From the January 7 edition of Health Plan Week:
Ahead of 2014 and to get ready for open enrollment this fall, insurers are gauging their interest in participating in certain markets based partly on how [the U.S. Department of Health and Human Services] writes regulations governing the exchanges set to open on Jan. 1, 2014.
Roy Ramthun, president of Maryland‐based HSA Consulting Services, tells HPW that the biggest challenge health insurers face in 2013 is the uncertainty inherent in regulations governing exchanges. “The uncertainty comes on two fronts: (1) state insurance exchanges and (2) rules for qualified coverage and selling insurance [e.g., essential benefits, actuarial value, rating rules, etc.],” he says. “On the exchange front, you have only about 15 states moving forward on developing their own exchanges. For every other state, we are waiting to learn what the federal exchanges will look like. And this all has to be in place for enrollment beginning Oct. 1, 2013. I am not sure what carriers can do to overcome this other than lend their expertise to the development of exchanges while perhaps pushing or hoping for delay of the Jan. 1, 2014, ‘go live’ date.”
For example, Ramthun says, “It is hard to develop insurance products for sale when you don’t have all the details about what can be offered…”
Dan Mendelson, president of consulting firm Avalere Health, LLC in Washington, D.C., tells HPW that the biggest challenge insurers face in 2013 is deploying new, profitable products for use in exchanges. “This is a massive jump ball, and complicated by the fact that plans don’t have a clear actuarial history for the population that will be buying insurance in this way. Two other important challenges will be responding to Medicaid expansions, and increasingly integrating quality into systems to enable pay for performance,” he says.
Peter Hayes, principal at consulting firm Healthcare Solutions in Scarborough, Maine, says diversification is the largest issue for health insurers to tackle in the near term, stressing that new market rules are going to make it tough for traditional lines of business to create acceptable profit margins. “Aetna has already declared that they do not believe their future is selling health insurance coverage in an environment where margins and profits are regulated by an 85% medical loss ratio [MLR]. They believe their revenues and earnings growth will be from the sale of their intellectual and system assets to the ACOs [accountable care organizations] and exchanges and from offshore opportunities. Cigna has expressed similar strategies,” he tells HPW.
This rethinking process may leave some plans on the sidelines for exchanges, Hayes adds.