Today’s tight two-hour meeting featured a much anticipated presentation on benefit designs for 2016, an enrollment update, and a surprise announcement: that this meeting would be California Endowment Chief Executive Dr. Bob Ross’s last as a member of the Covered California Board.
Dr. Ross’s’ valuable contributions to the Board’s discussions since he was appointed by former Senator Pro Tem Darrell Steinberg (D-Sacramento) helped Covered CA get launched and moving in the right direction; Bob Ross has certainly made his mark on health care history in more ways than one, and will be missed.
The Landscape for New Plans and Benefit Designs for 2016
It’s a new day, and while insurers can still make money, but no longer on the wrong things (avoiding risk). If they want to compete, they will need to learn to compete over the right things, like keeping us healthy–and insurers that played such “risk selection” games by declining to enter the market in the first year, when the sickest signed up, don’t get full entry to cover the relatively healthier population later—much to United Healthcare’s consternation. Staff recommended that new entrants, with the important exceptions of Medi-Cal plans and plans serving areas with fewer plan choices, would still be barred from the marketplace. The Board will vote on whether to accept new entrants for 2016 at a subsequent meeting. What the staff recommended is “active purchasing” at its most active: Covered CA can be choosy about who can offer new products, in this case it will be plans that can serve areas with fewer plan choices. It also means that alternative benefit designs, which helped no one but those profiting from them, will only be permitted in the still negligible small group marketplace, the SHOP.
The board discussed new benefit designs for 2016. California has standardized benefit designs so that every health plan sells exactly the same copays, deductibles and other cost sharing—and the only difference is the premium, the network, the services the carrier offers—and of course, the brand name. In other states, a single health insurer can offer literally dozens of Silver products, to the considerable confusion of consumers and allowing health plans to pick their customers based on benefit design.
Much of the presentation was focused on the design of the Bronze and Silver products, the “workhorses of Covered CA,” as Health Access phrased it, and in much of this work the advocates needed to walk a fine line between wanting to convey the limitations of Bronze products which require the consumer, on average, to pay 40% of the cost of care. Bronze gives consumers a very low premium, sometimes as low as $1 a month, but then they pay lots when they need care.
By the new, less confusing standard recommended for Bronze plans, the deductible and maximum out of pocket will be set at $6,500 (the maximum out of pocket limit or, bear with us, “MOOP”). Consumers will pay a copay for up to three visits, which can be any combination of primary care, specialist, urgent care or mental health. The enrollee pays the entire cost of all other services, at the contracted rate, until he spends $6500 out of pocket. That means a consumer would pay $1800 or more for an MRI, hundreds of dollars for the third doctor visit, and thousands for an emergency room visits. Very few consumers spend $6,500 in a year so for many consumers, aside from the three doctor visits, they would pay every penny for their care—unless they got really sick.
One reason for Health Access’ keen interest in the proposed bronze product is the sad fact that in 2014, over 120,000 enrollees in Covered California picked a bronze product—but would have been eligible for a silver Cost Sharing Reduction product—with copays of less than $10 for a doctor visit and much better cost sharing generally. These Californians make less than $30,000 a year and yet bought a product with a deductible of $5,000—when they were eligible to buy something with a deductible as low as $75.
To make them easier to select, the silver plan options for those eligible for CSR (Cost Sharing Reduction) plans will be vastly simplified for 2016. CSRs are the much under-utilized discounts that lower the amount eligible consumers have to pay out of pocket for deductibles, coninsurance, and copayments. They were underutilized because they were hard to pick out from a line up of bewildering options. The new silver plans combine the copay and coinsurance plan designs into one design, reducing the number of CSR-qualified silver plans from six to three—much better.
After all is said and done, Covered CA enrollees selecting a plan in late 2015 for 2016 will have an easier time selecting the right plan—and, more importantly, they will know more precisely what they are buying and what it’s worth, even if it’s bare bones.
The recommendation was also to minimize co-insurance, defined as the consumer’s share of the costs of a covered service, calculated in turn as a percent of the allowed amount for that service. Right now if you’re scratching your head, it’s because you are right to wonder what on Earth this could possibly cost.
The basic problem with coinsurance is that it cannot be predicted in advance—it’s one of the big unknowns in the cost sharing calculation. How much will you owe on co-insurance? Well, it depends on what the service costs—but who knows how much something costs, until maybe it’s too late and the bill comes in the mail. This is why Health Access and our partners are so keen on getting rid of it altogether–and at least limiting it to very specific circumstances.
Where the the Ad Hoc Group ‘s work left off is on the lingering problem of unmanageable cost sharing for certain specialty medications—the Sovaldi issue. This will be a top issue for the coming year’s benefit design process—if it is not addressed through legislation (more on that later).
Covered CA Executive Director Peter Lee’s report focused on an appropriately ambitious campaign to allay fears about immigration status of applicants. On this Lee did not mince words and so we repeat it here: Covered CA is a safe place to apply for affordable coverage, no matter where you or your family members came from or when you arrived. And, President Obama’s recent executive order will not change this. See Covered CA’s many fact sheets for messaging on this and specifics for outreach.