivers at better prices.

That might explain why the companies offering high-deductible plans saw such significant savings even though not all workers signed up, Haviland said. Even employees with traditional, lower-deductible plans may be using the shopping tools.

The study doesn’t close the book on consumer-directed plans.

“What happens five years or ten years down the line when people develop more consequences of reducing high-value, necessary care?” she asked. Nobody knows.

And the study doesn’t address a side effect of high-deductibles that doctors can’t treat: pocketbook trauma. Consumer-directed plans, often paired with tax-favored health savings accounts, can require families to pay $5,000 or more per year in out-of-pocket costs.

Three people out of five with low incomes and half of those with moderate incomes told the Commonwealth Fund last year their deductibles are hard to afford. Many households simply lack the resources to make out-of-pocket health costs, shows a recent study by the Kaiser Family Foundation. (Kaiser Health News is an editorially independent program of the Foundation.)

As in all battles, the front-line infantry often makes the biggest sacrifice.

NFIB Updates Senate on Obamacare: Data Validates the Doubters

For Immediate Release

Washington, DC (March 19, 2015) —  Five years of data on how small business owners are dealing with the Affordable Care Act show that large majorities are disappointed and that its predicted benefits for local employers were far off the mark.

“The problems that many predicted have arrived but most of the promises for small business owners remain unfulfilled,” said NFIB Research Director Holly Wade, who testified this morning before the Senate Finance Committee at a hearing to assess the real effects of the health care law.

Wade pointed out that the law is just as restrictive and confusing as its detractors predicted. Ten percent of small business owners had their personal insurance plans cancelled last year, for example, something the President and others promised wouldn’t happen when they were pushing the law through Congress. Twelve percent of owners renewed their old plans early in order to avoid higher premiums and narrower choices, two results that were also not part of the deal.

Most disappointing, according to Wade, is that a large majority of small business owners report higher premiums despite the fact that the law was billed as a way for them to reduce their expenses.

“We found that 62 percent of small business owners are paying higher premiums while only eight percent say their costs have dropped,” she said. “A big part of the President’s sales pitch for the law was that it would help small businesses save money on their health insurance.  Five years later, a substantial majority of small business owners are reporting the opposite result.”

What about the SHOP Exchange and small business tax credits that were supposed to soften the impact of the taxes and mandates and make things generally easier for local employers to purchase insurance?

“It’s been difficult for us to find very many small business owners who have purchased insurance through the SHOP Exchange,” said Wade. “Almost no one is using the system and that’s evident from the administration’s own enrollment numbers.”

The tax credits, she said, which were supposed to create an incentive for small employers to cover their workers, also have been ineffective.

“Qualifying for the credits is cumbersome and complicated,” she said. “The tax credit is temporary but the mandate is forever, so the financial advantage is very small over the long run.  It’s certainly not enough to offset the higher costs and the administrative headaches that the law imposes on small business owners.”

President Obama and supporters of law point out that millions of Americans who didn’t have insurance are now receiving subsidies to buy coverage. That, they say, shows that the ACA is a success.

“But that’s not the way the President and Congress defined success when they were debating the law,” said Wade. “The ACA was sold to the country as a way to reduce the cost of insurance for everyone and as a way to make the system work better for everyone. And they put a heavy emphasis on the advantages for American small businesses.

“Based on the data and our experience with the law, most of that seems to have been greatly overstated,” she continued.