A lot of national and local discussions have focused on insurance companies losing money on policies issued in the Health Insurance Marketplace (AKA the "public exchange") and how those losses might impact the cost and availability of health insurance choices in the Marketplace. How will Hoosiers and businesses be affected in 2016 and beyond?
The pot was stirred most recently by UnitedHealthCare (UHC), the nation’s largest insurer. UHC made a late but impactful entry to Indiana’s public Marketplace, first offering individual policies in 2015. UHC’s arrival was impactful because the policies it offers are more like what we are all accustomed to in the employer health coverage space: broad provider access and nationwide in-network coverage. In contrast, other Marketplace players (Anthem, MDwise, and IU Health, to name a few) stayed with the narrow provider network options that were initially introduced at the inception of the Marketplace in 2014. In part as a result of the broader network access, UHC sold a large number of Marketplace policies in 2015-roughly 28,000 in its first year.
Now, almost as quickly as UHC made its entry, the insurer is threatening to exit due to financial losses from Marketplace policies across the nation. Whether this will happen remains to be seen. Many industry insiders see UHC’s announcement as an attempt to leverage the federal government to extend insurer "transitional" subsidies beyond the 2016 statutory sunset date. Such an extension is unlikely with a Republican controlled House and Senate and a presidential election looming. One thing is certain: UHC’s departure from the public Marketplace would be as impactful as its arrival, particularly for Indiana.
As an advisory firm focused on benefits, culture and people, we view UHC’s announcement as a reflection of the reality employers must face in the post-ACA world. While it is true that Indiana’s Marketplace offerings are not experiencing the substantial increases that are prevalent in some areas of the country-2016 premiums saw anywhere from a 19% decrease to a 13.5% increase-insurers overall are losing money, making continued cost inflation inevitable on both the individual and group side. Disruption is certain to continue in the coming years. All of those impacted by the health care financing system-employers, insurers, health care providers, and individuals-will have to make strategic shifts to address change.
So what does all of this mean to employers who choose to remain engaged?
With an uncertain and volatile market, simply offering a quality health plan isn’t a sustainable business strategy long term. Employers have to think differently about how to best "play" the health care game. Do we drive change by bringing health care options closer, such as through on-site and near-site health care? Do we incentivize better choices through plan design with aggressive steerage to higher quality, lower cost providers? Offer additional incentives for positive lifestyle choices, such as additional paid time off and financial reimbursement of wellness activities? Or is it necessary to really examine compensation strategies and determine how, and if, health care really fits in? Changes in the group market as well as the individual Marketplace bring new, different, and evolving options to the table. The most successful employers will be armed and ready with a business and people strategy that creates innovation in the face of change.
Katy Stowers is an advisor and general counsel at FirstPerson.