Most of us probably don’t think of window shopping for health insurance, but starting November 10th, that’s exactly what people can do on HealthCare.gov. Even though the federally managed public health insurance exchange doesn’t open for business until November 15th, it’s available now for visitors to browse.

In addition to being able to sort plans by price and plan category or “tier,” visitors also can filter plans based on the level of coverage for common conditions such as asthma, heart disease, depression, diabetes and more. Providing the ability to quickly sort through plans in these ways will likely aid people in picking plans that best suit their needs.

Visitors to HealthCare.gov are initially prompted to enter their ZIP code. People who live in states that do not run their own exchanges can proceed through prompts asking about the number of people in their household and household income to determine their eligibility for subsidies or Medicaid. Once that has been determined, they are free to browse the federal site. Those who live in states with their own exchanges, such as Covered California or Minnesota’s MNSure, are redirected to those sites.

These should streamline the process of evaluating and selecting plans on the site this year.

The open enrollment period runs from November 15, 2014 – February 15, 2015.

Health Insurance Literacy

November 4, 2014

A recent national survey by the American Institute for Research (AIR) tackled the challenge of measuring Americans’ “health insurance literacy.” AIR defines health insurance literacy as:

“The degree to which individuals have the knowledge, ability, and confidence to find and evaluate information about health plans, select the best plan for their own—or their families’—financial and health circumstances, and use the plan once enrolled.”

This is a mouthful, but simply put, health insurance literacy means having the knowledge and technical know-how to select and use the best and most affordable health plan that meets your needs.

The Affordable Care Act empowers individuals to be their own health care advocates, their own price checkers, their own quality control measurers. This makes being health insurance literate an essential skill, but it’s not one that can be acquired overnight.

A startling statistic from AIR reveals just how unprepared many people are to manage their own health care coverage choices. Three out of four Americans surveyed said they believe they know how to use health insurance, but just one in five could correctly calculate how much they would owe for a routine doctor’s visit.

The 2013 AIR survey was completed by 828 people aged 22 to 64 who were uninsured, privately insured or had Medicaid.

AIR breaks health insurance literacy into four main areas: knowledge, information seeking, document literacy, and cognitive skills.

Knowledge means knowing insurance terms and concepts, such as the definition of a premium (paying for insurance that protects against an unforeseen medical event). It also includes understanding types of healthcare services and enrollee rights.

Information Seeking is the ability to find unknown information and distinguish between credible and not credible sources of information. Examples include locating eligibility requirements and navigating health care or insurer websites.

Document Literacy is the ability to understand and follow directions, fill out forms, and follow schedules, such as provider or drug tier schedules. These are the basic mechanics of applying for insurance.

Cognitive Skills are required to accurately assess one’s own preventative care needs (called “wellness”) and personal risk factors. Key skills include being able to calculate out-of-pocket costs, assess value, and formulate questions.

All of these four areas come together, according to AIR, to comprise “self-efficacy,” which is the ability to perform the tasks, such as correctly filling out forms, asking the right questions, and assessing one’s own health needs, “with confidence.”

Some of these skills come with age, as evidenced by the following chart (Exhibit 3), taken from the AIR survey report:

Screen Shot 2014-10-30 at 4.07.28 PM

Those who are young and or have never had health insurance before face a steeper learning curve, but the report also showed that knowledge and skills increase with use (Exhibit 4).

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For more on health insurance literacy, including a checklist to help consumers pick the right plan, click here for the full AIR report.

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Jean Moore, managing director, active exchanges for Towers Watson, was interviewed on October 17 on the Institute for HealthCare Consumerism’s live radio show. She spoke on the rising popularity of private exchanges for employers to deliver health benefits.

When asked about the most common questions she gets from employers, Moore said that top of mind for many is avoiding the Patient Protection and Affordable Care’s excise tax, which goes into effect in 2018. Key to achieving this goal is keeping health plan cost increases in the 1 to 1.5% range, or close to the Consumer Price Index (CPI), instead of the current 5 to 6%, which is current health plan inflation. This is critical because the excise tax is pegged to the CPI.

Moore attributed the increase in employer interest in private exchanges to “the promise that those exchanges can actually deliver meaningful cost savings in the long run.” She noted that Towers Watson announced earlier in October that total spending on health care by companies participating in Towers Watson’s OneExchange for active employees is projected to grow by just 1.8% from 2014 to 2015.

Moore also said that employers that have moved to a private exchange model have found that it has positive implications for empowering individual employees as health care consumers. She cited Towers Watson survey data indicating that 80% of employees using OneExchange “understand their health benefits better on the exchange than they did prior to the exchange.”

For now, Moore noted that most early adopters of private exchange for full-time active employees have been small to midsize employers. However, she predicted that in 2015 we will start to see larger employers moving to private exchanges. As she put it, “Everyone’s waiting for the first mover to fall, then everybody else [making a private exchange move] will be a quick second follower.”

Click here for the full interview with Jean Moore on IHC, starting at minute 45:30.

A recent change in Medicare policy means that starting in January of 2015 primary care physicians will get paid a monthly fee for coordinating the care of patients with two or more chronic illnesses. Physicians often provide chronic case management services between office visits, but Medicare did not pay for it.

With this new initiative, Medicare will adopt some of the practices of a health maintenance organization. Doctors will draft and carry out plans of care for each patient who signs up for one. These patients will have access to care 24 hours a day and seven days a week for urgent needs. Doctors will ensure they are taking prescribed medications, oversee smooth transitions when patients move from hospitals to their homes or to nursing homes and provide other coordination of care when patients have multiple doctors. They also will assess patients’ psychological and social needs.

For these services, Medicare will reimburse doctors approximately $42 a month.

In a recent New York Times article, Marilyn B. Tavenner, the administrator of the Centers for Medicare and Medicaid Services, described paying doctors for chronic care management services as “a significant policy change.”

The change was a response to the disadvantages of managing care in a piecemeal way, which posed both an administrative challenge to care providers and heightened health risk to patients. The new policy reduces the risk of patients falling through the cracks and becoming victims of unintended consequences resulting from a lack of communication and coordination.

Going forward, Medicare may require doctors to use electronic health records to more easily share information with other doctors treating the same patient, but does not do so now.

For those concerned about a double standard with Medicare and the private Medicare Advantage, this policy change levels the playing field somewhat. “It shows that people do not have to leave traditional Medicare and go into a private Medicare Advantage plan to get coordinated care,” says Julie Stein, director of the Center for Medicare Advocacy.

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 Healthcare.gov site Cuidadodesalud.gov/es.
  • 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 ad 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 Healthcare.gov 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.

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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.

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