Happy New Year and welcome to the second edition of TPG’s Healthcare Review: a forum to keep our current clients, prospective clients, and candidates apprised of the ever-changing landscape of healthcare in a post-reform world. Tracking the iterations, implementations, extensions and exemptions of the Patient Protection and Affordable Care Act of 2010 (PPACA) can be a full time job. Each new day seems to bring a wave of information which needs to be fully digested before the next news cycle starts. Again, it is our intent to update this newsletter monthly through the end of 2014 to keep you well-informed of the latest developments and their implications. We thank you in advance for your interest, and welcome your comments and questions throughout the year.
January 1, 2014 has come and gone and we have all entered into the post-reform world together. Sure there are plenty of “yet to be“ implemented pieces of PPACA to come over the months and years to come, but effective January 1st, the law’s key mandates were put in place, and those who purchased insurance through the exchanges are now covered by the insurance policies of their choosing. As of mid-January, it has been reported that enrollment through the exchanges has totaled 2.2 million individuals. This is a significant increase in program participation after the difficult start in October and November of 2013. Due to the increased enrollment numbers, there have been a few extensions made to differing groups to allow additional time to enroll. What has not changed is the end of the open enrollment period which remains fixed at March 31, 2014.
Now that larger numbers of individuals have enrolled in the program, some of the underlying assumptions which were used to develop PPACA are being tested. Of particular concern in mid-January are the enrollment numbers of paying customers between the ages of 18 and 34. According to the Obama administration, 40% of PPACA enrollees must fit this category in order to obtain the affordability targets outlined within the law. As of Monday, January 13th, only 24% or 489,460 of the 2.2 million enrollees fit within this category of “younger people” as designated by the administration. The architects of PPACA have been counting on these younger enrollees, who tend not to be heavy users of healthcare services, to help offset the costs of the “non-elderly adults” older than 45, but not yet eligible for Medicare. These non-elderly adults are the primary consumers of healthcare services for those in the private insurance sector. Without a more balanced demographic within the enrollee population, insurers will face significant financial losses. This in turn will lead to higher premiums for enrollees in 2015, or in a worst case scenario, a taxpayer bailout of the health insurance industry as outlined within PPACA.
With this in mind, the new start date for the employer mandate corresponds to the first real “re-pricing date” of the exchanges’ policies. If there is not a normalization of the enrollment demographics, where the 18 to 34 year old age range comes in line with the 40% demographic of the eligible population, we will be talking about another sticker shock moment in November of 2014. It is at this time that the next open enrollment period begins and the new pricing will be available on the exchanges. With the coming enforcement of the employer mandate, there will potentially be a significant increase in the number of individuals going to the exchanges as many employers may abandon their healthcare plans due to cost. It is for this reason that the United States Chamber of Commerce has stated that its number one lobbying effort in 2014 will be to change or delay the employer mandate of PPACA.
The initial focus of the past few months had been the newly created health insurance marketplace or the exchanges. Conceptually, these exchanges were developed to provide coverage choices for those individuals without insurance as well as those who have insurance but were interested in exploring other options. The launch date for the exchanges was October 1, 2013 and those who attempted to register through the electronic exchanges were greeted with long delays, error messages and frustration. Many of the technological issues have been addressed and improved with some notable exceptions. As of mid-January, Oregon still does not have an operating electronic exchange and has enrolled individuals directly with insurance companies and through a manual paper process. Internet security questions have also been raised; even before the revelation of the massive credit information breach of Target and Neiman Marcus in late November and early December.
In a surprise announcement from the United States Supreme Court, Associate Justice Sonya Sotomayor blocked a requirement for religious-affiliated organizations to include birth control coverage in their health insurance. This stay of enforcement was issued right before the law was to come into effect and created a front page focus on the conflict of certain required coverages and religious liberties. This serves as a reminder that a series of legal challenges to PPACA remain on the Court’s calendar for 2014, including arguments from two private corporations regarding certain coverage requirements. The results of each of these cases will impact the inevitable amendments to the law down the road.
Even with improvement in the enrollment numbers, there remains a coverage issue with the roll-out. It had been reported that there were as many as 30 million uninsured Americans at the time PPACA was signed into law in 2010 and that number increased since then to an estimated 48 million. With 2.2 million enrollees through the end of December and the large numbers of policy cancellations due to the new requirements (estimated at 4.7 million as of January 1, 2014), the number of uninsured Americans has actually increased significantly since the signing and implementation of the law. Again, the enrollment numbers over the final 75 days of the open enrollment period will be crucial to determining the future viability of PPACA as originally envisioned by the supporting lawmakers and the administration.
Last month, we put forth the idea that there is an educational gap for individuals regarding health insurance. Despite the mandates, health insurance remains a complex topic. As of January 1, individuals were responsible for the purchase of a qualified health insurance policy. If the purchase wasn’t made, they are subject to a fine (or tax as designated by the United States Supreme Court). Is this understood among the general populace of the United States? Many individuals have not had to deal with the intricacies of health insurance and terms like premiums, deductibles, copays, out-of-pocket limits, etc. There are still coverage exclusions, limitations on participating providers, in network payments, out of network exclusions, prescription limits, brand name, generics, formularies, etc. Insurances have been grouped into metallic classes of platinum, gold, silver and bronze. Did the “Navigators” employed by the Department of Health and Human Services adequately explain these important terms and conditions to enrollees? Now that PPACA has been implemented, this issue may begin to get some press coverage.
We will continue to address each of these issues and more over the months to come, as well as The Performance Group’s solutions for dealing with the upcoming employer mandate. Identifying potential costs and implementing a plan to contain these costs is in the best interest of everyone involved in the world’s largest economy. Stay tuned for more. As a trusted employer, staffing partner and fellow consumer, we will help you figure out the best way to utilize the law and its implications in 2014 while preparing you for 2015.
From all of us here at The Performance Group, we want to thank you for your interest in our varied employment solutions. We are ‘Your Partners at Work’.
Thomas E. Readdy
President