While much of 2017 will be spent watching the Trump administration and Republican Congress change the Affordable Care Act, health plans will face other dynamic forces as well. The continued rise of care costs and emphasis on active consumers are likely regardless of policy changes. Here are the 7 things our research team will be watching in the coming year.
1. The future of individual exchange financing
Of all the ACA components, a Trump administration puts the public exchanges in the most jeopardy. While Republican governors (e.g., Kentucky’s Matt Bevin) have found unwinding the exchanges and Medicaid expansion much harder than anticipated, it’s still likely they will change in some format.
The most probable outcome is the loss of subsidies and the individual mandate. In their place, the administration may offer high risk pools for insurers. However, given plans’ trouble managing these members on the exchanges thus far, it’s not clear how many will be interested in participating, even with higher premiums possible.
2. The (final?) risk profile of the exchanges
Regardless of the future of the exchanges, most policy experts agree nothing will change for the 2017 plan year given that open enrollment is largely complete. In the fourth (and perhaps final) year of the exchanges, we’re watching to see if member risk continues to be higher than expected or if more low-risk members are trading the tax penalty for premiums.
In particular, the high volume of late sign-ups (leading HHS to extend the enrollment deadline) might suggest one of the riskiest pools yet.
3. Provider ability to lower spending for Medicaid beneficiaries
Across the country, state legislatures are changing benefits and network administration to lower costs. Given the possible transition to a block grant system, states will have some additional flexibility, but likely less money to cover beneficiaries. As a result, managed care organizations will continue the transition to value-based care as a way to cope with lower per capita rates.
Thus far, almost 20 states have or are pursing direct contracting with ACOs. For example, Massachusetts recently changed its Medicaid program to a state-wide ACO program, while Vermont moved further still to an all-payer, state-wide ACO model. We’ll be looking to see how providers manage the risk of Medicaid beneficiaries to determine how well they can lower spend in tighter economic environment.
4. Greater employer collaboration to lower spend
Employers are reaching the end of their ability to consistently increase spending on their employees’ health. Traditional strategies like self-funding and high deductibles can only go so far and few are willing to take on the risk and administrative complexity of a direct-to-provider arrangement.
Last April, Health Transformation Alliance brought together 20 of the country’s largest employers to share data and best practices on lowering employee health spending. They plan to roll out pilots this year and these will likely serve as a bellwether for other employer innovations. We expect more employers will be looking to plans for guidance on how to navigate their options.
5. Emphasis on HSAs heralding in the activated shopper
A Trump administration is likely to place more emphasis on the use of HSAs to fund both premium spending (in the individual and potentially Medicare markets) and care financing. And Seema Verma, Trump’s pick for CMS Administrator, previously helped Indiana reform Medicaid through beneficiary cost-sharing requirements.
However, consumers have yet to show that they can be great shoppers of care. Previous exchange behavior tells us that people will buy primarily based on price, even if it means paying more out of pocket later on. When it comes to accessing care, members don’t shop around extensively and plan tools remain largely unused.
But with a larger push toward market-based solutions, consumers may have no choice but to figure out how to partner with their plan to access affordable care. Employers continue to have an interest in an activated consumer base and can serve as a partner for plans in teaching members to be better shoppers.
6. The end of risk adjustment?
With previously discussed changes to Medicare Advantage risk scoring (shifting from diagnosis to encounter-based data) and the future of the exchanges uncertain, plans may deprioritize their efforts to secure diagnosis data from providers. The past few years have seen plans invest heavily to accurately capture these diagnosis codes through embedding prompts in the provider workflow or conducting home visits.
But with an uncertain individual exchange and the shift in MA payment, plans may turn their efforts elsewhere. Even if the exchanges remain, their zero-sum risk adjustment model becomes irrelevant in markets with only one carrier—an increasingly common phenomenon.
7. Continued backlash against high-priced drugs
Mylan’s EpiPen is the most recent example of public outrage to high priced pharmaceuticals, but certainly not the only one. Plans have been working with their PBMs to manage down drug prices as much as possible and many others have struck deals with the manufacturers directly to reduce costs for their members.
But while high-priced brand name medications get a lot of media attention, the rise in generic drug prices has a larger impact on plan finances. While there’s been a lot of talk of policy solutions, few have been suggested that will target the generic issue. We’ll want to watch for more plans investing in PBMs to take cost out of the system.