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King v. Burwell
Another Summer ‘Blizzard’ is Upon Us

Summer BlizzardA blizzard in late June? Is it even possible? Yes, and I’m afraid it will only continue…

Late this month, the Supreme Court is expected to issue their decision on King v. Burwell – a highly charged case that challenges the legality of health insurance subsidies to low- and middle-income people enrolled in federally-based exchanges or marketplaces.

More specifically, if these people live in Iowa and 33 other states where the federal government operates the health insurance marketplace, future subsidies will be at risk.

If the Supreme Court rules in favor of those challenging this critical piece of the Affordable Care Act (ACA), how would subsidized Iowans be affected? Thanks to a newly released Kaiser Family Foundation interactive map, we can view 2015 enrollment data (Source: U.S. Department of Health and Human Services) that is broken out by each state’s marketplace.

The Kaiser map looks at the total number of residents in each state that would lose premium assistance, and the total dollars in subsidies that would be lost. In addition, should the Supreme Court nullify the subsidies provided through the federal marketplaces only, this interactive map shows the size of the lost subsidy for the average resident and the potential increase to their premiums.

On a national basis, about 6.4 million Americans could lose subsidized coverage, worth about $20.4 billion annually. Those who currently receive subsidies for their health insurance coverage would see an average premium increase of 287 percent if they were to pay the full cost of coverage.

Based on the 2015 enrollment – if federal marketplaces are not allowed to provide subsidies – here’s what it would mean for Iowa:

  • 34,172 Iowans would lose tax credits. (Iowa would rank 27th compared to other states in terms of people losing subsidies.)
  • Total monthly tax credit dollars at risk: $8,987,236 (Iowa ranks 8th lowest when compared to other states.)
  • Average tax credit per Iowa enrollee: $263 (Iowa ranks 20th highest, with the national average being $273.)
  • Percent increase in average premium: 244% (Iowa ranks 20th highest, with the national average being 287%)

Many more Iowans qualify to receive subsidized premiums in the Iowa marketplace but have elected to remain outside this exchange. In fact, based on an earlier Kaiser Foundation report, Iowa ranks second among other states with having the lowest percentage of its population enrolled in the public marketplace. A May 11th Des Moines Register article suggests that just 20 percent of Iowans who could have qualified for premium subsidies in 2014, took advantage of them.

The upcoming Supreme Court ruling has a multitude of implications in Iowa and around the country. Political and legal uncertainties continue to cause a seemingly unending blizzard in our healthcare snow globe. It’s never too early to prep your snowblower!

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Shifting Health Costs to Employees – Pre vs. Post ACA

Consumer-Driven Health Care in IowaAccording to various media reports and a recent USA Today article, Americans continue to pay more of their own healthcare costs.

But there was one sentence in a December 3, 2014 Wall Street Journal article that got me thinking. The sentence reads: “The trend is being accelerated by the Affordable Care Act (ACA) because many private plans sold by the law’s health exchanges come with high-deductible health plans.”

Can this be true? If so, what is happening in Iowa with employer-sponsored health plans since the ACA was passed in 2010? From our vault of study data, I decided to perform a quick ‘audit’ of pre-and-post ACA trends in Iowa on this particular issue.

My findings appear to be a bit different than conveyed by the WSJ article – at least for our state of Iowa.

To clarify, our survey does not exclusively analyze the health plans offered within health exchanges. After all, the ‘public’ exchange has only been operating since the beginning of 2014. But rest assured, because we randomly select employers to participate in our surveys, a few employers may have purchased their group health plans through the Iowa Partnership Exchange and participated in our 2014 survey. Realistically, a scant number of these employers would have affected our overall findings.

PRE and Post ACA Deductibles
The chart below illustrates the average single health plan deductibles offered by Iowa employers during the period 2005 to 2014. All group medical plans within our data include PPOs, HMOs, Indemnity and consumer-driven health plans. Looking at the five-year period prior to 2010 (the year the ACA became law), the deductible increased from $750 in 2005 to $1,061 in 2009 – an increase of 41 percent. Yet, when we look at the five-year period that follows 2009, the deductible growth appears to be more tame – increasing only 13 percent ($1,247 in 2010 to $1,410 in 2014).

All Medical Plans DeductiblesPNG

Many key ACA provisions did not take effect until sometime after 2010, so we cannot completely comprehend how the ACA will ultimately impact employer-sponsored plans on cost-sharing arrangements and cost. When attempting to clearly understand the ACA impact, this comparison is only one of many metrics that will need to be assessed in the years to come.

PRE and Post ACA Out-of-Pocket Maximums
Similar to the above deductible chart, the chart below illustrates the average single out-of-pocket maximums (OPMs) offered by Iowa employers from 2005 to 2014. Again, the five-year period prior to the 2010 ACA implementation year shows that OPMs increased by 19 percent, compared to 13 percent since 2010.

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There are many variables to consider that are not addressed in this blog, such as average health plan designs within the public exchange versus outside the public exchange. Assuming a healthy number of employers enroll in the public exchange, it will take a few years to have a better accounting of such differences. At this point, plan design changes continue to show additional cost sharing with employees and their dependents, just not at the accelerated pace that some may think.

What will the future eventually reveal about our ever-changing health insurance world? Stay tuned…

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Iowa Employers and Health ‘Exchanges’

Healthcare ExchangesAs employers review their health insurance options for 2015, we know that some may have interest in learning more about electronic marketplaces – better known as ‘exchanges.’

Exchanges basically come in two varieties – private and public. Private exchanges are established by benefit consultants, insurance companies and other third party vendors. Under the auspices of the Affordable Care Act (ACA), public exchanges were implemented to allow qualified individuals to receive premium subsidies from the federal government. In addition, small businesses with fewer than 25 full-time equivalent employees may be eligible for premium tax credits depending on the average wages paid to employees.

Iowa has a hybrid public exchange – which is a joint federal/state arrangement. Also known as a ‘partnership’ exchange, it is similar to the federal public exchange, whereby subsidies and small business tax credits are available for qualifying individuals and businesses.

As we all know, the primary concern for employers who offer health insurance is COST. Cost drives behaviors for both employers and their employees, resulting in health plan alterations that can help alleviate (but not solve) annual premium jumps. Usually plan design changes come in the form of elevated deductibles, copayments, out-of-pocket maximums and employee contributions. Such behaviors result in shifting costs to others but does not address the fundamental issues that adversely impact health costs.

Inevitably, questions arise about the growth of exchanges and how they may eventually contain costs. Will employers embrace the exchanges here in Iowa and elsewhere? Can annual premium increases be tempered due to the eventual ascension of exchanges, both private and public? Without a doubt, many questions surface as to whether exchanges can and will make a difference with cost. Yet, the waters remain turbulent and uncertain for the foreseeable future.

Within our 2014 Study, we did ask employers about their intentions to offer health coverage through a private or public exchange in 2015. From this, we learned that 15 percent of Iowa employers appear interested in exchanges for 2015, with almost 21 percent coming from employers with fewer than 250 employees.

Interest in Exchanges for 2015Based on organizational size, the smallest employers appear more likely to embrace participation in exchanges, as 32 percent of employers with 2 – 10 employees indicated interest. While only three percent of employers with 201+ employees show interest in exchanges for 2015.

Interest in Exchanges by Employer Size

Of those 15 percent of employers interested in exchanges, about 29 percent (coming only from organizations with under 250 employees) responded that their preference would be to explore only private exchanges, while five percent indicated they would consider public exchanges. Two-thirds (66 percent) of employers who have interest in exchanges responded to having interest in both the private and public exchanges.

Type of Exchange

Will exchanges make a great impact to the cost problem confronted by individuals and employers? My simple answer is no, employers should avoid having high expectations that electronic marketplaces will somehow control health costs. This would be pure delusions of grandeur. Expecting exchanges to control costs is nothing more than rearranging chairs on the Titanic – it may feel like progress is being made, but the bow of the ship has a gaping hole that requires immediate attention. The gaping hole that I am referring to is a dysfunctional healthcare system and unhealthy lifestyles.

Make no mistake, merely shifting costs to employees should not be confused with controlling costs.

Health exchanges may likely be beneficial in other areas for employers and their employees, just not in controlling health costs. Let’s first fix that hole.

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