Will the Health Insurance Exchanges Mean More Patients for Anesthesiologists?
In a little more than two months, individuals and small businesses will be able to enroll in health plans offered by the Health Insurance Exchanges (HIEs) created under the Affordable Care Act. By the deadline of January 1, 2014, all states must have an operational individual and small-business exchange. The Congressional Budget Office estimates that nine million people will obtain coverage through HIEs in 2014, a number predicted to rise to 22 million people by 2022.
Will that mean more patients for anesthesiologists? Or at least more insured patients? On the face of things, it seems obvious that better population coverage will lead to a greater number of patients for whom insurance will pay providers. The current state of development, or lack of development, of HIEs in many localities, however, together with the July 2nd announcement by the U.S. Treasury Department that it will postpone until 2015 the mandate requiring that employers with 50 or more full-time employees offer insurance—not to mention the general mistrust of the Affordable Care Act in many quarters—has fueled a lot of uncertainty about the impact of the HIEs. Although no one can produce reliable projections of HIE-based demand for healthcare services, considering the situation of the different stakeholders is a good place to start.
The Federal and State Governments
The original House of Representatives health reform bill called for a single federal exchange with a provision for states to opt out and establish their own HIEs. The Senate bill, which became law, created an opt-in model. Thus either the state or the federal government would be responsible for implementing the core HIE functions: eligibility and enrollment, plan management, consumer assistance, outreach and education and financial management.
In the few years since the enactment of the Affordable Care Act, the models for dividing exchange responsibilities between the federal and state governments have multiplied. Nineteen states (AL, AK, AZ, FL, GA, IN, LA, MS, MO, NJ, NC, ND, OK, PA, SC, TN, TX, WI, WY) are deferring entirely to the federal government to operate all core exchange functions. (“Health Policy Brief: Health Insurance Exchanges and State Decision,” Health Affairs, July 18, 2013.) In 14 states and the District of Columbia, the state will run all core exchange functions but may use federal services for some of these. Another 14 states will conduct only plan management, or plan management and/or consumer assistance, outreach and education functions on behalf of the federal government, which will operate the remaining core exchange functions.
The states have enjoyed a great deal of flexibility in structuring their HIEs, and the models continue to evolve. As noted in the Health Policy Brief, “The substantial flexibility afforded to states throughout the implementation process, along with state-specific factors, such as rates of uninsurance and market dynamics, is likely to lead to variability among states in both exchange design and outcomes, even among states with the same model.” The resulting variability in the coverage that will be available through the HIEs precludes predictions regarding the numbers of potential anesthesia patients.
Health Plans
The Affordable Care Act requires HIE-“qualified health plans” to comply with specific benefit designs standards, including coverage of “essential health benefits,” cost-sharing limits, and standardized levels of coverage, often referred to as “precious metal tiers,” of which the silver and gold levels of coverage must be offered by all HIE insurers.
The Act does not mandate health plan participation in the exchanges—it does not need to, since premium tax credits and individual cost-sharing subsidies are only available for health plans purchased through HIEs. Premium tax credits are tied to the cost of the second-lowest cost silver plan offered in an exchange. In order to sell policies, therefore, health plans are likely to compete to offer the second-lowest cost silver plan offered in the market.
“Robust competition in many states” is the “central conclusion” of the authors of a July 2013 paper from the Urban Institute, “Cross-Cutting Issues: Insurer Participation and Competition in Health Insurance Exchanges.” The paper explores state legislation and initiatives to encourage participation in HIEs as well as “preliminary responses from health insurers in six study states (Colorado, Maryland, New York, Oregon, Rhode Island, and Virginia) that are participating in the Robert Wood Johnson Foundation’s State Health Reform Assistance Network.” The authors believe that the states studied are being very liberal regarding network adequacy, geographic service areas and other health plan design issues and that they expect most commercial insurers, as well as Medicaid carriers and new consumer operated and oriented plans (COOPs) to offer coverage through the HIEs.
Competition to obtain market share means that health plans will be seeking ways to limit premium costs. Indeed, early indications are that premiums are already coming down. A report released by the Department of Health and Human Services on July 18th shows that in the 11 states for which data are available, the lowest-cost silver tier plan in both the individual and small-employer markets is on average 18 percent less expensive than predicted in previous analyses.
Foremost among the ways for health insurers to limit costs is holding down payments to providers. The Urban Institute study concludes that insurers will seek to negotiate lower payment rates both across provider categories broadly and in narrow networks of lower-paid providers. The outcome, it is assumed, will be payment levels somewhat lower than standard commercial rates.
Narrow networks will by definition exclude a certain proportion of the anesthesiologists in a market. New insurance coverage may make it possible for more patients to seek elective surgery—but the anesthesia for those procedures may possibly be provided only by those anesthesia groups that have agreed to lower payments.
Health and Hospital Systems
“Despite the prospect of millions of newly insured patients, many hospital and health system finance executives are not expecting healthcare reform to be a boon to their organization's bottom line.” (“Healthcare CFOs Sing Reform Blues,” HealthLeaders Media, July 18, 2013.) The reasons for the pessimism expressed by the health system leaders interviewed included the following:
- Reductions in Medicaid’s Disproportionate Share Hospital (DSH) program payments to compensate hospitals with large uninsured patient populations, not offset by HIE insurance policies;
- Lack of familiarity with the concept of copayments and deductibles on the part of former Medicaid beneficiaries who become insured through the HIEs,
- Penalties for failure to comply with the individual mandate to obtain coverage are so low that many people will remain uninsured, and
- Uncertainty in general about the future operation of the HIEs.
Interestingly, the health systems in the article were all working on consumer outreach and education programs to help patients obtain, understand and properly use HIE coverage. Anesthesiologists and other physicians will be incidental beneficiaries as the newly insured learn to navigate the HIE system.
Employers and Employees (Patients)
Beginning on January 1, 2015, the Affordable Care Act will require employers with 50 or more full-time employees to offer health insurance or pay penalties. Despite the effective date having been postponed for a year, most affected employers already offer health benefits, according to the Kaiser Family Foundation. A 2012 survey determined that only 11,500 of the 230,000 companies with 50 or more employees did not offer health insurance. This represented only about 1.6 percent of the more than 89 million employees at these firms. Even among the smallest employers (3-9 employees), 50 percent offered benefits. (“Employer Health Benefits 2012 Annual Survey,” Kaiser Family Foundation and Health Research & Educational Trust, Sept. 11, 2012)
The individual mandate’s start date has not changed; effective January 1, 2014, individuals will be required to have or to obtain health insurance or to pay a penalty. Lower-income individuals whose employers do not offer coverage will have access to subsidized HIE policies. Most observers predict that some increased number of individuals will enter the HIEs rather than wait a year for the mandated employer-based coverage.
Doctors
Healthcare reform will continue to put pressure on physicians’ as well as on health systems’ and payers’ margins, it seems safe to say. The true impact of the HIEs on anesthesia practices is going to depend more on the terms of the contracts that they negotiate with hospitals and health plans than on year-to-year changes in the numbers of insured patients. We will learn much more, and we will bring our readers much more information, as the HIE experience unfolds.