Health Insurance Exchanges: 4th & 10

OFIf you haven’t already heard, the Department of Health and Human Services is in active negotiations with the National Football League to leverage its broad reaching media platform to promote and grow awareness about the impending online health insurance exchanges. The exchanges (or marketplaces, as HHS arbitrarily decided to begin calling them back in January of this year) are really the pinnacle upon which much of the long-term economic success or failure of the Affordable Care Act rests.

The exchanges are to consist of regulated and standardized healthcare plans from which individuals will be able to purchase health insurance that is eligible for federal subsidies. Only 17 states have so far opted to develop their own exchanges (including DC), while an additional 7 are developing partnership exchanges with participation of the federal government. That leaves another 27 states that have chosen to have the federal government develop and administrate exchanges on their behalves. Thus, we could have Terry Bradshaw and Dan Marino now benefitting from both sides of the healthcare paradigm: Nutrisystem on one side and insuring against the consequences of obesity and diabetes on the other.

And in what is no doubt another unintended irony of federal healthcare policy HHS will be choosing to utilize a marketing platform in which the primary communicators are specifically restricted from discussing the health of the individuals playing the game being featured (i.e., due to HIPAA requirements). Just imagine Joe Buck describing the action this fall.

“Ow! That was a tough hit Troy.  I’m not wanting to speculate on whether his knee normally bends all the way forward like that or not, but given where his foot is now resting I’m thinking that hypothetically such a condition could constitute an injury. And hey, while they are carrying away the player whose condition is confidential on a stretcher, this gives us a chance to pause here and remind everyone that you probably shouldn’t wait until your ligaments are shredded before you take advantage of the wonderful discounts now being offered in your state insurance market, er, or I mean exchange . . . did I get that right, Troy?”

Let’s face it: the federal government just doesn’t do marketing very well. As opposed to all of the things it does do very well, right? Wrote it before you thought it. But there have been some notable exceptions too, the source for many of those being the National Ad Council (remember the Crying Indian from the Keep America Beautiful Campaign of 1971?) I still can’t watch that ad without tearing up. Where did that type of talent go and why isn’t such creativity being employed to promote the benefits of the ACA?

Beyond just marketing, the lack of effective communication for the Affordable Care Act has been a complaint of mine dating back four summers ago when the ACA was still a bill being debated in town halls and at dinner tables across the country.  The number one search string for this blog continues to be queries regarding whether or not the ACA will ration knee replacements for seniors. Think there’s a need for more education and awareness?

We have had two presidential administrations now with weak communication skills. In George Bush we had a president whose every public appearance offered new and imaginative ways to use the English language. Now with President Obama we have someone who, to me, frankly just doesn’t seem to like being around people. Now that’s a general disposition I can certainly appreciate – but how one reconciles that disposition with a desire to be effective in public office is a little more difficult to understand.

Invariably, the ultimate effectiveness of a public policy will be more indebted to its implementation than its design. We have seen this administration step on rake after rake in developing marketing and communication strategies that reflect its own arrogance and disconnect with understanding simple yet common realities – like concern over whether or not someone is going to be able to get a knee replacement.

I have read that a primary strategy of leveraging sporting venues such as the NFL to promote the insurance exchanges is to target young, healthy men – who actuarially are less likely to need healthcare. In order for any insurance pool to be financially viable you have to have enough folks paying in that will never get paid out. That makes sense in theory, but think of this: how do the guys you see in all of the beer commercials ran during NFL games compare to the guys sitting around watching the game with you?

Just sayin’


Healthcare 2013: Get Ready for a Wild Ride!

cedar-point-4With the impending blizzard ready to ruin, or at least significantly delay, one of my favorite holiday traditions – taking down the outside lights and decorations – this seems like a good time to throw another log on the Pub’s corner stove and set upon contemplating what’s just around the bend.  With implementation of the Affordable Care Act now ready to swing into full motion in 2013, might as well use this downtime to start preparing for the wild ride ahead.  So here are a few items on the horizon.

Fiscal Cliff Resolution
As written about here before, how Congress and the Administration resolve – or don’t – the Fiscal Cliff will significantly impact implementation of the Affordable Care Act in 2013.  Neither political party wants to risk being blamed for going over the cliff; yet neither wants to be blamed for, “giving in” on principles.  The resolution? Why, kick the can over Father Time’s head, landing squarely in Baby New Year’s lap once again, of course.  That means having temporary legislation in place to avoid the most feared short-term economic impacts (e.g., avoidance of broad income tax increases, extension of unemployment benefits and forestalling the nearly 30% reduction in Medicare payments to physicians).

Unfortunately, what it is does not mean is any real sense of stability or reliable framework for budgeting and appropriating funds.  Though funding for many of the ACA provisions was appropriated as part of the Act, the interconnected nature of the federal budget means that discretionary funding will still have a great impact on HHS departmental planning and implementation.

Further, it is likely that any meaningful and sustainable fiscal policy compromise will involve some legislative modification to the ACA – i.e., particularly in lieu of the need to control entitlement spending.  So until a long-term bargain can be reached there will continue to be a lot of uncertainty on the actual means, methods and timing regarding key provisions of the ACA.  Notwithstanding such uncertainty, below are a few of the more significant items that are supposed to be implemented in 2013.

Health Insurance Exchanges
Health Insurance Exchanges (HIEs) must be certified and operational by January 1, 2014.  A
t the latest count,  upwards of 30 states have opted not to establish health insurance exchanges on their own, which by default means the federal government will have to set up HIEs in those states.  While portions of the underlying technological and operational infrastructure can be duplicated from state to state, there is still an enormous implementation effort beyond what was anticipated.  Implementation will likely be delayed even with a fiscal agreement in place.  Likely too, will be modification to the Minimum Essential Benefits definition in lieu of projected exchange plan pricing.

The HIEs will get a lot of media attention in 2013 because of the direct impact they will have on millions of individuals and the lightening rod they are likely to become as a portended bell weather of ACA failure once implementation challenges and frustrations emerge.  At the same time, private insurance exchanges – seizing the opportunity to gain comparative perceptual market advantage – will flourish.

Medicaid Expansion
To be – or not to be – morally supportive of providing access to life saving healthcare to your poorest citizens, that is, as some have framed the debate over Medicaid expansion.  Effective January 1, 2014, Medicaid coverage is to be expanded to include individuals between the ages of 19 up to 65 (parents, and adults without dependent children) with incomes up to 138%  of the Federal Poverty Level (based on modified adjusted gross income).

More than likely, most states will find it politically unpalatable to opt out of the federal expansion once the dollars begin flowing out of Washington.  But as written here before, Medicaid coverage is a particularly sharp problem within a thicket of thorny policy challenges.  It behooves any healthcare provider with exposure to Medicaid (i.e., particularly those PA/LTC providers) to be very aggressive in staying informed regarding state Medicaid program policy developments over the next two years.

Medicare Bundled Payment Program
Payment bundling is perhaps one of the most confusing concepts in a sea of confusion that is healthcare policy because the concept both actively precedes and  transcends the ACA.  Pilot programs and demonstration projects testing whether paying multiple providers a lump sum to coordinate treatment and care of a patient for a defined condition and/or disease have been met with mixed results.  Still, provider enthusiasm to participate in such programs seems to be growing.

The difference in 2013 is that the ACA mandates CMS to begin a Medicare bundled payment pilot program to begin in January and run for five years.  The impetus of this initiative is try and drive broader, sustainable alignment across providers.  This is a voluntary program requiring application and must include a hospital, physician group, skilled nursing facility, and home health agency.  Only one entity (the contracting organization) will be responsible for allocating the payment among all providers.

To be sure, there will continue to be significant discussion, disagreement and controversy on the long-term viability of payment bundling, from both an economic and patient quality/safety perspective.  But from a more pragmatic, short-term financial vantage, providers interested in staying in business would do well to at least begin to understand what payment bundling will mean to them in the near future.

Tax Provisions in 2013
There are also a number of ACA revenue (i.e., tax) provisions that will take effect in 2013.  These include:

  • Itemized individual deductions threshold on medical expenses will go from 7.5% to 10% of AGI
  • New limit on flexible spending account for medial expenses will be set to $2,500 per year
  • Increase in Medicare Part A tax rate on wages goes from 0.9% to 2.35% on earnings over $200,000 for individuals and $250,000 for married couple filing jointly (plus a  3.8% assessment on unearned income of higher-income individuals)
  • Elimination of tax-deduction for employers receiving Medicare Part D retiree subsidy
  • Excise tax of 2.3% on the sale of taxable medical devices

    There are more provisions in 2013 worth knowing and understanding, and Kaiser’s Health Reform Source provides a sharp, interactive means of tracking these here.  Those mentioned above are just a few that should get immediate and highest priority as healthcare providers.