There is no shortage of uncertainty when it comes to the implementation of the state health insurance exchanges (HIX) by 2014, as required under the Affordable Care Act. Regardless of the snail's pace of guidance from HHS on key aspects of the HIX or even if the individual mandate is deemed unconstitutional, health plans should be making state-by-state analyses of how they will participate in these new marketplaces.
That was the message Wednesday in a presentation by Alison Hagan and Jim Whisler of Deloitte Consulting LLP, at the AHIP Exchange Conference held in conjunction with AHIP Institute 2012 being held in Salt Lake City through Friday.
Instead of worrying about the unknown, health plans can be better prepared for the participating in the exchanges if they focus on those things that are known, the presenters said. Many of these are within the “three Rs” of reinsurance, risk adjustment and risk corridors. HHS is not blind to the fact that the advent of the HIXs will be a major disruption for health plans and will also stretch health plans’ ability to accurately price products for the masses of people who were previously uninsured.
“One of the things that has become clear and is known is that there is a very strong emphasis on trying to eliminate the benefit of selecting risks,” Whisler noted during the presentation, while detailing how the federal government intends to smooth out the pricing uncertainty.
Programs that will help health insurers in the early phases of implementation include plans for the federal government to pay a portion of the claims for high-cost members, a move that should provide both financial protections to insurers and stability in the states’ individual market.
There are also plans in place to adjust payments to issuers based on the risk of their enrolled members, as well as a program for payments to pass between QHPs and HHS to limit losses or gains that may occur due to the difficulty many will face in setting rates for the various policies offered on the exchanges.
Even with the general direction these activities will take, HHS has yet to issue its final regulations in many of these areas. Even if these regulations were in hand, the time frame for participating on the state HIXs is very aggressive, Whisler noted. There is uncertainty about what the insurers will need to price for the policies until March of 2013 and open enrollment beginning in October, 2013.
“This is an extremely tight time frame,” Whisler said, adding that insurers will need to “anticipate some things to do some of the work upfront and be prepared when certain triggers happen to reassess what you’ve already done, because I don’t think you can take your normal process to do this.”
And while the impending decision by the Supreme Court may provide a small measure of relief should the individual mandate be thrown out, insurers won't get a full reprieve.
“The important point is that short of the complete overturning of the entire legislation, there is still a lot of work to be done with exchanges,” noted Hagan. “Even, for example, if the individual mandate goes away that hits a segment of the exchange population, there is still a large population of people receiving subsidies that will likely be there.”