ACA: What Now? Part II (More Questions & More Settling of Dust)

We last noted that the dust may have settled on the first round of PPACA enrollment and that the “who won and lost” discussions may be slowing down. However, the news since the last article’s publication appears to have still prompted more questions than answers:

• Do we NOW know how many have enrolled? The Obama administration tracked plans purchased on the Federal and 14 state exchanges to arrive at its 8 million figure announced on April 17. This figure is up more than 10 percent from the 7.1 million noted at the end of March, and it is separate from Medicaid enrollment and enrollment in private plans outside the exchanges (i.e., buying directly from carriers).

• How many are covered? “Covered” is different than “enrolled.” This is an important distinction to agents and agents’ carriers. Initial reports based on incomplete data (not accounting for the late enrollment surge) indicated that potentially in excess of 30 percent of enrollees had not paid the first month’s premium for coverage to become effective. But, with more anecdotal information available from the largest carriers, it appears that number more likely ranges between 10 percent and 20 percent–an improvement from initial reports, but still a large range that begs for further clarity and confirmation as to the real and true number.

• Net gains and new enrollment, as opposed to enrollment of people who were already covered pre-PPACA, remains a similarly relevant question for agents and carriers. With roughly 25 percent of those selecting a new PPACA plan in 2014 previously uninsured, the initial challenge appears to have been more along the lines of fighting to keep those you already had as customers, as opposed to PPACA serving as a new enrollment bonanza.

• Is the first round of PPACA premium rates sustainable and able to dampen trend increases going forward, or does that remain more of a long-term goal rather than being immediately achievable? Time will tell, but the first news anecdotes have raised additional questions related to the viability of the current pricing, given:
• Enrollment of the “young invincibles” (ages 18 to34) came in below targeted percentages; and
• Preliminary data from Express Scripts, from the first enrollees’ first two months of coverage, showed greater use of specialty drugs (i.e., drugs to treat chronic conditions) for the exchange-enrolled population, in comparison to similar figures from pre-PPACA commercial insurance enrollment. An accompanying concern is that higher drug utilization and costs typically correlate to higher overall costs (with more hospital stays, physician visits, etc.).

Beyond the need to get better detail and confirming information as it relates to the above items, additional information is emerging to provide at least a bit of clarity as it relates to tomorrow’s benefit environment:

• Ancillary product purchasing remains a work in progress:  The PPACA marketplaces may offer an assortment of Dental benefit options, but a March 2014 Research Brief from the American Dental Association indicates issues remain related to the quantity and quality of information available to consumers on many key attributes of Dental plans within the marketplaces, “making it challenging for those consumers to make meaningful comparisons and fully informed decisions.” Beyond Dental, with coverage such as Vision, Critical Illness, and other ancillaries untouched by PPACA, questions remain as to their place, if any, in the public exchange marketplace.

• Anecdotally, the agent still has a role – is that sustainable?: Agents played a meaningful role in California’s enrollment of people in private health plans, as recent anecdotal data shows agents signing up over 500,000 Californians (roughly 40 percent of the state’s total). This bit of news may be heartening as an indicator of an agent’s fit in the post-PPACA world – but evidence of a fit for agents more regionally or nationally is still to emerge and be answered. Time will tell on answers to questions such as whether:

• PPACA can drive sufficient enrollment volumes to adequately compensate for reduced commission levels as a result of PPACA’s loss ratio restrictions;
• PPACA compliance requirements can be reasonably accommodated; and
• Emerging technology solutions can simultaneously keep agents compliant with PPACA regulations while delivering cost and time efficiencies and sustaining effective agent-customer communication.