Policy Shifts Private Insurance Delivery

Much of the healthcare spotlight has been squarely focused on the federal and state implementation of the Affordable Care Act (ACA). Yet, there is another fundamental shift in policy that is occurring at the private level that will change the way health insurance is offered to consumers.

Chris Conover, an adjunct health policy scholar with the American Enterprise Institute (AEI), said that as many as 129 million Americans will not be able to keep their private health insurance coverage if the ACA is fully implemented. That number includes an estimated 9.2 to 15.4 million in the non-group market, 16.6 million in the small group market, and 102.7 million in the large group market. The AEI is a “think tank” with more than 50 scholars and experts engaged in public policy research.

“I find it particularly pernicious that the ACA designers nevertheless felt compelled to impose further requirements—free preventive services, for example—essentially saying, ‘Look, we know your BMW is a very safe and reliable car but we think you need to add this auto-locking system that prevents you from driving your car if you haven’t changed the oil in 3,000 miles. It only adds 1.5% to the cost of your car (you can afford it!) and it will prevent you from getting stuck out in the middle of nowhere and possibly dying because your engine blew up,’” said Mr Conover.

The majority of those losing plans will be required to purchase expensive add-ons to their existing plans, while others will be given subsidies to purchase plans on private insurance exchanges, much like Walgreens or other companies are providing.

Although the White House has urged states to allow old policies to be renewed for another year, including the extension of existing policies in the small-employer market, it is clear the ACA will impact employer-based insurance delivery.

“The stricter the standards for mandated coverage, the harder it becomes for existing policies to comply—and the more likely they’ll be cancelled,” wrote Robert Samuelson, an economics columnist. “That’s now happening in the individual market. For legal reasons, most potential cancellations in the employer market are probably at least a year away.”

The shift in private insurance policy might not be all bad news—private insurance marketplaces, for instance, encourage competition among payers. The system could resemble something like the current 401k or pension plans do in the private sector.

“For two to three years the entire employee population would be locked in to using that carrier alone. ... If that carrier decided there would be cost increases year on year, you were basically loaded into those cost increases,” said Dean Carter, chief human resources officer for Sears Holdings, in regard to the former employer health plans they offered. “We believe the competitive nature enables us to save on costs and our employees to save on costs.”

As more employers consider this shift in policy, questions remain as to whether competition and mandates will control costs and improve quality of care for consumers, or if employees will simply end up paying more out of their own pockets for less.

Around the Web

No, David Axelrod, The 'Vast Majority of People In This Country' Are Not Keeping Their Plan [Forbes]

More People Can’t Keep Their Healthcare Plans

[The Washington Post]

To Changing Landscape, Add Private Health Care Exchanges [NPR]

Alternatives Sought for ACA Health Plans [AJMC]