A Mid-Term Look at Health Reform (OPINION)

It seems like only yesterday the crash of HealthCare.gov was front and center in headlines across the country and it appeared, if only for a moment, this monumental reform legislation known as the Affordable Care Act, would stumble and fall coming out of the starting gate.

A lot has happened — and not happened — since October 1. The wave of relief felt by the uninsured, with the website glitches resolved and online marketplace open, was quickly replaced by panic and disbelief by those who already had health coverage.

Millions of Americans received letters from their insurers terminating their current policies — soon to be replaced by government-mandated, one-size-fits-all coverage. And in many cases these replacement policies were markedly more expensive.

The outcry prompted President Obama to announce a makeshift, “if you like what you have you can keep it” policy, and then push its implementation to the states and insurance departments to find a way to make it work. Offered under the term “Transitional Relief,” the results have been a mixed bag, with many states opting to move forward with the new law’s plans, some states offering a limited relief period and others pursuing the full transition period to allow individuals to keep existing policies.

Politically, the move to allow grandfathered plans to linger on through 2014 may garner goodwill with a certain electorate, but its effects on a tenuous model predicated on a diverse demographic could have a negative impact on rates that the new health-law plans will see in coming years.

Recent data, albeit a subset of the total enrolled population, indicates that individuals with more serious health conditions have enrolled in the government marketplace at a higher rate than those covered under policies offered through the private sector.

According to medical claims analyzed in the first quarter of this year by a health-technology firm that receives data from 200 insurers across the country, 27 percent of the new health-law enrollees who have visited a health-care provider harbor significant health issues. Diabetes, asthma, heart problems and cancer are listed as the top conditions. Compare this to 16 percent for the entire individual consumer market last year and 12 percent this year for those on existing “grandfathered” plans.

This indicates the creation of two markets with one likely to see sharp increases as we head into 2015. With the recent announcement by the administration that the grandfathered plans may be extended through 2016, pending approval by the individual states and insurers, this gap could widen over the next several years.

Truth be told, we won’t know the actual impact the law has on the individual market for months, maybe years. With limited data this early in the game, proponents can stake claim to success in the addition of covered lives, as equally as opponents point to failure in controlling costs.

Meanwhile, as we head into mid-term elections, the Obama administration and the Department of Health and Human Services have been remarkably quiet when it comes to impending “pay or play” mandates scheduled to hit large employers on Jan. 1, 2015. Given reprieve for the current plan year, and transition relief for employers with staff members between 50 and 100 in 2015, companies with more than 100 employees in 2015 must provide affordable coverage or face penalties. As part of this transition relief, however, the newly defined large employer will be required to provide coverage to 70 percent of their full-time employees in 2015, increasing to 95 percent in 2016.

Breaking the silence in recent weeks, The Centers for Medicare and Medicaid Services provided guidance on a major-revenue-generating portion of the health law — the Transitional Reinsurance Fee. Targeted at health insurance issuers and self-insured programs, the fee will add $63 per covered life to all fully insured premiums. Sponsors of self-insured plans must cough up this fee in two installments over the course of the next year. For a self-insured employer with 2,000 covered lives, this fee will add an additional $126,000 to the cost of providing coverage to its workers in 2015.

In a politically charged year with much at stake for both parties, it will be interesting to see what is reported and what is exploited over the next couple of months as we enter the next critical phase of the Affordable Care Act.

Tom Hayes is the national practice leader for employee benefits at Regions Insurance, a top-30 national insurance brokerage with 23 offices in eight states in the Southeast and Indiana. He can be reached at [email protected].