After nearly a decade of uncertainty around the longevity of the Affordable Care Act (ACA), the law now stands to remain in place for (at least) the foreseeable future. In the wake of the latest repeal and replace failure, we can expect a new wave of bipartisan effort to amend and update the ACA in its current form to bring greater market stability, wider access to care, and lower costs. With this in mind, it’s time to shift our focus toward how the ACA could change and how Health Plans can mobilize and adapt in the immediate, mid, and long term.
More Uncertainty in the Immediate and Mid-Term
The current uncertainty around the Federal Government’s willingness to provide cost sharing subsidies to Health Plans, incentivizing lower premiums offered on the individual exchanges, as well as the fate of the individual mandate will leave insurers with crucial decisions to make. Plans will have to decide whether to stay or exit the individual marketplace and ultimately, how they can mitigate the risk of incurring significant losses. Both of these decisions have far reaching implications and great potential for disruption for Plans and consumers. Eliminating the individual mandate could see the most severe outcome with healthy individuals exiting the individual market, leaving those requiring healthcare to exist within high-risk pools, ultimately destabilizing the individual market and driving significant losses for Health Plans.
Long Term Forecast
If cost-subsidies continue and the individual mandate is preserved, there are still opportunities for substantial change to the ACA. As the political landscape has potential to shift in November 2018, new opportunities could emerge to enhance the law and bring more Americans into the health insurance market. Some of these potential enhancements include:
- Reinstating a reinsurance program to help insurers offset the cost (and risk) of covering older, less healthy customers
- Incentivizing Health Plans to continue to participate in the individual marketplace by giving Medicaid program preference to those that participate in the exchanges
- Lowering prescription drug costs by allowing the government to negotiate lower drug prices for Medicare and Medicaid
The Path Forward
In the immediate to mid-term, Health Plans will need to determine a path forward by assessing their financial risk tolerance. To combat potential losses, Health Plans should be focusing on factors they can control to reduce costs wherever possible. This can be achieved with a continued focus on Care Management and Utilization Management to control costs and improve quality of care for plan members.
Over the long term, the proposed enhancements to the ACA would ultimately result in more people buying health insurance. Thus, Health Plans should prepare for a larger and more diverse population of customers, each wanting to pay less for more customized and accessible products. Here are some ways they can prepare:
- Invest in Affordability of Care: Focus on Care Management and Utilization Management to improve patient care and reduce costs of members requiring a lot of health services
- Digitize: Invest in digitizing all member-facing touchpoints, such as telehealth solutions and mobile applications, which will increase customer engagement and further reduce long term administrative costs
- Update Architecture: Sunset legacy systems that are not able to handle changing market needs and replace them with more flexible platforms
- Get Lean: Reduce unnecessary administrative costs through process optimization to free up funds for more complex initiatives
- Arm the Front Line: Ensure that enhancing call center performance is top of mind. For new health insurance buyers, an effective call center will be key to an optimized member experience
Regardless of the future of the ACA, it has already acted as a catalyst to optimize how Health Plans do business and evolve consumer expectations for care. As this trend will only continue, it’s crucial that Plans mobilize today.