At the end of last year’s 2014 open enrollment period for purchasing health plans on the ACA’s public marketplaces, a little over 8 million people had enrolled.

Seventeen states and the District of Columbia ran their own exchanges, with California, New York, and Kentucky standing out for the overall success and smoothness of their exchange rollout and the number of state residents they enrolled.

In contrast, certain states provided a cautionary tale of what not to do, perhaps most notably Oregon, whose exchange never really got off the ground. Oregon blamed the technology provider behind its exchange, claiming that the exchange implementation was rife with flaws and the process plagued by technical delays. As a result, Oregon was forced to enroll people exclusively by paper applications, causing a sizeable backlog.

Minnesota’s exchange also had technical problems with its online enrollment system, driving people to its over-the-phone help lines, resulting in hour-long wait times.

As we prepare to head into the 2015 open enrollment season, which starts November 15th, we might still see some technical issues with the public exchanges. But with a year to work on making their exchanges more reliable, states are hoping that most of the technical issues are behind them.

Instead, the operators of public exchanges are turning their attention to making their exchange offerings more robust and their outreach efforts more effective at reaching underserved and underrepresented populations.

Here are some perspectives on what we will see, what we might see and what we shouldn’t see this year.

What We Will See

  • Increased outreach to minorities and underrepresented demographics. In December 2013, less than 5 percent of the 109,296 people who enrolled in plans identified as Spanish-speakers. This had to do in part with the late launch of the Spanish language site
  • Increased outreach to younger people, aged 18 to 34. The success of an exchange lives and dies with its ability to recruit young, healthy individuals who offset the cost of people with chronic health conditions. Last year, in Colorado, Baby Boomers dominated enrollment in the first two months, with 43 percent of enrollees being 55 to 64 years old. In contrast, only 17 percent of enrollees fell into the target demographic of 18 to 34 years old.

More insurers offering plans. The U.S. Health and Human Services department has reported a 25 percent increase in the number of insurers that will provide plans during this year’s open enrollment period, which will likely translate to more plan options in more parts of the country. More choice, however, does not necessarily mean more business for all of the insurers participating in the newly energized individual market for health plans. In California, for example, although 11 insurers offered plans on the Covered California exchange, 96 percent of enrollees bought plans from just four large providers: Anthem, Kaiser, Blue Shield, and HealthNet.

  • Retail storefronts as a means of reaching suburban or rural populations. California and Connecticut, among other states, opened enrollment “storefronts” to help individuals and families enroll in plans. The storefronts served the dual purpose of reducing strain on online enrollment sites and increasing visibility of the exchange in underserved or remote areas. Expect to see more retail outlets participating in public exchanges this year.

What We Might See

  • Concerns related to automatic re-enrollment for current ACA subscribers. A new uncertainty in this year’s open enrollment period is the introduction of automatic re-enrollment for people who enrolled in ACA plans last year. Intended to streamline enrollment by reducing or eliminating human intervention, and to minimize stress to online enrollment sites that were brought down by high traffic last year, automatic re-enrollment poses a perceived risk to consumers, who may be complacent and not explore other options. In particular as more insurers provide plans on the exchanges, the likelihood grows that a better, more affordable plan is available for them. People could also face issues with their subsidies, if their income information has changed since last year.
  • More wacky campaigns. Last year, ad campaigns for public exchanges ranged from straightforward and informative, such as the campaign for Covered California, to Oregon’s hilarious and memorable folksy guitar ads and Minnesota’s strange but compelling ads featuring an accident-prone Paul Bunyan. Colorado was also a standout – and somewhat controversial – in that its ads aimed at young people put the message in the mouths of college students doing a keg stand and an eager coed pondering a new hookup. It remains to be seen what type of ad campaigns we will see leading up to this year’s open enrollment period, but chances are they won’t be dull.
  • Doctor directories and other tools that help consumers make better plan choices. Doctor directories and other consumer tools were largely absent from last year’s exchanges as states struggled just to get the basics right. For example, Covered California introduced a doctor search tool for consumers wishing to find out of their current doctors accepted the health plans of their choice. The state recalled the tool almost immediately, calling it “premature.” These tools are essential to helping consumers make the right choices, and we should see an increasing number this year.

What We Shouldn’t See

  • High numbers of technical glitches that crippled some exchanges. We will no doubt continue to see technical glitches in various public exchanges, especially as they introduce new advanced functionality such and decision support tools, but nothing like last year (we hope).
  • High turnover of exchange staff. Many states saw firings and resignations as beleaguered officials bowed under the pressure of failed websites and low enrollment numbers. Hawaii’s exchange director resigned following repeated delays and problems launching the online exchange. The head of Maryland’s exchange also stepped down following a delayed launch of the online exchange and low enrollment numbers in subsequent months.
  • Enrollment deadline extensions. Last year, extensions to enrollment deadlines were permitted for people who were unable to enroll because of technical glitches with the site and for “high risk” patients who have chronic health issues and for whom a gap in coverage would significantly affect their health outcomes. This should be much less of an issue for the coming open enrollment period, since people will not be transitioning from an old system to a new one.

Bottom line, everyone involved in the public exchange open enrollment period last year learned a lot – some the easy way and some the hard way. With this’s year open enrollment period just around the corner, we don’t have long to wait to see which public marketplaces were able to apply what they learned and which ones will have another rocky year.

Good news for the 49 million Americans who are enrolled in Medicare Part B: premiums and deductibles will be the same for 2015 as the last two years.

According to the U.S. Department of Health and Human Services, Part B monthly premiums will hold at $104.90 and the annual deductible at $147.00. Since 2007, Part B beneficiaries with higher incomes have paid higher monthly premiums. These income-related monthly premium rates, which affect less than 5 percent of people with Medicare, will also remain the same as they were in 2014.

Part B covers “physicians’ services, outpatient hospital services, certain home health services, durable medical equipment,” among other things.

HHS Secretary Sylvia Burwell attributed the stable premiums and deductibles to lower health care cost growth within Medicare since the passage of the Affordable Care Act. Medicare spending grew just 0.8 percent annually over the past four years, much lower than the 3.1 percent annual increase in per capita GDP over the same period.

“The Affordable Care Act is working to improve affordability and access to quality care for seniors and people with disabilities,” said Secretary Burwell.

Stable premiums and deductibles leave more money in the pockets of seniors, who may already be limited by fixed incomes and other financial constraints.

To read the entire press release, which includes tables detailing amounts that will be paid by beneficiaries based on income, click here.

Data recently released by the Obama administration predicts that the number of insurers providing plans on federal and state insurance exchanges will increase by 25 percent for the next open enrollment period, which begins November 15th, 2014. According to the administration, there were 252 insurers for the plan year 2014. The number will rise to 315 for the plan year 2015.

Economics 101 teaches that competition in a market is nearly always good for consumers. With just a few insurers in the game during the first open enrollment period – in some states such as New Hampshire and West Virginia, just one – insurers had great latitude with plan prices. The hope is that more players will drive down premiums and improve service.

There still may be unequal distribution of services between urban and rural areas in some states, which could mean the lower prices might not be available everywhere. But generally speaking, consumers will win when more insurers compete for their business.

For example, according to joint research done by Northwestern University and M.I.T., if all insurers in each state’s 2011 marketplace had participated in that state’s exchange in 2014, “premiums would have been 11 percent lower, saving $1.7 billion in federal premium subsidies.” And of course, consumers would also have benefitted directly from those lower prices.

More competition, more choices

An increase in the number of insurers participating on the exchanges will also give consumers more choices when it comes to plans. In 2014, United Healthcare, the largest insurer in the country, did not offer plans on the exchanges, adopting a wait-and-see attitude. United Healthcare will be participating on the exchanges for the 2015 OEP, with plans to expand to as many as two dozen states for next year.

For most insurers, the second time around for the open enrollment period is less of a gamble and more of a savvy move to capture new customers and greater market share.

How insurers compete matters

Of course, how insurers compete makes a difference. Most start by offering attractive plans at appealing prices. But often the key to winning in a market is to beat the competition by creating an “unfair” advantage over them. In the health care market, that could mean leveraging size and a large footprint to negotiate the best prices within provider networks. If an insurer is able to “lock in” the best prices with the most utilized networks in an area, that can neutralize the competition and opens to the door for the victor to charge premium prices or pocket the savings, though insurers are required under the ACA to spend either 80 or 85 percent of premium dollars on medical services.

Still, for consumers, the benefits of increased competition are almost always a no brainer. If they do their homework and choose wisely, they should be able to find a plan that meets their needs at a price they can afford.

Towers Watson has unveiled a new personalized decision support service that will help pre-Medicare retirees determine whether they are better off using a subsidy from their former employer or taking a tax credit from the federal government. Under the Patient Protection and Affordable Care Act, pre-Medicare retirees can use either a tax-advantaged employer subsidy or a federal tax credit to defray the cost of their health insurance premiums — but not both. The service is designed to help early retirees optimize their health insurance spending without “double dipping.”

Employer clients of Towers Watson’s OneExchange requested the service to make it easier for their early retirees to evaluate and enroll in health plans on the individual market. Retirees can take advantage of the service by phone through a OneExchange benefit advisor or go online and access a guided self-service tool at no charge.

For employers offering subsidies, Towers Watson will create and manage health reimbursement arrangements (HRAs) for their early retirees. Early retirees accepting employers’ funding have the option of buying individual plans directly from insurers or from public exchanges. Early retirees who accept a tax credit must choose plans from the public exchanges.

For more information about the new service, click here for the full release.

Towers Watson projects that total spending on health care by employers that participate in Towers Watson’s OneExchange for full-time active employees will grow just 1.8% from 2014 to 2015. That number includes both employer funding for coverage and employee contributions and out-of-pocket costs.


A growth rate of 1.8% is very close to the Consumer Price Index (CPI), which was 1.5% in 2013, and is significantly lower than both historical and projected market averages for health benefit cost increases. Keeping growth levels at or near the CPI is a must if employers are to avoid the PPACA’s excise tax on high-value health plans, also known as the “Cadillac tax,” which goes into effect in 2018.

By contrast, a 4% increase is expected in 2015 for midsize to large employers not using a private exchange but who are making some plan design changes. If employers make no plan changes, the projected increase is a 5.2%. Aon Hewitt recently announced a 5.3% projected cost increase in 2015 for employers using its private exchange.

For more on how OneExchange kept health spending growth low, click here for the full release.

We are happy to report that we’ll be serving the Ohio Public Employees Retirement System (OPERS) in 2016. For more details about OPERS and the transition, click here for the full press release.

Towers Watson released survey results showing that nearly one in four employers believe that private insurance exchanges could provide a viable alternative for their full-time, active employees as soon as 2016. So far, 28 percent have “extensively evaluated” the viability of private exchanges.

These results are from the 2014 Towers Watson Health Care Changes Ahead Survey, which was completed in July 2014 by 379 employee benefit professionals of midsize to large companies across a variety of industries.

Results from the survey also revealed the three primary reasons employers would adopt a private exchange: 1) if it was a better value than current self-managed model, 2) if other large companies in their industry adopted one, and 3) if the employer’s company was unable to get under the ACA’s excise tax ceiling coming in 2018.

Though employers are starting to consider the viability of private exchanges, they are not inclined to send active employees and their families to the public exchanges. Of the employers surveyed, 99.5 percent said they have no plan to exit health benefits for their active employees and send them to public exchanges.

This position is not likely to shift soon – 77 percent of employers were not confident the public exchanges would be a viable alternative for actives in either 2015 or 2016.

For additional details on these topics and others, click here.

Preventative care costs employers significantly less than treatment: think about the relative cost of helping employees lose weight compared to managing a chronic illness such as type 2 diabetes. As a result, an increasing number of employers are implementing wellness programs that engage employees and get results.

However, creating a successful wellness program often entails a trial-and-error process to find the optimal combination of programs and services, which takes time. And getting employees to participate in the programs and track their progress can be challenging.

Of the options employers have, “outcome-based incentives,” or rewarding employees based on specific benchmarks or goals, have been generally well received by employees. In contrast, penalties such as higher insurance premiums for not meeting fitness goals or continuing a risk-factor behavior such as smoking, have not. Simply put, while employees seem to like carrots, they don’t like sticks.

It’s no surprise then, that by 2017 as many as 76 percent of employers could have outcome-based incentives programs in place, according to the 2014 Towers Watson Health Care Changes Ahead Survey of 379 midsize to large U.S. employers. Today, 18 percent of respondents already have them in place, ten percent plan to implement them in 2015, and 48 percent are considering them for either 2016 or 2017.

Still, even though wellness programs are becoming more widespread and more sophisticated, they still have a long way to go.

According to the 2013/2014 Towers Watson Staying@Work Survey, less than half of employers surveyed describe any specific aspect of their health and productivity programs as successful. Employers report little success in achieving goals such as lower cost, fewer employee sick days, and reduced chronic disease and lifestyle-related risks in employee and dependent populations.

One obstacle to quantifying the success of wellness programs is that it takes a long time for a change in behavior to pay off in the form of an employee’s improved health and wellness.

Also, some people are simply healthier than others, meaning the most successful wellness program in the world won’t necessarily help an employee who for example, is genetically predisposed to have heart disease or arthritis.

And finally, wellness programs that target some behaviors work better than others. For example, studies have shown that participants in programs targeting exercise frequency or smoking cessation saw marked improvement, but participants in programs that focus on managing cholesterol levels did not.

So while pinning down ROI for wellness programs is tough in the short term, the potential for long-term health benefits is worth the time investment. For best results, employers are advised to select wellness programs that target behaviors where such programs have proven effective – and implement them with care and patience in equal measure.

Numerous news reports on the high cost of medical services and variations in price from region to region are bringing price transparency to the forefront – especially with more consumers empowered to select their own health plans – both on public exchanges and for employee-consumers via private exchanges. Savvy health care consumers are increasingly leery of trusting the first price they’re offered for a treatment or procedure – and they should be.

A recent article by KQED, a public radio station for Northern California, explains a new program that it has organized to bring clarity to the often-cloudy world of health care pricing by crowdsourcing pricing data. Listeners are invited to submit prices they paid for various procedures to an online tool called PriceCheck and compare those prices against those submitted by other listeners to get a sense of how much price variation to expect in the area.

PriceCheck data indicates the procedures that appear to be the worst offenders in price variation are:

  • Mammograms, reported to cost between $134 and $1,200
  • Back MRIs, which ranged from $255 to $3,700

PriceCheck is a voluntary, opt-in tool, so it doesn’t give comprehensive price comparisons. However, since such a tool does not yet exist for San Francisco Bay Area residents, the KQED PriceCheck tool is a helpful resource.

Consumers are increasingly advocating for price transparency nationwide, in some cases, sparking bidding wars for certain procedures. While PriceCheck prices are representative of cost differences only in the San Francisco Bay Area, such a tool could be useful in many local markets, since there are price variations everywhere.

This year’s annual report of the Trustees for Medicare and Social Security revealed that the Medicare trust fund will not run out until 2030 — four years later than last year’s estimate.

The extension was attributed, among other things, to reduced hospital admissions and to Part D payments declining 4% from 2013 estimates due to the use of generics.

In an article on the report in USA Today, Bryce Williams, managing director of Towers Watson’s Exchange Solutions, offered the opinion that future savings could be in store beyond what is being projected, considering that the ACA now covers many people who were previously uninsured. This could result in more people reaching the Medicare eligibility age of 65 without a lifetime of chronic health issues going untreated or unmanaged, putting less strain on Medicare coffers.

Said Williams, “[The ACA is] a stealth benefit that’s going to further extend the life of Medicare, perhaps substantially, without having to round up new funding.”

Keep an eye on the headlines for more Medicare cost-saving measures, such as changing the way doctors are paid and the creation and use of more quality metrics to improve care and weed out excessive fees.


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