Last month, we wrote an article about upcoming expected Health Care Reform changes for 2013–2014 after the Supreme Court found the Affordable Care Act legal. This month, we would like to share what global consulting and actuarial firm Milliman identifies as the major strategic considerations for plan sponsors, insurers, and advisers now that the Supreme Court has upheld the Patient Protection and Affordable Care Act.
1. Adverse selection may still be a challenge. Even with the individual mandate in place, the success of many insurers under PPACA will depend on their ability to minimize adverse selection.
2. Medicaid expansion just became a far more complex and variable proposition. The court’s decision to allow states to opt out of Medicaid expansion creates dynamic changes across the health care system.
3. Employers grapple with new options and plan requirements. While reports of the demise of employer-sponsored insurance coverage are premature, these plans still face many potential changes.
4. What is the effect on early retirees? The role of the employer in covering those between 55 and 65 may change under PPACA.
5. Rate review scrutiny and no-risk selection: Something’s got to give. Keeping rate increases under 10% may become more challenging with many of the traditional cost-control mechanisms no longer available to insurers.
6. Which states will get on the exchange bandwagon? With the Court decision minimizing uncertainty, there may be increased incentive for states to fast-track exchange planning.
7. Minimum loss ratios (MLR) pose an ongoing challenge for insurers. Insurers have struggled to comply with the MLR requirements, and increased volatility in medical costs potentially brought on by adverse selection may compound the difficulty for insurers.
8. Risk adjustment is essential. A new reform calculus is required with traditional risk selection techniques such as medical underwriting no longer allowed.
9. Will cost shifting hold steady, increase, or decrease? Subsidies, rating restrictions, and an effort to achieve universal coverage all introduce new cost dynamics for insurers, providers, and policyholders.
10. The cost problem persists. What can be done about it? Certain aspects of PPACA have the potential to affect costs, but this potential needs to be actualized in order to moderate annual cost increases that regularly exceed other consumer spending.
Additional ISM articles of interest
Private School News Vol. 11 No. 4 Health Care Reform 2013-2014
ISM Monthly Update for Business Officers Vol. 10 No. 8 Rises in U.S. Health Care
Additional ISM articles of interest for Consortium Gold members
I&P Vol. 35 No. 7 Health Care Reform: What Schools Need to Know Now
I&P Vol. 36 No. 9 Faculty Compensation, 2010-11: Day School Insurance Benefits
