EDITOR’S NOTE: Healthinsurance.org’s Curbside Consult is a periodic informal dialogue with medical and health policy experts about pressing issues of the day.
Sabrina Corlette is Research Professor and Project Director at Georgetown University’s Health Policy Institute. She directs research on health reform, particularly the regulation of private health insurance plans and the implementation of new insurance market rules under the Affordable Care Act. As someone who has focused more closely on Medicaid than on the private side, I’ve learned a lot from Corlette’s work.
We recently caught up over Skype, and – in a two-part interview – discussed how the new health insurance marketplaces are actually working: How many consumers have paid their premiums, the differences between the different kinds of available insurance plans, the likely impact of the “Cadillac tax” on high-expenditure insurance plans, and more.
I enjoyed our conversation. I hope that you do, as well.
Transcript of Part 1:
Harold: Welcome to healthinsurance.org, another addition of Curbside Consult. I’m very honored to have Sabrina Corlette with me today to talk about how it’s going. So, maybe we should start by telling me a little bit about your day job and how you spend your time on this stuff.
Sabrina: Absolutely. It’s a pleasure to join you today. I’m a senior research fellow at Georgetown University’s Center On Health Insurance Reforms. At the center, we study how the health insurance marketplace is changing. We’ve been very busy since the passage of the Affordable Care Act four years ago. We’ve been studying how the rules are changing for health insurance companies, but with a particular focus on how consumers are navigating these changes and how they’re affecting them.
We focus on what we call the Three As. The first A is access: How are our consumers accessing coverage? The next is affordability: Is that coverage affordable to them? The third is adequacy: Is that coverage adequate to meet their health care needs and their ability to see a doctor when they need to see a doctor and get preventive care and that kind of thing. Everything we do is sort of focused on those 3 As.
Harold: How do you think it’s going so far?
Sabrina: I should just say what a difference six months makes. If you would have asked me six months ago how things are going, I would have been very, very pessimistic, but I certainly didn’t expect that we would see 8 million people enrolling through the health insurance marketplaces, millions more accessing new Medicaid benefits, millions of young adults staying on their parents’ policies. So in terms of just sheer numbers of people getting covered … I just recently saw there is an estimate that [inaudible].
Harold: I’m sorry. Could you repeat that? There was just a moment of glitch. I just didn’t hear what you said.
Sabrina: That by just sheer numbers of people gaining coverage and the overall estimated reduction in the number of uninsured, I think this first year has been a success, but we’re by no means there yet. We have roughly 48 million people in the country estimated to be uninsured, and if the latest estimates are correct – that we’ve reduced that by about 5½ million – we still have a long way to go. And then ultimately, it’s not about insurance coverage per se. It’s about whether people are healthier, whether they’re productive and able to do what they want to do with their lives and get to see the doctor and also that their coverage provides that important financial protection, so that they’re not facing big, out-of-pocket costs or going into bankruptcy because of medical debts. Those, at the end of the day, are the most important metrics and we just don’t know yet where we’ll end up in terms of the overall health status and financial stability of America families.
Harold: But you do think we’ve moved on from the fairly catastrophic rollout of HealthCare.gov and that people are enrolling successfully? And the mechanics of all of that seems to be working the way it’s supposed to for the most part?
Sabrina: Well, the open enrollment period has closed, but I think it closed on a very positive note. For the most part, in most states, the systems were working, which isn’t to say that there’s not gonna still be some disruption for some people. There were a number of people who stayed on policies that are not compliant with the Affordable Care Act and they may need to be coming into the market, so we’re not out of the woods yet, but I think the open enrollment period closed on a very positive note, giving the great hope that the markets will stabilize and that people will be happy with the coverage that they’ve been able to get.
Harold: One point that Garance Franke-Ruta made, which resonated with me and the poverty work that I do, is that a lot of low-income people are used to getting help from systems that don’t initially work the way they’re supposed to do and that it is, from the point of view of sort of University of Chicago professors and Georgetown researchers, we’re used to a level of consumer service. We look at some of the glitches in HealthCare.gov and we say “Oh my God. This is appalling.” If you are used to dealing with any sort of social service context, you’ve seen this tape before. There are a lot of people who stuck with it. In a sense, it’s a tribute to the ability of low- and modest-income people to sort of roll with the punches with a system that is trying to help them, but isn’t always as efficient or as seamless as it’s supposed to be.
Sabrina: That is an excellent point. It’s very much about perspective and what you’re used to. And I think what we did see over the last six months is people coming back, trying again and again and again and again until they got through. I can only hope that the process and the system will be a lot smoother for them next year, but you’ve got to admire their persistence, that’s for sure.
Harold: Again, you’re watching healthinsurance.org, Curbside Consult. I’m Harold Pollack and I’m talking with Sabrina Corlette about the rollout of ACA’s marketplaces and its related issues.
Any surprises to you? I know that the 8 million enrolled was kind of a surprise. Any other things that you’re seeing that kind of surprised you compared to what you expected two months ago?
Sabrina: We heard some interesting rumblings from some of the for-profit insurance companies in the last couple of weeks, that they have been favorably surprised by the number of young people that signed up in March in those last few days, which suggests to me that young people are procrastinators [laughs], but that they did in fact sign up and they signed up in greater numbers than perhaps some of the insurance companies expected that they would. That’s a good sign. Youth is often a proxy for overall health status, so to the extent those young people are healthier than the average population, that will help keep prices low over the long term. That was, I think, some good news that came as a surprise to some.
Harold: Do we know how many people have actually paid their premiums?
Sabrina: That’s an excellent question and a question of debate. The insurance companies, in some recent public statements, have said that the numbers are between about 85 and 95 percent have paid their first premium. The House Energy and Commerce Committee Republicans yesterday released a report suggesting that that number is much lower. It is about, I think they said, 60 to 65 percent have paid. However, I believe that that that percentage came from an early estimate and wouldn’t have reflected the fact that most people have to pay their premium by the first of the month, so it wouldn’t have reflected those premiums that came in right before the first of the month.
Harold: Do you have a sense of – is there information that you’re waiting to see about how things went up until March 31 that we should be kind of on the lookout for over the next couple of months?
Sabrina: That question of how many did, in fact, pay their premium, many probably just paid yesterday. [laughs] Again, just like we had a big surge of enrollment on that very last day of March 30, we’re probably going to have a big surge of premium payments on April 30, which is the final day on which they were due. That will be an important thing to watch out for. The other thing that we’re going to be watching for is just what kind of coverage did these folks sign up for? What’s the age mix? What does it look like on a state-by-state basis? Because I think that there’s a tendency to try to look at national information and write a story from that, but the truth is that health care is very, very local. And so the experience of a consumer, the experience of a health plan, is really going to depend on what town or city you live in. It’s just a very, very locally driven market.
Harold: What are some places that seem to be going well at the moment, based on what you’re seeing?
Sabrina: In some ways the fact that it’s been relatively quite in regards to how people are using their coverage [inaudible], in some ways no news is good news. I think many people were concerned about the fact that these new plans had narrow networks of providers. So there’s a lot of concern that there would be this big surge of demand and not enough providers to meet that demand. And that may be true in some communities – some areas – but in general, we’re not hearing a whole lot of complaints or concerns that people can’t get to see a doctor or have to wait months and months to get an appointment. It’s just been relatively quiet, so that’s good.
I think there has been some reports that people are surprised by the level of cost sharing that they faced, particularly early on because a lot of people aren’t familiar with insurance concepts like deductibles, co-payments and that kind of thing. Particularly, if you sign up for one of these lower-value plans – like a Bronze plan that might have a really high deductible – some people may not have had it explained to them exactly what that means. There’s just been some really reports of people being a little surprised by that cost sharing that they’re facing.
Harold: One of the things that I’ve heard is that there’s some things to be ironed out in the no-cost-sharing, preventive services angle, where you show up for a colonoscopy and the colonoscopy is free, but the polyp removal that comes with it is expensive if people are not expecting that.
Sabrina: Right. The good news is that the Obama administration has tried to clarify that, so that consumers shouldn’t be hit with a big bill, but the preventive services coverage – which is supposed to be free – that’s been a very confusing area, not just for consumers, but frankly for doctors and health plans, to figure out exactly what’s covered – what’s not covered? If you get an additional service while you’re in the doctor’s office, what are you supposed to pay for and what is actually free? That’s just been more difficult than expected to figure that out.
Harold: Again, you’re watching Curbside Consult at healthinsurance.org. I’m talking to Sabrina Corlette about the rollout of ACA. I guess – a couple more questions on that. One is what kinds of plans are people choosing? Are they gravitating to the Bronze plans and the really cheap plans?
Sabrina: You know, they’re not, actually. The vast majority of people have gravitated to Silver-level plans, which are sort of in the middle in terms of overall generosity of coverage. That’s gotten the vast majority of enrollment. Then, I think it’s kind of even between Bronze and Gold. Interestingly, almost nobody has signed up for the catastrophic plans, which have been available as a more affordable option for people. So it suggests to me that as people look at their coverage – and particularly when they’re eligible for premium tax credits and can get some help paying for the premium – they want coverage that actually covers things [laughs] and doesn’t leave them with really, really high out-of-pocket costs.
Harold: The Silver gives you much better protection against out-of-pocket expenses than the Bronze does in various ways …
Sabrina: It does. Sorry, I missed the last thing you said.
Harold: I just said that the Silver gives better protection against very high out-of-pocket costs than the Bronze plans do.
Sabrina: Well all of the plans do provide a maximum out-of-pocket cost that any individual would owe. It’s about $6,300 per year, is the maximum that you would owe out-of-pocket, but yes, Bronze plans do come with higher deductibles and higher cost sharing than Silver plans.
Harold: But it’s interesting that the catastrophic plans are getting low take-up because one of the real critiques of ACA is that people should have more options to buy very limited health insurance coverage. It seems like in the marketplace, that’s not what consumers are looking to buy.
Sabrina: Right. I will say, though, that the data that we have on where consumers have enrolled in coverage is through February. And we did get a huge surge of people signing up in March, including a fair number of young people, so it’s possible that, especially if those last-minute sign-ups tended to be healthier folks and younger folks, we may find that in this latest month’s data that more people gravitated to those more bare-bones plans just because they need less health care than some of the earlier signer-uppers.
Harold: Yeah, that’s another known/unknown that we’re waiting [inaudible].
Sabrina: Right, exactly.
Harold: One anxiety that a lot of people have is that there’s going to be a big increase in premiums next year and the sort of rate shock kind of problem. Do you think that that’s likely that we’re going to see some big premium increases next year?
Sabrina: I think this is another one where it’s going to be an extremely localized issue and really based on the health care market that you’re in. The other problem with trying to predict rates is that it just varies – it’s just going to vary on so many different factors. Obviously, it depends on the kind of risk pool that exists in the market: Did a lot of healthy people sign up or as many as the carriers had hoped would sign up, did they sign up? But it also depends on general trends in the underlying prices and costs of medical care, which has generally been going up year to year and we expect it to continue to go up.
There’s also this phenomenon that I think many people didn’t expect, which is the existence of these transitional policies, where people were allowed to stay on their plans that were not compliant with the Affordable Care Act and also outside of the risk pool, and so to the extent that those plans have healthier people enrolling in them than the general risk pool, if that could have have an impact on premiums. But again, it will depend state to state and market to market because many states did not allow those transitional policies. And in some states that did allow them, not all insurance companies decided to offer those, so it’s, again, another one of these things that’s just impossible to make general pronouncements about.
Harold: Do you think there’ll be a point, maybe this summer, or at some point, where we’ll begin to see the patterns and there’ll be a lot of variation, but we’ll kind of begin to see what the map looks like?
Sabrina: Yeah, on the premium rates, this is a story that’s going to play out over several months. Generally speaking, insurance companies have to file their proposed rates for 2015 in the next couple of months. In some states, those rates will be made public immediately, but in other states they’ll take one to three months to review them. And some insurance departments will push back and say “I’m sorry. This is too high. You’ve got to bring it down.” Some won’t. We’re going to sort of get a steady trickle of news about rates over the next six months. In some states, we may not know what the rates are on the exchanges until the day before open enrollment starts. It just really is going to vary state to state.
Harold: One thing that I was wondering about. Some states have pretty significant high-risk pools of various sorts that have to be folded into or will be folded into the new exchanges. It seems to be, from a sort of risk-pool perspective, you’re adding a bunch of really sick people to the pool. Is that going to raise people’s premiums in the marketplaces in some states?
Sabrina: Right, so well first of all, this is anticipated and the drafters of the ACA included provisions to what they call mitigate or reduce the impact of this pool of sick people coming into the marketplaces. There’s a program called a Reinsurance Program and a Risk Corridor Program that helps protect against that sudden influx of sicker people. And remember that when they were setting their 2014 rates – which came in lower than projected – insurance companies were expecting this population, so the 2014 rates were set with an expectation that these high-risk pool enrollees would be joining the risk pool.
Harold: Ah, good. So whatever the impact is, we’ve seen a lot of it already.
Sabrina: I think for the most part, yes.