A Hard Pill to Swallow: Appreciating the Mathematical Dynamics of the Affordable Care Act – Axene Health Partners, LLC

March 22, 2020

The Affordable Care Act (ACA) is recognized for its role in reducing the uninsured rate in the United States. The federal financial commitment has expanded Medicaid eligibility and provided incentives for people to enroll in individual markets for the first time. Underneath the surface, the structural individual market design results in convoluted mathematical dynamics[1] that challenge stakeholders to understand and improve markets. There has been historical reluctance to freely admit these challenges, partially to avoid potentially providing leverage to ACA detractors. To improve ACA markets, we must first be honest about some of its illogical consequences. For many of us, this is a hard pill to swallow.

Source: A Hard Pill to Swallow: Appreciating the Mathematical Dynamics of the Affordable Care Act – Axene Health Partners, LLC


Self-Insured Health Plans: Recent Trends by Firm Size, 1996‒2016

May 5, 2018

This Issue Brief examines 1996‒2016 trends in the availability of and enrollment in self-insured health plans among private-sector establishments offering health plans and their covered workers, with a particular focus on 2013 to 2016, so as to assess whether the Patient Protection and Affordable Care Act of 2010 (ACA) might have affected these trends. The data come from the Medical Expenditure Panel Survey Insurance Component (MEPS-IC).

Here are the key findings:

• The percentage of all private-sector establishments offering health plans at least one of which is self-insured has continued an increase that started in 2000.

o In 2016, 40.7 percent of private-sector establishments reported that they self-insured at least one of their health plans, up from 39 percent in 2015.

• Between 2013 and 2016, the percentages of small and midsized establishments offering at least one self-insured plan both increased.

o For small establishments, the percentage increased from 13.3 percent to 17.4 percent (a 31 percent increase), with most of the increase occurring in 2016.

o For midsized establishments, the percentage increased from 25.3 percent to 29.2 percent (a 15.4 percent increase). (In 2016, the percentage of midsized establishments offering a self-insured plan fell from 30.1 percent to 29.2 percent.)

• Between 2013 and 2016, the self-insurance trend for large establishments continued to decline, falling from 83.9 percent to 78.5 percent.

• Because many more employees work for large establishments, the increase in self-insurance among small establishments (and their workers) was not large enough to offset the decline among large establishments (and their workers), resulting in a decrease in the percentage of covered workers enrolled in self-insured plans.

o Between 2015 and 2016, the percentage of enrollees in self-insured plans fell from 60 percent to 57.8 percent.

via Self-Insured Health Plans: Recent Trends by Firm Size, 1996‒2016 by Paul Fronstin :: SSRN


Ex Ante Moral Hazard in Health Insurance: Lessons from the ACA and Risky Sex

January 13, 2018

Given the $3 trillion spent on health care in 2015 and the political contention surrounding insurance expansions, the impact of health insurance on health behaviors, medical utilization, and health outcomes continues to be of the upmost importance. How insurance influences investment in good health and risky behavior (ex ante moral hazard) has received much less attention than the effect of insurance on the out-of-pocket cost of care (ex post moral hazard). Since many risky health behaviors take decades to result in illness, these behaviors likely respond to expectations about future insurance but could be unaffected by current insurance status. I examine the effect of moral hazard in the context of risky sex, a health behavior that results in quick and economically meaningful consequences – fertility and sexually transmitted infections. I isolate the effect of ex ante moral hazard by exploiting a policy in the Affordable Care Act, the 2012 zero cost-sharing for prescription contraception mandate. Leveraging pre-policy insured rates as a measure of policy intensity, I use dose-response event studies that estimate both a time-varying treatment effect as well as a one-time jump in outcomes in the treatment year. I find evidence ex ante moral hazard from health insurance decreases prevention and increases STIs. I then exploit the 2010 dependent coverage mandate to determine the overall effect of health insurance. Based on this policy I find that the protective effect of insurance on STIs more than compensates for the reduction in prevention.

via Ex Ante Moral Hazard in Health Insurance: Lessons from the ACA and Risky Sex by Barton Willage :: SSRN


Is Obamacare Harming Quality? (Part 1)

January 5, 2018

An additional 24 million people had individually purchased guaranteed-renewable coverage (HIPAA required all non-short-term individual market plans to be guaranteed renewable). Such plans protected enrollees from premium spikes if they developed expensive conditions, were more secure than employer plans for patients with expensive conditions, and faced incentives to make plans attractive to the sick as well as not to renege on their commitments to the sick. Hundreds of millions of Americans once had the freedom to enroll in guaranteed-renewable plans but lost that choice when Obamacare outlawed them. A study by McKinsey and Company for the Department of Health and Human Services shows provider networks in individual-market plans have narrowed significantly since 2013, when the breadth of networks reflected actual consumer preferences.

via Is Obamacare Harming Quality? (Part 1)


Health insurers get 1.6 percent of $6 billion they are owed for costly ACA customers – The Washington Post

December 15, 2016

Hundreds of insurers selling health plans in Affordable Care Act marketplaces are being paid less than 2 percent of nearly $6 billion the government owes them for covering customers last year with unexpectedly high medical expenses.The $96 million that insurers will get is just one-fourth of the sum that provoked an industry outcry a year ago, when federal health officials announced that they had enough money to pay health plans only 12.6 percent of what the law entitles them to receive.

Source: Health insurers get 1.6 percent of $6 billion they are owed for costly ACA customers – The Washington Post


A Taxpayer Bailout of ACA Insurers Just Got a Lot More Expensive | Mercatus Center

November 25, 2016

The Department of Health and Human Services (HHS) finally released the 2015 Affordable Care Act (ACA) risk corridor data. The data show the rapid deterioration of the ACA exchanges from 2014 to 2015.

The ACA’s risk corridor program was intended to transfer funds from profitable insurers to unprofitable ones for the first three years of the exchanges (2014 to 2016). The program ran a $2.5 billion deficit for the 2014 plan year as far more insurers incurred losses than made profits. In 2015, the deficit increased to more than $5.8 billion—a 132% increase.

Source: A Taxpayer Bailout of ACA Insurers Just Got a Lot More Expensive | Mercatus Center


Healthcare Stocks Are Crashing As The End Of Obamacare Looms | Zero Hedge

November 9, 2016

With Republicans holding the House, the Senate, and the Presidency, healthcare stocks are collapsing this morning on the “worst possible outcome” of the election and the implicit looming end of Obamacare.

Source: Healthcare Stocks Are Crashing As The End Of Obamacare Looms | Zero Hedge


How some Blues made Obamacare work while others failed – Modern Healthcare Modern Healthcare business news, research, data and events

October 16, 2016

The 34 Blues plans cumulatively had an underwriting loss of $1.36 billion in the ACA’s individual market in 2015, which amounted to a negative 5.8% margin. But performance varied widely by state. For next year some insurers are asking for and receiving double-digit premiums hikes, a fact that has dominated media accounts of ACA exchanges’ performance.

Source: How some Blues made Obamacare work while others failed – Modern Healthcare Modern Healthcare business news, research, data and events


Obamacare’s in Trouble as Insurers Tire of Losing Money – Bloomberg

August 19, 2016

UnitedHealth expects to lose $850 million on Obamacare in 2016, while Aetna, Anthem, and Humana are all on track to lose at least $300 million each on their ACA plans this year, according to company reports and estimates from Bloomberg Intelligence. UnitedHealth says it’s quitting 31 of the 34 states where it sells ACA policies. Humana is exiting 8 of 19 states and reducing its presence to just 156 counties, from 1,351 a year ago. Anthem hasn’t announced plans to change its participation in the program.

On Aug. 15, Aetna said it will stop selling Obamacare plans in 11 of the 15 states where it had participated in the program, reversing its plan to expand into five new state exchanges in 2017. “The exchanges are a mess as they exist today,” says Aetna Chief Executive Officer Mark Bertolini. “They’re losing a lot of money for a lot of people.”

Source: Obamacare’s in Trouble as Insurers Tire of Losing Money – Bloomberg


The Return of the Obamacare Death Spiral – Hit & Run : Reason.com

August 18, 2016

And it is because of those losses that we are seeing what looks more than a little like the start of a health insurance death spiral in the exchanges. This is far from certain, and will depend in significant part on the results of the next open enrollment period, which starts later this year, as well as the decisions made by other health insurers under the law. But there are a number of warning signals to be watching.

We know what a health insurance death spiral looks like because we’ve seen them before, in states such as New York, New Jersey, and Washington. The experience in those states varied somewhat, but they all shared several essential qualities: The states put in place regulations requiring health insurers to sell to all comers (guaranteed issue), and strictly limiting the ways that insurance could be priced based on individual health history such as preexisting conditions (community rating). As a result, insurers ended up with large numbers of very sick customers who were very expensive to cover. Because they were subject to limits on how they could price health history, they responded by signficantly raising premiums for everyone. The new, higher premiums caused the healthiest, most price sensitive people to drop coverage entirely, which caused insurers to raise premiums further, resulting in yet more individuals dropping coverage, and so on and so forth, until all that remained was very small group of very sick, very expensive individuals.

Source: The Return of the Obamacare Death Spiral – Hit & Run : Reason.com