Brokers, carriers and politicians have written and spoken volumes about the status of health care benefits in 2017. As the year winds down, is it possible to sum up the 12-month roller-coaster in just one word?
“Uncertain,” says Liz Gallops, individual insurance specialist for Allegacy Benefit Solutions in Winston-Salem, North Carolina.
“Chaotic,” offers Arthur Tacchino, J.D., principal and chief innovation officer for SyncStream Solutions in Baton Rouge, Louisiana.
Not surprisingly, the failure of the U.S. Senate to repeal and replace the Affordable Care Act (ACA) was both the major story and the leading cause of ulcers among insurance professionals this year.
“The congressional efforts to repeal and replace the ACA have created a state of confusion for employers,” Tacchino says. “They’re unsure whether they need to offer coverage or continue to comply with the ACA's complex tracking and reporting requirements. Employers see premiums rise while simultaneously hearing that politicians will take action to drive premiums down, but then nothing is done. In fact, the opposite is happening. This year seemed as hectic and confusing as it did in 2010, the inaugural year of implementing the ACA.”
Back to the status quo
Despite campaign promises, passing repeal and replace was always a longshot, says Craig Paulson, president of Altura Benefits in Salt Lake City and president of Utah Association of Health Underwriters.
“It was never politically feasible for a full repeal and replace to occur,” he says. “The short-term impact of no ACA revisions will be continued instability in the personal plan market. In the long run, the market will remain unstable unless politicians can reach bipartisan solutions to making the ACA better.”
Chris Byrd, executive vice president of Wex Health in Hartford, Connecticut, agrees.
“We reached the end of the road on the ACA and now are returning to normalcy,” he says. “Many employers were watching and waiting to see if there would be a wholesale change in the framework and wanted to hold off on making big strategic decisions. The ACA remains the law of the land. They had dealt with it before and know it will stay in place for now.”
What does this return to the status quo mean for brokers and their clients?
“The short-term impact is definitely continued confusion,” Tacchino says. “In many ways, the failure of the Senate to repeal and replace Obamacare may also drive non-compliance. There were certainly employers who believed the ACA was going away and didn't think they’d need to comply this year. Now they’re scrambling to retroactively comply.
“The long-term impact is hard to tell. However, it will be interesting to see if repeal and replace gets revisited in early 2018. Another failed attempt by Republicans, just before the 2018 midterm elections, could significantly impact their control of the House and Senate, and they may decide that, strategically, they’re not willing to take that risk. This would only prolong the ACA and embed it even further into society.”
Individual consumers face the same challenges.
“It creates more immediate attention on the ACA and confusion for the average consumer as to the existence and viability of the program,” Gallops says. “Long term, it sets up the possibility for bipartisan reforms to improve the ACA. But it also opens the window for the executive branch to push through regulatory changes to undermine the ACA reforms and create more instability in the market.”
However, not all of the regulatory developments were bleak.
“Seventy-one percent of small businesses don't offer group health insurance to their employees,” Byrd says. “At the end of 2016, many of them were able to offer health reimbursement arrangements (HRAs) that employees can use to purchase individual health insurance or pay out-of-pocket expenses. A recent executive order directed agencies to look at other ways to expand HRAs to go beyond the 21st Century Cures Act.”
There also was good news for an often-maligned government program.
“We saw many positive things happen for Medicare Advantage,” says Kristine Grow, senior vice president, communications, for America's Health Insurance Plans in Washington, D.C. “Nearly a third of beneficiaries now choose a Medicare Advantage plan. Ninety-nine percent of Medicare beneficiaries will have access to at least one Medicare Advantage plan in 2018. Over half of Medicare beneficiaries live in a county that has at least two additional Medicare MA-PD plans from 2017. In addition, all beneficiaries will have access to at least one standalone Part D plan.”
In addition, the cost of these plans continues to fall.
“According to CMS, the average Medicare Advantage premium is projected to fall 6 percent to $30 per month in 2018,” she says. “For Part D, the average monthly premium next year is estimated to be $1.20 less than 2017. Moreover, most seniors who choose an MA-PD plan don't pay any premium. And more than half of Medicare Advantage enrollees are in plans that will continue to have a zero premium next year.
“Overall, in 2018, 84 percent of beneficiaries will have access to a zero-premium MA-PD plan, up from 79 percent in 2017. Surveys show 90 percent of Medicare Advantage enrollees are satisfied with their plan, preventive care coverage, benefits and choice of provider.”
Away from Washington
Not all of the news in 2017 came out of Washington. Leading insurance carriers made their presence felt from Wall Street to Main Street.
“If you leave politics aside, two things brush up against each other,” Byrd says. “First is the collapse of the two big mergers—Aetna and Humana, and Anthem and Cigna. Massive consolidation of carriers has been halted. However, there has been more consolidation on the provider side, with several turning themselves into powerhouses. There has always been a power struggle between insurers and providers, and to the extent that providers continue to conglomerate and insurers do not, it could have an impact on the industry.”
Carriers also continued to refine their product offerings in the never-ending quest to balance features and price. “There has not been a huge amount of innovation product-wise because of the constraints of the ACA,” Byrd says, “but we see continued penetration of higher-deductible plans by employers.”
Consumers increasingly are driving the changes.
“We continue to see a strong movement toward consumer-centric offerings,” Grow says. “Health plans continue to find new ways to serve their members. Some are offering cost- and quality-transparency tools to help members make better informed decisions about where to go for care.
“Some are offering more personalized support through a member's health care journey—to help ensure a healthy baby, for example, or to help manage a chronic condition like diabetes or a heart condition. Some are offering access through more robust mobile tools for greater convenience. Others are offering online tracking tools to help members achieve a health goal. There is a strong drive to make health care more convenient, more accessible and more personal.”
More employers are turning to wellness programs to both improve outcomes and hold the line on expenses.
“Many employers are now utilizing wellness plans and seeing the significant benefits of offering these types of programs to their employees,” Tacchino says. “Also, we continue to see the health care industry utilize and leverage technology in myriad ways. I see this is as a tremendous benefit to all parties involved and I think the industry will continue to find efficiencies by leveraging technology.”
Grow points to several emerging trends among product offerings.
“Employers are increasingly demanding value for the care they purchase for their employees,” she says. “We have also seen growth in high-deductible plans and in health savings accounts. And let's not overlook non-major medical coverage. Coverage for dental, vision, disability and long-term care all play an important role in ensuring that you can get the care you need without jeopardizing your financial security.”
The most ubiquitous—and predictable—trend comes as little surprise to brokers.
“Premiums continued to rise,” Tacchino says. “That was the obvious trend. Carriers remained compliant with the ACA and continued to offer more comprehensive coverage, but with stricter underwriting rules.”
Looking ahead by looking back
If 2017 has taught brokers anything, it's that the future is impossible to predict. However, this year's trends can provide a valuable roadmap as they look ahead to 2018. What do experts see on the horizon?
“The biggest 2017 development that impacted benefit brokers was failure of the repeal and replace efforts,” Tacchino says. “Brokers, like employers, had to wait to see the fate of the ACA, and this created a lot of uncertainty. It had, and continues to have, a major impact on brokers and how they advise their clients.
“As brokers look toward 2018, they should continue to guide clients with ACA compliance in mind and reaffirm with their clients that the ACA is still the law of the land. Brokers need to make sure their clients are taking steps toward compliance, while continuing to document all decisions.”
Grow expects a continued focus on putting consumers first.
“We will continue to see health plans push to ensure that we get the greatest value out of every dollar spent on premiums and care,” she says. “And health plans and providers will continue to work together to ensure that patients get the right care in the right setting and that patients achieve their best health. Health plans will continue to be strong partners at the federal and state levels to advocate for improvements to health care for every American.”
Forward-thinking brokers can turn this uncertain environment into an opportunity for success.
“Employers are hungry for guidance, so brokers will have to be more than just a distributor of products,” Byrd says. “They have to be consultative about products and to some degree, laws and regulations.”
That's why he believes that the best way to succeed in 2018 is to tune out the noise and listen closely to clients. “I like to tell people that what goes on in the market is a lot more important than what goes on in Washington.”