Tuesday, February 9, 2016
Kaiser Health News
February 9, 2016
Will Healthcare.gov Get A California Makeover?
By Pauline Bartolone
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 <http://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
<http://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
"Where there is competition and choice is where consumers benefit and
where health plans benefit," said Krusing.
Comment by Don McCanne
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
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
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.
at 3:45 PM