This is part two of a three-part series about what we can expect as we head into 2017. In part one, we examined the three big political changes: a new President, a new Congress, and a new Supreme Court Justice. In this section, we’ll look at some of the big changes we can expect with the products we sell, particularly those in the individual market.
So this isn’t really a change—premiums have been increasing for a long time. But it is worth mentioning, because each year, as premiums continue to rise, it becomes more difficult for people to afford health insurance. The Affordable Care Act distorts this by expanding Medicaid, in many states, to families earning less than 133% of the Federal Poverty Level (FPL), and by providing subsidies to families up to 400% of the FPL. Higher middle-income earners, who don’t qualify for the financial assistance, are actually the ones who have the most difficulty affording coverage.
Perhaps more than ever, the out-of-control premiums are forcing people to buy plans with a higher deductible than they are comfortable with. This opens the door for agents to recommend other products to help fill the gaps.
In response to the rising premiums, carriers continue to increase their out-of-pocket costs. What this means is, that the plans that do fit into your clients’ budgets have higher deductibles, higher out-of-pocket limits, and in many cases, they don’t offer copayment options for doctor visits or prescription drugs. These plans dominate the bronze and silver levels in the individual marketplace and, as already mentioned, are what most of our clients can afford. This requires agents to sell other types of coverage, like accident and critical illness plans, to help fill the gaps of the higher deductible plans.
As evidence of the high exposure most ACA policyholders face, Modern Healthcare points out that 43 percent of this year’s “marketplace enrollees still have an average deductible of at least $2,500.”
Of course, people who earn less than 250% of the FPL, and who purchase silver-level coverage, may qualify for Cost-Sharing Reductions that reduce their out-of-pocket exposure. However, a lawsuit challenging the administration’s ability to provide these subsidies without an appropriation from congress could eliminate the subsidies altogether. So, in case you were wondering, the subsidies will be available to your clients during this year’s open enrollment period. This case is a good example of why the Supreme Court nomination is so important.
Smaller provider networks seem to be a fact of life under the ACA. We’ve noticed a trend toward HMOs and other plans that offer no out-of-network option for the past couple years, and it doesn’t appear that that’s going to change anytime soon. This, of course, increases the amount of time brokers must spend with each client, digging through provider directories to determine which plan will cause the least disruption for their client.
At the same time, many of the provider directories you rely on to help clients choose a plan are inaccurate or out-of-date, something that’s drawing the attention of both federal and state regulators. As Emily Bazar with Kaiser Health News explains, health care consumers encounter a “variety of obstacles to making an appointment,” including inaccurate provider directories. Secret shoppers in California, for instance, were only successful in scheduling appointments with providers about a third of the time, and ten percent of providers “either were no longer with the medical group listed in the directory or never had been.”
Carriers are trying to keep their directories up to date; the problems aren’t from lack of effort. The truth is that things are changing rapidly; some providers are being dropped as carriers reduce the size of their networks, and other providers have decided not to accept individual ACA plans anymore.
One real challenge during the 2017 open enrollment period is that consumers may not have the same choice of plans they did during the first three years. That’s because some carriers are going out of business, others are merging together, and others are exiting the Marketplace.
According to the Washington Post, only “seven non-profit member-run health plans” will participate in the ACA’s fourth open enrollment period this fall, which is “down from 23 such plans — CO-OPs, as they are commonly known — that started in 2014.” While CO-Ops were not available in every state, thousands of consumers have been impacted by these non-profit plans closing their doors.
The mergers between Aetna and Humana and between Anthem and Cigna—assuming they’re ultimately approved—could also reduce the number of available options, though the federal approval of these two mergers/acquisitions is moving a little more slowly than some expected.
Finally, some carriers are re-evaluating their participation in the federal and state Marketplaces. UnitedHealthcare, for instance, announced a few months ago that it would stop selling subsidy-eligible Marketplace plans in all but a handful of states. Aetna and Humana have since made similar decisions.
For brokers, what this means is that you won’t have to run as many quotes when showing your clients their available options in the individual market, but running quotes isn’t the hard part. The hard part is explaining to your clients why there are no provider networks that include their preferred doctors and hospitals and no plans that provide an adequate level of coverage at a price that fits within their budget.