New York is doing something very unusual on 1/1/16. It is making pregnancy a qualifying event that opens up a special enrollment period for women to either get insurance on the state Exchange or change their policy on the exchange.
As of January 1, pregnancy will be a qualifying event in New York’s exchange. https://t.co/qF4rjNqaJO @EyeOnInsurance
— LouiseNorris (@LouiseNorris) December 28, 2015
From a 30,000 foot policy perspective, this is a good thing. The better insured pregnant women are, the more likely any individual is to receive appropriate prenatal and post-natal care. That means over the long run kids are in better shape and healthier.
However, using the open enrollment mechanism to a risk based insurance model has significant problems unless there is a perfect behind the scenes risk adjustment process. I’m not a huge fan of this idea before it was enacted:
Special Enrollment Periods/qualifying events for people who have already identified that they are high cost individuals is a tough thing to square in a risk based insurance model. The better approach is to make Medicaid the payer of second resort for all pregnancy care while paying Medicare rates for those services.
Why is this?
Pregnancies are expensive. Non-complicated full term vaginal births can cost an insurance company $9,000 to $12,000 on average. When a company gets most of its membership for a year by January 1st, its actuaries can make a very good bet that the total pregnancy expense will be X dollars per member per month plus or minus a little bit….Now the MBAs at the top of the company and in utilization management won’t want to pay for variance, so they’ll engage in a race to the bottom for the attractiveness of their policies for pregnant or potentially pregnant women….
In my local market, there is a high end Ob/Gyn specialty hospital that handles a plurality of births in the region, and the vast majority of the odd/high risk cases. That hospital is in all but one insurers’ narrow network Exchange plans this year.
If pregnancy is a special qualifying event where people can get on Exchange insurance mid-year without paying into the pool for the first several months, the incentive is for every Exchange policy to drop the high end Ob/Gyn hospital from their networks. People want to go there, and they will select the plan that allows them to go to the high end specialty hospital over a plan that sends them to the community hospital for their Ob/Gyn services. Any insurer who keeps that hospital in network would have a massively disproportionate number of pregnancies, an even more disproportionate number of high risk/high cost pregnancies without the associated premium revenue coming in to cover those costs.
To make this policy work in New York state, the Exchange plans would need a baby bump in their risk adjustment. All insurers would pay a fixed per member per month into the mid-year pregnancy enrollment pool. From this pool, each insurer would file a claim for each pregnancy that came to their risk pool via the pregnancy only special enrollment period. From there, the insurers would get a percentage of the pool proportionate to the percentage of mid-year pregnancies.
This type of financial reshuffling would discourage insurers from making their networks and benefit configuration policies ugly to pregnant women. Otherwise, insurers would seek to avoid being selected by women with $8,000 to $15,000 probable claims who will pay less than $6,000 in premiums for a Gold Plan in Rochester. The easiest way to be ugly is to avoid including high end Ob/Gyn hospitals in network, and then making plans with large inpatient co-pays as the primary form of cost sharing.
Does New York have a risk adjustment tweak in place? If they do, this is a workable kludge, if they don’t the quality of health plans will get far worse next year.
eclare
I don’t agree with this. How is this different from someone without insurance getting cancer or being in a wreck all of a sudden being allowed to buy in? Defeats the whole principle of insurance, where you pay when you are healthy and hope you don’t need it, but it is there for you when you do.
Richard Mayhew
@eclare: I agree with you, but if this is what NYS wants to do, they need a back end risk adjustment kludge to make it mostly work.
NonyNony
@eclare: But human beings are terrible at assessing risk. Utterly abominable at it. And so there really needs to be a backstop for the person who doesn’t think she’s likely to get pregnant in November of 2015 but then finds out that she’s terrible at risk assessment in May of 2016. And pregnancy is an especially terrible risk for people to evaluate because there’s so much pregnancy shaming that happens that skews people’s risk assessment (i.e. “I’m not going to get pregnant – I’m careful and am not one of those kinds of people who have accidental pregnancies” is a stance that many people have right up until they discover that accidents can happen to anyone.)
This is why individual insurance as a model for healthcare is really, really lousy. People suck at risk assessment. They regularly worry themselves sick over events that are highly likely to never occur at all while simultaneously lowballing risk estimates of things that are damn likely to happen to them sooner or later. There are a lot of bad things about employer-sponsored insurance, but at least when you’re in a group of people the risk assessment is being managed by other people – and being looked at in the aggregate – so there’s a better shot that the risks have been properly assessed.
Richard Mayhew
@NonyNony: Make pregnancy an automatic qualifying event for Medicaid without regard to income or assets.
The issue I have is that if we are using a risk based insurance model, blowing up the risk model is not a good idea. We have a better solution in place already.
eclare
Highly disagree. That is what insurance counters, that people are horrible about accessing risk. But for insurance to work, everyone needs to be in. Not just people who think they will not get pregnant so don’t need insurance. Everyone. And no backsies for people who didn’t get in when they need it now.
eclare
Full disclosure, I have insurance because of the ACA. The only way that works is for everyone to be in, healthy or not. So when someone suggests we should cover costs even though someone paid nothing while healthy, that bothers me. That dooms ACA.
NonyNony
@Richard Mayhew: I’d agree with this, though I think it’s less good than having some kind of system in place where pregnancy is always fully covered for all women who are in the age brackets where it’s a risk regardless of what level of coverage you choose. I understand that’s not how the individual exchange markets work, but that’s a flaw in the very idea of the individual market, due to how poorly human beings manage their individual risk.
@eclare: Pregnancy ends up being a weird special case for me because there is an individual who is affected by it who gets to make zero decisions about it – punishing the child that comes at the end of the pregnancy because his/her mother was lousy at making risk assessment is something I can’t agree with. I can agree that if I choose to lowball my very real risks for heart disease and I end up needing more intervention than my insurance will be able to cover then I’m the dumbass who mismanaged my risks and in the end there’s some level of my own karma biting me in the ass (though again – human beings are terrible at risk assessment and a system that requires us to micromanage our own risks is really not the best choice), but if a kid ends up not being able to get the right pre-natal care because his/her mother was a dumbass that lowballed her risks in the same way I did with my heart condition then that’s just pointedly unjust. We protect kids from the dumb decisions of their parents every day in this country (though not to the degree we probably should) and this is just another example of where there needs to be intervention to protect the kid from their parents’ bad decisions.
eclare
Every female who has sex should know her risk of pregnancy is above zero. Not shaming anyone, just stating facts. And thus they should be paying in, but I would give exemptions for those whose states did not expand Medicaid.
Richard Mayhew
@eclare: That assumes all sex is consensual.
More importantly, women can and do take significant actions to minimize pregnancy risk (pill, condoms, barrier methods, hormone shots, IUD, anal, etc) that occasionally fail. I don’t think a world in which sex can only be enjoyed by individuals with insurance is a good world to live in.
blackcatsrule
Richard, thank you for all you contribute to these complicated health care discussions. I hope you can help me with a question that I have not been able to get an understandable answer to. Next year my employer will only be offering HSAs. I was told that the plan deductible is 1500, but there is an “embedded” deductible, supposedly a government requirement, that is 2650. What is this? Will the plan start paying after I meet 1500 or not until 2650? If it’s 2650, why bother including the 1500 deductible at all? This is a family plan, doesonly one member have to meet 1500? If this is a government requirement, does it have something to do with the pre tax deductions to my HSA account?
As you can see I’m very confused…
Kylroy
@eclare: This is New York, the state that had mandated community rating on insurance pre-ACA…but provided no compensation or risk corridors for insurers. They effectively turned their private market into every other states’ High Risk plan, while offering no equivalent to other states’ individual insurance markets.
Pre-ACA individual insurance was a shitshow anyway, so I don’t think they did much damage, but NY has demonstrated a willingness to pass insurance laws that feel righteous without doing any good.
Richard Mayhew
@blackcatsrule: e-mail me details at bjdickmayhew Yahoo as I need to see the actual language to have a clue
eclare
Since when did this turn into a discussion about rape? All I have said is that young, healthy people who pay nothing for health insurance should not be given the option to retroactively get health insurance once they need it. Because that dooms all of us on ACA. I have no risk factors, but I have an appendix, so I pay.
Richard Mayhew
@eclare: “Every female who has sex”
that is what turned the discussion into one about consent
eclare
You are reading too much into what I wrote. I have been assaulted, I am sorry to anyone I have offended. No wonder I am a lurker. Good bye. I’m gone.
Prescott Cactus
Richard,
Thanks for all the insurance info. The guy with the most information wins. You enable all of us here at BJ to learn how the system works and what the future may hold.
I’m not often on the side of insurance companies but this seems to be a bad solution for a procedure that should already be covered by the insured.
Richard Mayhew
@Prescott Cactus: As long as there is an appropriate risk adjustment change in the background, this system could work well enough as a kludge. But it is a kludge at best.
Richard Mayhew
@eclare: My apologies, I did not intend to offend or drive you off. I’m just looking at the entire possibility space and assault/rape is an unfortunate fact and act that can lead to pregnancies.
Ruviana
@eclare: This was a flounce. People were trying to explain the wide range of factors that can contribute to a surprise medical condition, in this case pregnancy. In real life shit happens. I didn’t think anyone was being nasty, just discussing the range of things that happen.
Glidwrith
I confess I am rather puzzled why pregnancy is such an issue. First, the system is now set up where everyone is supposed to be insured (or as close as possible). If not, they are paying penalties. By definition, an ever-smaller population is not insured and pregnant women are also a very small percentage of the population. Even with the cost of the pregnancy, both mother and child become part of the system and will be paying into it going forward. Basically the equivalent of got-hit-by-a-bus the day after signing up for insurance.
Does this really pose such a large problem? Or do the Maths demand it?
Richard Mayhew
@Glidwrith: The way New York has set it up is the problem is two fold:
Scenario A: Woman declines insurance during the annual open enrollment period. She finds out she is pregnant in March, due in December, so she comes on board for 7 months and has a personal MLR of 250% or higher.
Scenario B: A young woman goes on a Bronze plan for 1/1 effective date. She finds out she is pregnant in March, and goes to Platinum or Gold coverage for 7 months. The Platinum plan has a separate risk pool than Bronze so the first few months of healthy coverage and low premiums don’t pay for the high cost care period. Those payments go to other healthy individuals dropping their premiums slightly while the Platinum or Gold pools get more expensive and premiums increase to cover expected claims costs
JustRuss
@eclare: Females most likely to become pregnant are just entering adulthood, a period in life where judgement and risk assessment are less than optimal. I don’t think it’s right for an infant to suffer because her 19-year-old mother didn’t have the foresight to sign up for health insurance, but that’s me.
Feathers
One issue with the ACA model is that you can end up with very gappy insurance. You get dropped from work insurance for having too few hours, so you find another job, but they keep pushing your start date back. Do you go out and buy an insurance plan when your GD new job with insurance is supposed to be starting NEXT WEEK. (Yes, I’ve had this happen.) Or as a freelancer, you just don’t have enough cash on hand to pay the insurance premium some month and get dropped. (Happened to friends.)
My guess is that some of this is like the under 27s staying on parent’s health insurance. Parents are finding out daughters or son’s partners have let insurance coverage slide without fessing up about it. Now there is a pregnancy and future grandparents are willing to pay, but the coverage can’t be bought. I think most people who can afford insurance have it. And that the sort of people who end up not having insurance because of not paying attention and doing the research are also the people who end up with unplanned pregnancies.
But my guess is still that someone’s uninsured daughter is the reason for this.
Glidwrith
@Richard Mayhew: So for scenario A, you are assuming once the pregnancy is over she would drop being insured?
For scenario B, New York says even if you are covered that pregnancy counts as an event that lets you move up in metal bands? Presuming the pregnancy is successful, wouldn’t that be a qualifying event anyway akin to adoption?
Regardless of the answers above, do the actual numbers of uninsured pregnant ladies really constitute that much of a financial threat?
I am going out on the net to hunt for some numbers, but will post this in the hopes you might have those numbers.
Richard Mayhew
@Glidwrith: Scenario A has a high cost spike and then a reversion to average spending if the mother maintains insurance. There is no pre-pregnancy revenue to help pay for the spike.
Scenario B birth of a child is a qualifying event for a family. However the qualifying event is after the birth which means after labor and delivery charges and after initial NICU chages (if needed). In a typical scenrio, the kid is expensive (Birth to 6 months is expensive even when labor/delivery is excluded and the kid is in good shape) while the mom reverts back to being cheap.
I don’t have numbers to go with to cost out the effects (I would need to work for NY State to get those numbers)