The “Brave New World” of Health Insurance Markets
One of the best overviews I’ve seen of the issues facing health insurers – and, for that matter, health providers – as we move forward toward health reform implementation comes in this month’s issue of Health Affairs. It’s an article written by Healthcare Leadership Council member Troyen Brennan, executive vice president of CVS Caremark, and University of Melbourne professor David Studdert. For those speculating on the coverage-and-cost obstacles, as well as opportunities in the new health reform law, this piece is well worth reading.
Among the key points made by Brennan and Studdert:
• Under the Patient Protection and Affordable Care Act, medical underwriting will be virtually eliminated. The authors write that insurers should still be able to construct reasonable risk pools, but many insurers fear that the new insurance mandates will fall short of compelling compliance. This is a worry we’ve expressed frequently in this space.
• When Massachusetts launched its own health reforms, all stakeholders in the state wanted the reforms to work. This is not the case with the federal version, as exemplified by 20 states suing to overturn the new law. The smart money, they write, is on the suits failing and insurers would be prudent to plan for the new exchanges in 2014 rather than waiting for the Supreme Court to rule.
• Various players in the new exchanges will face difficult cross-pressures. Insurers will be under pressure to keep health coverage affordable, even though the legislation “does not do enough to change the fundamental cost drivers in health care.” That places state insurance commissioners in the undesirable position of trying to hold the line on consumer costs while also maintaining the solvency of insurance carriers.
• There still exists a critical lack of details on important issues such how insurance products can be sold across state lines (a door opened by the new law), the amount of transparency required, and how the costs of disease prevention factors into the new medical loss ratio requirements.
Brennan and Studdert write that, through new care models and payment reforms, the new law does provide opportunities to reduce care costs without compromising quality, but that success will rest upon the ability of providers, regulators and insurers to productively cooperate.
