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Iowa ‘Partnership’ Exchange – We’ve Only Just Begun

Iowa 'Partnership' Labyrinth

Iowa ‘Partnership’ Labyrinth

As we now know, Iowa has elected to implement a ‘state partnership exchange’ for at least 2014 with the expectation to migrate to its own exchange in subsequent years.

Last year at this time, David P. Lind Benchmark was hired by the State of Iowa to provide background information for Iowa’s Health Benefit Exchange (HBE). We were responsible for providing two reports to the state regarding Iowa’s health coverage marketplace:

  1. Background Research
  2. Background Research & Simulation Modeling

As a sub-contractor to CSG Government Solutions, Inc., our firm worked very closely with Data Point Research (DPR) on both reports. DPR is the firm that we’ve worked with over the past 14 years on our annual “Iowa Employer Benefits Study.” Additionally, we sought the assistance and expertise of Magnum Actuarial Group for their comments, analysis and input on the second report listed above.

During the time of this research, we worked on the premise that Iowa would develop its own HBE, which required a great deal of assumptions about many unanswered PPACA*-related provisions affecting state-based exchanges. Much like examining an onion to determine its core, we took great care in peeling back the many layers of this complex subject in an attempt to learn the core issues specific to all stakeholders within Iowa.

To provide a glimpse of the many complex issues being addressed within the second report, below is the ‘Summary’ as found on pages 6 and 7.

“Under the Affordable Care Act (ACA), private insurers are required to deliver coverage to individuals and small businesses in more open and transparent insurance markets. Beginning in 2014, insurers must offer products with more comparable benefits and cost-sharing. Additionally, they would be required to provide coverage to anyone regardless of any pre-existing health conditions, allowing consumers to more easily shop for coverage. A Health Insurance Exchange (HBE) will facilitate insurance purchasing with the hope that new competition among insurers will help to moderate premiums for individuals and small groups. The Federal government will subsidize the cost of coverage for low and moderate income individuals who buy insurance through the Exchanges.

As with all other states, Iowa will need to make many critical policy decisions to implement new insurance market rules and decide whether and how to operate Exchanges. Many of these decisions may be influenced by how competitive Iowa’s insurance market is perceived to be, with the subsequent results of these decisions affecting how insurance markets operate and the cost of coverage. Because Iowa is highly concentrated with few insurers in both the Individual and Small Group markets, Iowa may lean toward using the purchasing power of an Exchange to counteract the market power of one or a few large insurers. Given the various political and economic dynamics found within Iowa, unique considerations will need to be made to avoid unintended consequences for both the Individual and Small Group markets.

When assessing the Individual and Small Group markets inside the HBE, a key decision that Iowa must address is whether the Iowa HBE should take an Exclusive, Qualifying, or Open approach. The implications stemming from each approach are far-reaching, as it will affect many inter-related issues. Requiring or not requiring carriers to offer their Qualified Health Plans (QHPs) outside the HBE would also provide potential advantages and disadvantages under each scenario. However, it is only after considering whether to standardize the health plans offered both within and outside the Exchange that a combination of choices can be generated to provide some clarity of which paths to seriously consider.

Determining how best to develop and implement the transitional reinsurance program for the individual market is another decision to be made by Iowa. As with the HBE, Iowa will be able to either take an active role in designing and running the reinsurance program or default to a Federal option. If Iowa chooses to run its own program, the next steps would involve forming the reinsurance entity or entities and contracting with an administrator. The analysis indicates that Iowa should seriously consider running its own transitional reinsurance program, but adopt the 2014 assessment rates and reimbursement parameters.

The ACA does not dictate a timeline to merge the Individual and Small Group risk pools, which means that both markets can be merged at any time on or after 2014. Given the complexities of the various reform provisions of ACA for 2014 and beyond, Iowa may wish to experience ACA-required changes to both markets before deciding to merge them. A preliminary analysis performed by The Urban Institute for this report shows that merging both markets would likely lead to higher premiums in the Small Group market and lower premiums in the individual market.

It is difficult to predict the change to the insurance market that would be caused by classifying organizations with 51-100 employees as small groups before the 2016 mandate. The ACA has many moving parts. The creation of a Basic Health Program (BHP) and Exchange along with the possible market disruptions from merging the individual and small market plans, defining sole proprietors as small employers, and adding organizations with 51-100 employees to the small employer definition all interact with each other with various outcomes that are most likely to be unknown.

Iowa may need to first decide whether to merge the Individual and Small Group risk pools before determining the potential impact of sole proprietors being defined as “individuals” or as “small employers.” If the two risk pools are not merged, pricing differences could emerge. In either event, there does not appear to be any compelling ACA-related reason not to include sole proprietors in Iowa’s definition of “small employer” and to allow them to purchase either individual or small group coverage.

Another question to be addressed by Iowa is whether to revise the definition of “small employer” outside the HBE to be consistent with the HBE definition. Successful state Exchanges have often ensured a level playing field between policies in and out of the Exchange by standardizing definitions and regulations. These common regulations and definitions reduce the potential for adverse selection.

By deciding to establish and run its own Health Benefits Exchange (HBE), there are several key considerations for Iowa to make when confronted with the eight main issues found in Milestone 7. Each issue presents unique and complex challenges in addition to the challenges of maintaining and promoting affordable coverage and competitive markets within Iowa. When factoring in the current market conditions inherent within Iowa’s insurance industry, the state must carefully make decisions that will no doubt have both intended and unintended consequences for each insurance market. All issues are intertwined, accentuating the complex decisions the state must eventually address.”

As mentioned earlier in this blog, Iowa has elected a ‘State Partnership Exchange,’ whereby some of these questions may need direction from the federal government, but many will ultimately require difficult decisions from Iowa.

And, so the journey continues…

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PPACA* – Patient Protection & Affordable Care Act

Wellness in Iowa – Not as Expensive as You Might Think (Part II)

Healthy lifestyle concept.Continuing with last week’s blog – much was learned from the 2012 Capital Crossroads Wellness & Community Study. Iowa employers cite these key reasons for not offering wellness programs:

  • Too expensive or no budget – 45 percent
  • No staff to administer program – 40 percent
  • Their organization is too small to offer wellness – 39 percent
  • Difficult to manage program – 23 percent
  • Never considered offering wellness – 23 percent
  • Unsure how to start program – 18 percent
  • No time available to start program – 17 percent
  • Lack of management support – 13 percent
  • Employees are healthy/no need to offer program – 5 percent

Understanding these perceptions can provide a wonderful opportunity to educate employers, regardless of size, on just how easy and inexpensive many basic wellness programs can be. Employer location also appears to determine whether wellness programs are offered. Employers in urban areas (60 percent) are more likely than their rural counterparts (40 percent) to offer at least one wellness program.

In addition, the distribution of wellness offerings varies widely by industry. Over 60 percent of organizations in Finance, Insurance and Real Estate are most likely to offer these programs, while only 21 percent of employers in the Construction industry offer wellness.

Also within this extensive survey of 913 Iowa employers, wellness programs were divided into three categories:

Education and Health Management – of the nearly 70 percent of employers who offer wellness programs, Workplace Safety is the most commonly-offered education program, with more than six in ten employers providing workplace safety education. Education programs that are expected to grow the most in the next year, include managing:

  1. Obesity and cholesterol (about nine percent may offer program in the next 12 months)
  2. Tobacco cessation (8.3 percent)
  3. Hypertension and diabetes (almost 8 percent each)

Preventive and Screening – of the nearly 60 percent of employers who offer Prevention and Screening programs, offer the following:

  • Cold & Flu prevention (50 percent)
  • Blood Pressure Check (34 percent)
  • Cholesterol Check (29 percent)
  • Blood Sugar Check (29 percent)
  • Health Risk Management (29 percent)

Fitness and Nutrition – 57 percent of employers who offer Fitness and Nutrition programs, offer the following:

  • Nearly 40 percent promote healthy eating programs
  • 31 percent include healthy choices in on-site vending machines
  • 25 percent provide fitness memberships
  • 23 percent have on-site exercise programs

Other Findings:

Larger employers reported being most familiar with the Healthiest State Initiatives (HSI), a statewide program that aims to make Iowa the healthiest state in the nation by 2016. There is a clear trend of familiarity with the HSI and the size of the employer. There is also a clear relationship between an employer’s familiarity with the HSI and their willingness to offer a wellness program. Only one in five employers unfamiliar with the HSI offer wellness programs, while four in five employers familiar with HSI do.

The 2012 Capital Crossroads Wellness & Community Study contains many great nuggets of information to assist Iowa employers on implementing and enhancing quality wellness programs.

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Positive Perceptions on Wellness (Part I)

Last year, our firm (along with Data Point Research and Yogesh Shah, MD) was hired by the Capital Crossroads Wellness Committee to undertake a state-wide survey of Iowa employers to determine:

  • the extent employers have embraced wellness initiatives
  • their desires for future assistance in offering and maintaining such programs

The results from the 2012 Capital Crossroads Wellness & Community Study were both extensive and revealing!

Generally, Iowa employers believe wellness programs are beneficial for their workplace environment – whether they currently offer wellness programs or not. Over 15 percent of Iowa employers statewide offer some type of wellness program to their employees, and this offering greatly depends on the size of the employer. Only 13 percent of employers with 2 to 9 employees offer wellness programs, while nearly all (94 percent) of employers with 1,000 or more employees offer at least one wellness program.

Larger employers (250+) are significantly more likely to offer incentives for participation in wellness programs (55 percent) versus employers with 2 to 49 employees (24 percent) and employers with 50 to 249 employees (39 percent). The most common incentive offered by both large and small employers? Cash or gift cards. In addition, some employers offer “lower insurance premiums” as an incentive for employees who participate in programs, with larger employers being twice as likely to offer this incentive.

Larger employers are also more likely to assume the majority of the wellness costs (62 percent), while only 46 percent of the smaller employers do so.

When offering a successful wellness program, large and small employers alike agree that these three items are inexpensive to administer:

  • Communication about programs
  • Strong internal leader
  • Top management support

Perhaps one of the biggest findings from this Study is the most encouraging of all. There is strong agreement by Iowa employers that wellness:

  • Reduces healthcare costs
  • Increases productivity
  • Reduces absenteeism
  • Increases the quality of life for employees

In fact, less than three percent of those employers who do not currently offer programs feel that wellness programs do not work!

The findings within this Study certainly suggest that having a strong workplace culture committed to wellness with a healthy dose of senior leadership support is critical for any wellness program to be successful.

The results reflect some very positive feedback to Capital Crossroads and to the Healthiest State Initiative – employers are looking for guidance from their respective communities on how to make wellness programs inexpensive to begin (and continue)…and easy to administer. As they say, “If there is a will…there is a way!”

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