Things Looking Up for Obamacare, But New HHS Chief Faces Tough 2015

his blog previously ran on Managed Healthcare Executive.

The Obama administration received a substantial amount of good news last month. Not only did 8 million individuals enroll in qualified health plans, millions more joined Medicaid or obtained coverage through private markets.

Additionally, health reform will cost $100 billion less than anticipated, according to the Congressional Budget Office (CBO). Over the next decade, lower-than-predicted premiums will translate into smaller subsidies. Exchange plans utilized narrow provider networks and tight cost management strategies to keep rates down, and CBO expects those trends to continue.?Furthermore, the Centers for Medicare and Medicaid Services (CMS) disclosed a notable drop in Medicare spending, a trend that reflects a slowdown in healthcare spending overall.

These developments provided an opportunity for Health and Human Services (HHS) Secretary Kathleen Sebelius to exit from the health reform spotlight, a move that had been on hold for months. With the program now functioning and costs under control, Sebelius was able to leave Washington in an environment that may support Senate confirmation of her successor, Office of Management and Budget Director Sylvia Mathews Burwell.

Uncertainty ahead
While these successes may quiet some of the heated anti-“Obamacare” rhetoric, the new HHS chief will face multiple challenges in engineering a smoother enrollment process for year two of health reform.

The late surge in enrollment-more than 2 million people signed up after March 15­-creates problems in calculating costs and risks that will shape rates and benefits for the coming year. Open enrollment for 2015 begins Nov. 15, 2014, and the delay will give insurers and regulators time to assess millions of new beneficiaries.

Stakeholders also have to digest a host of new rules issued by CMS in March. There are revised policies on provider network adequacy and medical loss ratio calculations. Consumers gained added support for navigators and stronger requirements for how plans communicate changes, while insurers face a number of changes in how CMS calculates risk corridors and reinsurance.

A key issue for all parties is how much rates will rise for 2015. Some insurers have predicted double-digit increases-or more-but the late addition of more younger, healthier individuals may revise those projections. Plans are looking hard at early utilization figures and medical spend numbers in calculating premiums, cost-sharing and benefits for next year. Insurers also want to see how many new enrollees actually pay their bills.

It’s also unclear whether mandates and penalties will compel more of the uninsured to sign up next year. Even though individual penalties are very low, they may spur action, meanwhile implementation of the business mandate could make a difference in enrollment numbers.

Also important is whether more states will set up their own exchanges. Positive experiences in a number of state exchanges could inspire interest from governors who object to federal interference. Likewise, implementation disasters from 2014 have provided states useful guidance on what to avoid.

Consumer advocates are looking at evidence indicating plan discrimination, excessive out-of-pocket costs, limited benefits and appeals processes. While there is pressure on HHS to add low-cost, bare-bones plans with higher deductibles, such a move raises the risk of skewing the risk pool.