The first post-deadline Exchange enrollment report is out. The topline numbers are good ( 11.3 million people enrolled by 12/27 on all exchanges), and the case mix looks to be decent with a good number of young people in the newly enrolled group. There is an interesting nugget that implies a lot of churn and therefore a significant incentive set against insurers pushing people to get preventative care:
Within the HealthCare.gov states:
HealthCare.gov users are actively shopping and saving money. Within the 38 HealthCare.gov states, 3.6 million reenrollees actively selected a plan. Of those active reenrollees, 60 percent switched to a different plan than they had in 2015.
More than a third of the people on Healthcare.gov who renewed their policies switched plans. From a shopping and market competition perspective, this is amazing. People are using managed competition to send price signals. They are most likely jumping from bad and high cost plans to at least lower cost plans which hopefully better suit their needs.
However, this is a market full of churn.
In the old pre-PPACA days, 60% of the people on the individual market at a given point were off the individual market a year later. Most of the jumping was from the individual market to something better on the group or government segments.
Today, 40% or more of the people who signed up on January 1, 2015 will have a different plan on January 1, 2016. Some of that is attrition as people jump from the individual market to something better (group coverage, Medicare, Medicaid, CHIP etc) and most of it is people moving from one Exchange plan to another.
There is a problem with this movement. Preventative care may still not pay for the insurer in any given year.
PPACA mandates that preventative care (vaccines, screenings, annual PCP and ObGyn visits etc) are no cost sharing services. This removes a patient side barrier to access. The policy goal is two fold. The first is to keep people healthier by either averting problems or catching them earlier through proper screenings. This should bend the cost curve as early care tends to be cheaper than acute care. The second is to move insurances from being risk avoiders to active population health managers.
If the market is still very unstable with the average length of enrollment that is still fairly short, the incentive structure for insurers is to not push preventative care that has long run pay-offs .
Insurers are still going to push for people to get a flu shot, as the return on investment in this case is immediate and significant. But they won’t be pushing people to get some vaccines (like HPV) where there is a big gap between the administration (and payment) date and averted disease incidence. They will pay for the vaccine if someone gets the vaccine on their own, but they won’t benefit from future lower medical expenses from that particular individual getting the vaccine tomorrow as that person is highly likely to be covered by someone else when they otherwise would have gotten HPV. The same logic applies to broad categories of preventative care.
There are two ways to resolve this problem. Both would require Congressional action for a national fix or a 1332 waiver for a state level fix. The first action is to use a successful program from Medicare (the Medicare Stars) and twist it into an Exchange program. Part of Medicare Stars looks at previous claims history and determines which Medicare Advantage providers do a good job of managing chronic conditions and preventative care. Plans that do a good job at getting their members appropriately screened, vaccinated and who also manage chronic conditions effectively get more stars. More stars means more money from CMS to the insurer. Good insurers work very hard to get 4 or 5 stars as both a sign of quality and because there is a lot of money attached to being 4 stars instead of 3 stars.
The Exchange plans could have a modified Stars program where 4 and 5 star plans can first brag about their quality on the Exchange, and more importantly, get bonus payments that are independent of risk adjustment. $100 per member per year for being a 4 star plan instead of a 3 star plan would prompt a lot of effort on insurers to make sure their members (who may be likely to churn anyways) are properly screened and receiving all appropriate preventative services.
The other way of approaching this problem is on the consumer end. Low cost insurers on the Exchange can be free riders on public health improvement efforts as the subsidies are currently built. There is no good incentive for an insurer to build in a good preventative program with long term pay-offs but short term costs because, right now, most Exchange shopping is being done on price in relationship to the 2nd Silver subsidy point. If there was a back end calculation that modified subsidies so that the base subsidy stays the same, but high quality plans would get a $10 or $15 per month bump in subsidy, the cost gap between plans that chase people to get preventative care with long term pay-offs and freeloading plans would close.