The Obama administration announced a set of new changes Wednesday that will further delay the implementation of certain key elements to the Affordable Care Act (ACA). These delays could materially impact how the market, as a whole, will respond.
Here are a few key issues that will impact the various stakeholders:
As insurance companies are no longer denying coverage to individuals with preexisting conditions, there clearly has been a benefit. Those individuals with chronic conditions have, for the most part, found it easier to get coverage. As a result of the number of cancellations in insurance policies, and the uproar by consumers across the country, the administration has been under immense pressure to ensure that these people, in fact, are not left without coverage.
Based Wednesday’s announcement that insurers may be able to offer some of these older plans through 2016, this will make the decision for those contemplating using the exchanges that much more confusing. Since insurance companies may be offering these older plans without consideration to preexisting conditions, it is very possible that consumers will see a rise in premiums to ensure companies will make up for their losses.
In addition to delays for health plans, because the employer mandate has been delayed, some consumers could find themselves in a quandary as to whether they will be able to continue under their old plan option in the in individual market, opt for coverage under their employer or purchase coverage through the exchanges.
By the end of 2014, the projection is that 6 million people will be using the exchanges to purchase coverage, but that will still leave more than 30 million people without coverage over the subsequent years. In fact, most of the 6 million people purchasing coverage through the exchanges are those who are looking for a better deal, as opposed to those who never had coverage at all.
A key push is still in attracting younger, healthier individuals to sign up for insurance, which in the long run is important. But with the recent delays of when some of the penalties will kick in, there may be less of an incentive for these younger people to sign up sooner. Furthermore, the new guidelines have also imposed a new limit on out-of-pocket expenses at $6,600 for 2015. That’s about $250 higher than what it is for 2014, which will in fact be high for many families that are struggling to make ends meet.
Within the guidelines released Wednesday, there were details of what businesses need to adhere to. The rules outline how employers must report information to the government about employees’ working hours, and the kind of coverage offered to them.
Some companies will incur significant costs for new technology that enables this kind of reporting. Until now, the specific regulations were not well understood, and employers will ultimately weigh the total costs of providing health care coverage, and the new reporting guidelines – versus the costs of the penalty.
There is also the possibility in some states that the administration may not allow some small business workers to have a choice of plans, which will potentially raise premiums. This is complicated, of course, by the fact that the implementation of the exchanges for small businesses has been delayed, making it that much more difficult, in certain states, for these companies to find competitive plans.
For insurance companies struggling to sustain the rising costs of providing coverage, the recent changes may be more welcome. Specifically, insurers will find it easier to obtain financial assistance under a specific program often referred to as the “Risk Corridor.” This program will allow insurers to split some of their losses, and perhaps gains, with the government as a means of reducing the overall risk for providing insurance in the marketplaces. While this clearly benefits insurance companies in securing their financial performance, it is prudent for the CBO to recalculate the implications of the delays and the overall costs of the “Risk Corridor” on the total price tag of the ACA as it was originally passed.
The impact of these delays may not have immediate implications to doctors. In fact, certain measures that were a key part of the Affordable Care Act, including oversight by the Independent Payment Advisory Board (IPAB), are yet to be established.
A key provision for the Affordable Care Act was reducing fraud and waste within the health care delivery system and a key function of IPAB was to establish guidelines for oversight of such payments. The efficiencies that were proposed were a key provision in the attributed savings to the ACA.
With the numerous changes that continue to the original law, every stakeholder will have to carefully access the new risk and investment required of them to ensure that health care costs and quality are not compromised.