How are New CO-OPs Faring on Exchanges?

The Washington Post reports on the uncertain futures Consumer-Operated and Oriented Plans (CO-OPs) are facing now that exchanges have officially launched, but are off to a rocky start. While the debut of the Affordable Care Act this month has been marred by widespread computer problems, the difficulties the CO-OPs face have been less obvious to consumers. One CO-OP, however, has closed, another is struggling, and at least nine more have been projected to have financial problems, according to internal government reviews and a federal audit.

Their failure would leave taxpayers potentially on the hook for nearly $1 billion in defaulted loans and rob the marketplace of the kind of competition they were supposed to create. And if they become insolvent, policyholders in at least half the states where the CO-OPs operate could be stuck with medical bills.  

Although the CO-OP plan originated in the Senate, resistance to the initial proposal quickly materialized on Capitol Hill, in part because of pressure from insurance industry lobbyists.  So Congress saddled its new creations with onerous restrictions that, experts say, doomed many CO-OPs to failure. Federal grants for the CO-OPs were converted to loans with tight repayment schedules; they were barred from using federal money for crucial marketing; and they were severely limited from selling insurance to large employers, which represent the most lucrative market.  And sequestration at the end of 2012 cut off any funding for additional CO-OPs, leaving start-up organizations that had invested significant resources hanging with no future.

Three Critical Measures of Exchanges' Impact Could Take Several Years to Assess

Amid all of the sound bite media coverage surrounding the opening of exchanges on October 1, Kaiser Health News urges stakeholders not to jump to conclusions based on the first few days, or even months, of the new health insurance exchanges created by the Affordable Care Act. While people can enroll for insurance until the end of March, real assessments of these exchanges will most likely take years. Three issues - enrollment, "benefit shock," and future premiums - are what will determine whether the exchanges are working as intended. And we won't know the impact of how these three issues are addressed until 2016 or even later.

Labor Announces No Penalty For Failure to Provide Exchange Notice

In a very brief Frequently Asked Question (FAQ) document issued on September 11, the U.S. Department of Labor formally clarified that an employer will not be subject to a fine or penalty under the ACA if it fails to provide a written notice to its employees about the health insurance exchange in their state by October 1, 2013. The ACA amended the Fair Labor Standards Act to require employers (all employers, not just those who currently provide health coverage) to provide each employee with a written notice containing information about the exchange and how to request assistance, describing the availability of a premium tax credit (if applicable) and implications for the employee if they choose to purchase a qualified health plan through an exchange. The FAQ guidance, however, makes clear that the requirement is not enforceable through a penalty or fine, although it suggests that employers “should” provide the written notice. By not providing this document, an employer runs a higher risk of being assessed a shared responsibility payment, because employees will not fully understand the implications of seeking a tax credit on an exchange.

Large Employers Make Big Changes to Retiree Health Care

Bloomberg reports that GE and IBM have both decided to stop providing traditional retiree health care benefits, and instead shift retirees into private insurance exchanges where they purchase their own insurance plans with a defined contribution. While retiree health benefits have been shrinking for years, the newest cutbacks may quickly become the norm. About 44 percent of companies plan to stop administering health plans for their former workers over the next two years, a survey last month by consultant Towers Watson found. Retirees are concerned their costs may rise, while analysts predict benefits will decline in some cases. Companies argue that many retirees can find more choice and a better deal on the exchanges. Instead of taking a one-size-fits-all company plan, a healthier retiree might find a less expensive policy with a higher deductible, or one that saved money by favoring generic drugs.

NBGH Annual Employer Survey Results

Large employers expect their insurance costs to rise by 7 percent next year, which is similar to prior years, according to an annual survey by the National Business Group on Health. The companies also said they’re expecting some currently covered workers to opt to buy coverage on the insurance exchanges next year, especially those who are covered by a COBRA plan, early retirees, and part-time, seasonal or low-wage workers.

The survey is based on responses in May and June from 108 self-insured large businesses. They were asked about what coverage they’re offering workers, how they’re controlling health care costs and how they’re responding to the Affordable Care Act. None of the businesses surveyed said they are considering ceasing to offer coverage next year — although the survey was conducted before the Obama administration announced a one-year postponement of the penalty for businesses failing to offer coverage. Three percent said they’re considering dropping coverage in 2015 and paying the penalty instead.

Nearly all of the businesses surveyed offer individual coverage, but some expect certain workers will find a better deal on the insurance exchanges starting next year, especially if they qualify for subsidies. A number of businesses said they expect part-time employees and seasonal workers to opt for the exchanges, but 12 percent said they also expected full-time employees to choose exchange plans. The survey also found a moderate increase in interest among employers regarding private exchanges.

Study: Enrollment in Private Exchanges Likely to Grow

Enrollment in private health insurance exchanges is likely to match enrollment in public exchanges by 2017 and may exceed it in 2018, an Accenture study found. According to the Accenture analysis, private exchange participation will approach public exchange enrollment levels as soon as 2017, and surpass them soon after. The result: In 2017, approximately 18% of the American public will purchase insurance through exchanges, radically transforming the health insurance landscape. Many employers favor private exchanges because they offer defined contribution plans and opportunities to customize supplemental offerings such as dental, life and disability products.

While public exchanges will be government operated, private exchanges are being developed by consulting firms, such as Aon Hewitt, Mercer, and Towers Watson, as well as retailers, such Walgreens, and even insurance brokers.  Health insurers are not only joining private exchanges, some like Aetna and Cigna have plans to develop proprietary exchanges of their own. 

Participating in a private HIX provides something of a win-win for insurers and employers. Both have been looking for ways to extract themselves from the annual uncertainty of renewing healthcare benefit contracts. The advantage of defined contribution for employers is that it takes the guesswork out of budgeting for healthcare costs from year-to-year, and benefits employees by providing decision support technology that enables them to choose benefits that make sense for their circumstances.

HHS Awards $67 Million in Exchange Navigator Grants

Health and Human Services (HHS) Secretary Kathleen Sebelius has announced $67 million in grant awards to 105 Navigator grant applicants in federally-facilitated and state partnership exchanges. These Navigator grantees and their staff will serve as an in-person resource for individuals who want additional assistance in shopping for and enrolling in plans in the exchanges beginning this fall. The $67 million was more than the originally estimated $50 million, and comes entirely out of the ACA-created Prevention and Public Health Fund.

Navigators will be trained to provide unbiased information in a culturally competent manner to consumers about health insurance, the new exchanges, qualified health plans, and public programs including Medicaid and the Children’s Health Insurance Program. The Navigator funding opportunity announcement was open to eligible private and public groups and people who are self-employed who met certain standards to promote effectiveness, diversity, and program integrity.

Navigators will be required to adhere to strict security and privacy standards – including how to safeguard a consumer’s personal information. They will be required to complete 20-30 hours of training to be certified, will take additional training throughout the year, and will renew their certification yearly.

Helpful Health Reform Implementation Timeline for Employers

Entrepreneur Magazine has published a useful, yet brief article outlining the specific steps employers should take leading up to 2015 when the employer shared responsibility provisions take place.  Several recommended steps from Fall 2013 through Summer 2014 are described, including surveying employees and devising a strategy for part-timers.  The article also mentions when and how to consider private exchanges in an overall benefits strategy.  Coalitions and their employer members may find this an helpful resource to guide decision making as the full implementation of the ACA rolls out over the next year.

Study: Consumers Don't Understand the Health Insurance They Have Now

A new study by George Loewenstein, to be published in the September issue of the Journal of Health Economics shows that those who currently have health insurance, including employer-sponsored plans, have a poor understanding of their coverage. Loewenstein and a team of researchers commissioned two surveys of covered Americans and found that only 14% could explain all four key health insurance concepts: deductible, copay, coinsurance, and out-of-pocket maximum. Only 11%, given all the necessary information, could calculate the cost of a four-day hospital stay to within $1,000. 

The findings articulate the conundrum employers face when offering health insurance to their employees: consumers do not understand traditional plans and would better understand a simplified plan, but a simplified plan would not have strong appeal to consumers, or cause them to change their health care choices. This is especially critical information for employers as they start to devise a communications strategy around their current health insurance offerings as they relate to exchanges and tax credits that may be available; employers should be looking to their coalitions for help on developing employee communications strategies.

Towers Watson Signs Agreement With Federal Government to Facilitate Public Exchange Enrollments

Towers Watson has announced that it has signed a web broker entity agreement with the Centers for Medicare & Medicaid Services, which supervises the federally facilitated marketplace — the health insurance exchange operated by the federal government in 36 states.

With this agreement, Towers Watson can help employers provide health insurance education and enrollment services to part-time and seasonal employees, retirees and their dependents by supporting them as they evaluate and purchase individual health plans on the federally run exchange.

Towers Watson operates the nation's largest private Medicare exchange, which offers thousands of private Medicare plans from more than 85 health insurance carriers. Licensed benefit advisors and technology-based decision support tools provide personalized support and expert guidance to retirees as they shop for individual plans. Nearly 300 public and private sector employers and trade associations have used Towers Watson's private Medicare exchange to connect more than a half million customers with health coverage.

Insurer Sees Small Employers Dropping Health Coverage, Shifting to Self-Insured

As the nation prepares to roll out the next phase of the ACA, the second biggest medical insurer - Wellpoint - said that it expects to lose members in health insurance plans sponsored by smaller employers. At the same time, the company expects membership gains in self-insured employer plans and in the kind of individual plans that will be sold in the public exchanges starting Oct. 1.

The lost customers aren’t just signing up with WellPoint rivals; some of it is going into the uninsured ranks. The Obama administration recently postponed enforcement of a requirement that employers with 50 employees or more offer health coverage next year or face fines. But the delay in the “employer mandate” wasn’t the reason WellPoint gave for losing small-group members. Nor did executives respond directly to analyst’s questions about whether small employers are “dumping” workers into the subsidized individual market. Rather, small employers have hesitated to buy coverage for next year because of uncertainties surrounding the online exchanges offering individual and small-group plans, the company said.

Many State-Run Health Insurance Exchanges Set to Exceed Requirements for Plan Choice, Quality Reporting

Consumers and small businesses in states that have opted to run their own health insurance exchanges will likely have a greater ability to make informed choices regarding their coverage as well as more information about plan quality than what current federal regulations require, a new Commonwealth Fund report finds. The report, by researchers from Georgetown University's Health Policy Institute, examines the key design decisions made by the 17 states that, along with the District of Columbia, chose to establish their own exchanges. Use the Commonwealth Fund's interactive map to explore how health insurance exchanges are shaping up across the U.S., or read a Health Affairs primer on the exchanges and what lies ahead.

HHS Finalizes Exchange Navigator Regulations

On July 12, 2013, the Department of Health and Human Services published a final rule on exchange navigator and non-navigator personnel, exchange consumer assistance tools and programs, and certified application counselors. The new rule deals with the various programs that will assist consumers in learning about and enrolling in the ACA’s qualified health plans through the health insurance exchanges. There are three of these: the navigator program, the only program officially recognized in the statue; “non-navigator assistance personnel,” which have at times in the past been referred to as in-person assisters; and certified application counselors. HHS also released a helpful fact sheet setting out the distinctions among the various categories, including information on the role of brokers and agents in exchanges.

The final rule requires all navigators in a federal exchange, including partnerships, to fulfill training requirements, pass a certification exam, and receive continuing education, and be certified or recertified on at least an annual basis; states running their own exchanges are expected to have certification and training requirements. Navigators must be prepared to meet the needs of enrollees in both the individual and SHOP exchange.

Treasury Releases Guidance on Employer Mandate Delay

The Internal Revenue Service (IRS) issued Notice 2013-45, regulatory guidance that formally delays the employer mandate provisions in the ACA, first announced on July 2. This guidance confirms that both the employer reporting requirements and the shared responsibility provisions are delayed until 2015, and both will be "fully effective" for 2015. Proposed rules for the reporting provisions are expected to be published this summer, and employers are encouraged to voluntarily comply with the reporting requirements once the proposed rules are released, to ensure a smooth transition on January 1, 2015.

The guidance also confirms that no penalties will be assessed against employers for 2014, despite the fact that this delay will have no effect on the individual mandate, nor access to Qualified Health Plans through receipt of a premium tax credit on an exchange.

HHS Finalizes Exchange Rule

HHS has published the final rule explaining who is exempt from the individual mandate penalty. Would-be Medicaid beneficiaries who lose out on coverage because their states choose not to expand the insurance program for the poor will not have to pay the individual mandate penalty. The rule also says those who go without insurance for three months or less won’t be on the hook, and it spells out alternative types of insurance — self-funded student plans, for instance — that will qualify as meeting the standards for minimum coverage.

The rule also includes an exemption for those caught up in the so-called family glitch involving how the government will gauge whether coverage is affordable and who gets subsidies.The glitch stems from an IRS rule that outlines which employees will be eligible for tax credits. If the cost of individual coverage — but not family coverage, which is far more costly — exceeds 9.5 percent of the worker’s household income, the worker would be eligible for a credit. The administration chose not to base eligibility on family coverage because it would have been too expensive for the government. The new rule would cut those subject to the family glitch a break by exempting family members from the mandate penalty if the cost of covering the whole family is deemed unaffordable.

Employers will not be subject to a shared responsibility payment for employees who do not buy insurance because they claim financial hardship exemptions, or religious belief exemptions.

Brookings Institution Health Insurance Exchanges Implementation Webinar

The Brookings Institution is hosting a webinar on Tuesday, June 25 featuring a panel presentation on the status of implementation of the new health insurance exchanges.

Hosted by the Engelberg Center for Health Care Reform at Brookings, the panel presentation will run from 9:00 a.m. to 11:30 a.m. EDT and will be co-moderated by Dr. Mark McClellan, Director of the Engelberg Center for Health Care Reform and the Leonard D. Schaeffer Chair in Health Policy Studies at the Brookings Institution and Governor Michael Leavitt, Founder and Chairman of Leavitt Partners. Additionally, the event will feature senior officials from the Centers of Medicare and Medicaid (CMS)—Gary Cohen, Deputy Administrator and Director of the Center for Consumer Information and Insurance Oversight and Mandy Cohen, Senior Technical Advisor—who will provide an overview and update on the health insurance marketplace implementation including outreach, education, and system requirements for coordinating data flows, as CMS works to advance the diverse processes for successful implementation.

You can register for the webinar here.

HHS Launches Redesigned Website

HHS has redone its Healthcare.gov website, with October 1 in mind, to give it a new “how you can enroll” focus. It also announced that it has opened its 24 hour call center — which is supposed to be able to handle consumer enrollment questions in 150 languages. Over the summer HHS will add new features so that by the time exchange enrollments begins in October people will be able to set up accounts, complete an application online, and shop for coverage. A Spanish version, CuidadoDeSalud.gov, is also being updated.

The site can be accessed from mobile devices and includes “social media, sharable content, and engagement destinations for consumers to get more information,” HHS said. “The new website and toll-free number have a simple mission: to make sure every American who needs health coverage has the information they need to make choices that are right for themselves and their families — or their businesses,” HHS Secretary Kathleen Sebelius said in a statement.

Labor Department Publishes Model Employer Exchange Notification Documents

On May 8, the U.S. Department of Labor published Technical Release 2013-02, which provides guidance for employers regarding the Affordable Care Act (ACA)-required notice to employees of their options under state and federally-facilitated health insurance exchanges.

ACA section 1513 amends the Fair Labor Standards Act (FLSA) to require that employers provide each employee with a written notice providing the employee with information about the exchange in their state and how to request assistance, describing the availability of a premium tax credit (if applicable) and outlining the implications for the employee if they choose to purchase a qualified health plan through an exchange. This requirement applies to ALL employers, regardless of size, and regardless of whether the shared responsibility requirements ("pay or play") apply. Any employer with one or more common law employees must provide this notice.

As employer advocates had hoped, model notices have been issued by DOL for use by employers:

• Model notice for employers that currently offer a health plan to some or all employees
• Model notice for employers that do not offer a health plan

The ACA effective date for distribution of these notices was March 1, 2013. The Technical Release states that employers are required to provide the notice to each new employee at the time of hiring beginning October 1, 2013. With respect to employees who are current employees before October 1, 2013, employers are required to provide the notice not later than October 1, 2013. The notice is required to be provided automatically, free of charge. The notice can be provided electronically or by first class mail. The Technical Release also describes how to comply with the requirement for individuals in COBRA continuation coverage.

CMS Releases Guidance on Role of Brokers and Agents in Exchanges

The Center for Consumer Information and Insurance Oversight (CCIIO) within CMS has released a new guidance document describing the roles agents and brokers can play in the new ACA-created health insurance exchanges. The guidance acknowledges that agents and brokers have an important role to play in helping consumers - both individuals and small businesses - understand the new exchanges.

Section I of this document provides a high-level overview of the role of agents and brokers, including web-brokers, in federally-facilitated exchanges and state partnership model exchanges. In section II, CMS addresses common questions raised by states and other stakeholders on the role of agents and brokers in all exchanges, including state-based exchanges. In section III, CMS addresses questions specific to web-brokers. The guidance document also contains a process flowchart to illustrate how agents and brokers will assist consumers through both the issuer-based and exchange pathways.

Agents and brokers intending to work with consumers in federally-facilitated and state partnership exchanges will be able to assist consumers in two ways: (a) an issuer-based pathway, through which an agent or broker uses an issuer’s website to assist the consumer; or (b) an exchange pathway, through which an agent or broker assists the consumer using the exchange website. In states where a federally-facilitated or partnership is operating, all agents and brokers must register with CMS and complete a training course. This online registration process administered by CMS will begin in the summer of 2013, prior to open enrollment. Agents and brokers working in states with state-based exchanges will still need to register with the state exchange and follow any processes and requirements of that state exchange.

HHS Seeks Input on Exchange Design in Partnership and Federal Fallback States

HHS invites you and your colleagues to participate in state-specific conference calls about federally facilitated and partnership exchanges (marketplaces). Call in to hear updates about policies and operations of the exchanges in your state and for an opportunity to ask questions and provide input. HHS will use the information and feedback provided by participants to inform their decisions as they develop exchanges.

Please visit the CMS Open Door Forum (ODF) for call and registration details for your specific state.

Again, these calls are specifically for states participating in a federally facilitated or partnership exchange. If this applies to your state, we encourage you to participate in these important calls to ensure the employer voice is heard.